MFA STILL HAS RESERVATIONS ON CUSTOMS PROTOCOL;

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 001392

SIPDIS

DEPT. FOR NEA/IPA

E.O. 12958: DECL: 04/06/2016
TAGS: PREL PTER ECON KWBG KPAL ASEC EG IS ISRAELI PALESTINIAN AFFAIRS ECONOMY AND FINANCE
SUBJECT: MFA STILL HAS RESERVATIONS ON CUSTOMS PROTOCOL;
WILL WEIGH IN ON BANK HAPOALIM THREAT TO SEVER TIES WITH
PALESTINIAN BANKS

REF: TEL AVIV 1368

Classified By: Ambassador Richard H. Jones, reasons 1.4 (b) and (d).


1. (C) Summary: During an April 5 meeting with the
Ambassador, MFA Director General Ron Prosor said that the GOI
recognizes it is essential of keeping Karni open and only
close the crossing when there is a specific threat. The
Ambassador said a customs protocol is in Israel,s interest
because that is the only way to provide the EU-BAM the
authority to combat smuggling at Rafah. Prosor promised to
raise with FM Livni the possibility of dealing with GOI
concerns about the agreement through a letter. Prosor said
the MFA would weigh in on the issue of Bank Hapoalim,s
threat to sever ties with Palestinian banks. Prosor asked
for U.S. help in dealing with India, China, South Africa and
Japan, which he claimed may soon break ranks with the
international community and make contact with Hamas. End
summary.

--------------
CROSSINGS AND SECURITY
--------------


2. (C) Discussing Karni, which is closed for a third (as of
April 6) consecutive day due to a security threat, MFA
Director General Ron Prosor stressed to the Ambassador on
April 5 that the GOI closely monitors the crossing on a daily
basis and keeps track of how many truckloads pass each day.
Therefore, he claimed, the MFA has a handle on the situation
and knows whether there is a humanitarian problem or not. He
said the GOI recognizes that it is important that Karni stay
open, so the crossing is only closed if there is a good
reason. The Ambassador noted that USAID, in conjunction with
the U.S. Security Coordinator, has developed a security plan
for the Palestinian territories that should significantly
improve the security situation at the crossings by making it
much more difficult for terrorists to carry out an attack.
The security plan was completed and shared with the
Palestinian Authority (PA) before Hamas came to power. The
Ambassador said Mahmud Abbas spoke of establishing a separate
border service, which would not be under the PM. If that
does happen, the Ambassador said, it would enable the U.S. to
continue working with the Palestinians to enhance border
security. USAID and MOD/IDF officials are discussing
options. The Ambassador noted that the U.S. has $50 million
dollars for border security. Most of this will be used to
purchase scanning equipment, but some can be used to put in
place a tunnel detection system, which would cost only USD 12
million to cover the entire Gaza border.

--------------
CUSTOMS PROTOCOL
--------------


3. (C) The Ambassador said he is aware that the GOI has
concerns about the customs protocol for the Agreement on
Movement and Access (AMA),which was previously negotiated
with the PA but never signed, including its references to the
Paris Agreement, and the prospect of PA customs officials
working under the supervision of GOI counterparts.
Nevertheless, after looking at the agreement, the U.S.
believes that it is best to move forward with the current
document. In response to a question from Prosor, he pointed
out that it would not be possible to renegotiate the
document, because those on the PA side of the table would be
officials under a Hamas ministry. It did not make sense to
remove all mention of the Paris Agreement, since its duty
schedules are incorporated wholesale by reference in the
Customs Protocol. The references to "supervision8 in the
customs protocol would still apply if the PA officials work
only on their side of the crossing. The Ambassador said that
these and any other concerns could be addressed by a letter
that notes that implementation of the agreement would be in
accordance with Israeli law. He stressed that it was in the
GOI's best interest to have a customs agreement. The
Ambassador noted GOI complaints about contraband crossing the
border. EU-BAM Head of Mission General Pistolese would only
have the authority to stop contraband entering Rafah, which
he claims is exclusively cigarettes and alcohol, if there is
a document that so empowers him. The Ambassador added that
the Palestinians have said that they are only willing to have
their side of the border at Kerem Shalom open for 30 days
without a customs agreement.


4. (C) Prosor said the chief Israeli concern is that Hamas
is the PA government and there is no way to get around that
fact. By accepting the customs agreement, he asserted, the
GOI would give Hamas an agreed framework without Hamas having
agreed to anything. Prosor promised, however, to raise with
FM Tzipi Livni the possibility of addressing Israeli concerns
through a letter. In answer to Prosor,s question about
Egyptian reaction, the Ambassador said the Egyptians likely
would be supportive, suggesting that the U.S. could speak to
the Egyptians about the customs protocol as well as the
tunnel detection system if requested to do so.

--------------
CONTACTS WITH HAMAS
--------------


5. (C) Prosor asked for U.S. help in dealing with several
countries that appear ready to break with the international
community and meet with Hamas. He mentioned specifically,
India, which he said is planning to send a special envoy,
South Africa, China, and possibly Japan, which, unlike the
others, is a major donor. The Ambassador reiterated the U.S.
position on no contact with Hamas, noting that we had made
two worldwide demarches on the subject. He said this problem
illustrates the continuing value of dealing with Mahmud
Abbas, who can talk to countries that might be wavering and
has credibility with the Palestinian people.


--------------
SEVERING TIES WITH PALESTINIAN BANKS
--------------


6. (C) The Ambassador raised reports (TEL AVIV 1368) that
Bank Hapoalim and Israel Discount Bank planned to stop
working with Palestinian banks, fearing they would be accused
of involvement in terror finance and/or money laundering
under Israeli and U. S. laws. He argued that it is important
to keep legal means for transfers open in order to avoid a
humanitarian crisis and because a cut-off would result in a
mushrooming of illegal ways around the problem, which would
only benefit Hamas. Prosor understood the importance
immediately and said that the MFA would weigh in on the issue.

--------------
MAGEN DAVID ADOM
--------------


7. (C) The Ambassador mentioned that he had met the day
before with representatives of the Red Cross/Red Crescent
Movement. They are hoping for the accession of Magen David
Adom at the June conference. The Ambassador said, however,
that the Red Cross believes key elements of the
MDA-Palestinian Red Crescent Society (PRCS) MOU must be
implemented before the conference, including fast access
through IDF checkpoints for PRCS ambulances, allowing PRCS
ambulances to be stationed in East Jerusalem, and the
minister of health signing the necessary forms to make MDA
autonomous. The Red Cross had cautioned that waiting until
the last minute would be detrimental because many governments
will decide on their positions long before the conference.
Prosor said that he did not know how soon the Minister of
Health would sign the forms but agreed to follow up.

--------------
DAUGHTERS OF CHARITY HOSPICE
--------------


8. (C) The Ambassador brought up the case of the Daughters
of Charity Hospice in Jerusalem, noting that a construction
company, which is owned by the GOI, is apparently reneging on
a signed agreement with the religious order to provide an
access road as well as open space and height restrictions so
that sunlight is not blocked. Prosor promised to look into
the matter.


--------------
TRAVEL WARNING ON ISRAEL
--------------


9. (C) Prosor raised GOI concerns about the recent travel
warning on Israel that mentioned violent crime. The
Ambassador responded that embassy personnel had witnessed one
of the incidents mentioned and under the no double standard
policy this information must also be shared with American
citizens.

********************************************* ********************
Visit Embassy Tel Aviv's Classified Website:
http://www.state.sgov.gov/p/nea/telaviv

You can also access this site through the State Department's
Classified SIPRNET website.
********************************************* ********************
JONES