ISRAELI KIBBUTZ AND PALESTINIAN VILLAGE LOOKING TO SET UP

UNCLAS TEL AVIV 004395 SIPDIS SENSITIVE E.O. 12958: N/A TAGS: EAID EAGR EINV PGOV PREL KPAL KWBG IS SUBJECT: ISRAELI KIBBUTZ AND PALESTINIAN VILLAGE LOOKING TO SET UP AGRIBUSINESS COOPERATIVE SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY. This message was cleared by Consulate General Jerusalem and USAID WB/G Mission. ¶1. (SBU) Embassy ESTH and Econoffs and USAID representatives attended a briefing October 31 at Kibbutz Metzer regarding a proposed agribusiness project involving the kibbutz and the nearby Palestinian village of Qafin. Metzer is east of Hadera and about 1.5 kilometers west of the Green Line. The presentation was led by the Ahali Center for Community Development which works with small farmers and other groups in Israel's Arab population. Others attending and voicing support for the proposal included the Qafin Mayor (Fatah) and head of the village's agricultural cooperative, senior representatives of the PARC Palestinian Agricultural Development Association, an agricultural extension specialist from the Israeli Ministry of Agriculture, Israeli ag exporters and Kibbutz Metzer leaders. ¶2. (SBU) The kibbutz and the village have been trying to work together for several years. During the second Intifada, Palestinians looking to thwart such cooperation attacked the kibbutz and killed five of its members, including a mother and her two young sons. Not surprisingly, not all members of the kibbutz support the present proposal. A "Jerusalem Post" reporter who is following the story of Metzer and Qafin told ESTH Officer that the Palestinian proponents were seeking a letter from President Abbas endorsing the project in the hope that the letter and the support of PARC would provide some sense of protection for those involved in the cooperative effort. As noted by the kibbutz secretary, the main benefit of the project would be to provide employment for Qafin farmers whose land is on the west side of the separation barrier near the kibbutz. The kibbutz has lobbied for the barrier to be moved west to a ridge right on the Green Line, so that the Palestinian farmers could have direct access to their land. The Mayor stated that unemployment in Qafin is 80 percent. According to Ahali, only about 30 out of 200 farmers are allowed to cross the barrier each day to farm their fields. ¶3. (SBU) The project envisions construction of greenhouses to produce a range of herbs for the U.S. and European markets, drawing on Israeli agribusiness technology and access to export markets. The organizers are seeking a USD 15,000 grant for a pre-feasibility study and contributions towards the projected USD 1.8 million needed to get the project up and operating for the first three years. The political risks involved lower the expected rate of return and make it difficult to raise private capital. In response to a question during the presentation, USAID Officer explained that the project would have been a good candidate for funding under an agribusiness partnership program that was suspended shortly after the Hamas electoral victory. Under current USG policies AID cannot provide funding to new agribusiness enterprises for the purpose of producing high-value crops that generate export revenue. USAID agricultural programs have been confined to small-scale production systems that supply domestic markets. Project organizers stated that they will likely ask the U.S. Embassy for assistance in obtaining routine access to the project area for Qafin participants. ¶4. (SBU) Comment: The project's proponents have put together a strong team and made impressive technical and business preparations. Clearly, the proposal faces both political and financial challenges. Nonetheless, it represents a dramatic grassroots effort to transcend the hostility that separates Israeli and Palestinian neighbors. End comment. JONES 2