ISRAELI FM ON REVENUE TRANSFERS, MEETINGS IN

S E C R E T SECTION 01 OF 02 TEL AVIV 000515

SIPDIS

E.O. 12958: DECL: 02/03/2016
TAGS: PREL PGOV EAID PTER KPAL KWBG IS EG ISRAELI PALESTINIAN AFFAIRS GOI EXTERNAL ISRAEL RELATIONS
SUBJECT: ISRAELI FM ON REVENUE TRANSFERS, MEETINGS IN
CAIRO, AND OBJECTIVES FOR WASHINGTON VISIT

Classified By: Ambassador Richard H. Jones; Reasons 1.4 (B) and (D).


1. (C) Summary: During a February 2 meeting in Tel Aviv, FM
Tzipi Livni told the Ambassador and DCM that the Israeli
Cabinet will discuss revenue transfers to the PA on February
5, adding that she did not expect the issue to still be on
the agenda when she meets the Secretary next week. Livni
said that meetings in Cairo on February 1 left her with the
impression that the Egyptians agree with Israeli views that
Hamas must fill certain "preconditions" before forming a
government. For her upcoming visit to Washington, she listed
her three priorities as: 1) a discussion on the PA and Hamas;
2) consultations on the Iranian and Hizballah threats; and 3)
obtaining U.S. financial assistance for the Negev and
Galilee. She stressed that the assistance is politically
important and necessary to ensure Israel's security. The
Ambassador acknowledged receipt of Israeli concerns about
Rafah and urged the GOI to revisit AMA issues (including
operation of the Karni crossing) to review where progress
might still be possible. He also discussed the benefits of a
larger MFA role in Israel's export control system. MFA
Director General Ron Prosor and Chief of Staff Yaki Dayan
accompanied Livni. End summary.

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Cabinet will Discuss Revenue Transfer on February 5
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2. (S) The Ambassador stressed the significant role that
Israeli revenue transfers could have in stabilizing the
interim PA government. Livni said the issue will be
addressed by the Israeli Cabinet on February 5. She asked
that the USG avoid moves that could be misconstrued as undue
pressure, because such actions would have repercussions in
the Knesset electoral campaign. (Note: News articles in
several papers the next day claimed that Livni was under
pressure from the USG to transfer the revenues. End note).
She added that her initial inclination had been to avoid any
steps that could potentially help Hamas; i.e., "there was an
earthquake and Israel can take its time." She acknowledged
that once it became clear that the formation of a new
government would not happen quickly, she also saw the logic
of sustaining the PA until Hamas assumes power, provided the
PA agrees to certain conditions on the use of funds. She
refused to predict how the Cabinet would vote, but said she
did not expect the issue to still be on the agenda when she
meets the Secretary next week. (Note: PM Advisor Dov
Weissglas told the Ambassador separately that there was an
excellent chance the funds would be transferred to the PA
early in the week of February 5. End note).

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Cairo Meetings Focus on Conditions for Hamas
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3. (C) Livni described her meetings in Cairo on February 1 as
"very positive," saying that on the Hamas issue Israel and
Egypt "have the same interests." In her view, EGIS Chief
Omar Soliman had the strongest message on Hamas; he told the
GOI that Hamas needs to fill certain "preconditions" before
forming a government. FM Aboul Gheit preferred not to use
that term, but Livni said she left Cairo with the impression
that the GOE had a unified view on the conditionality issue.
She described the Egyptians as "optimistic" that Hamas would
accept such changes, but acknowledged that this may have been
Cairo's attempt to "calm me down." When asked by the
Ambassador whether the Egyptians had mentioned the views of
other Arab states, Livni replied that "we are hearing
positive noises from Jordan."

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Livni's Washington Agenda and Request for USG Assistance
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4. (C) Livni listed three priorities for her February 6-8
visit to Washington and New York: 1) dealing with the PA and
Hamas; 2) countering threats from Iran and Hizballah; and 3)
obtaining U.S. financial assistance for the Negev and
Galilee. MFA Director General Prosor claimed that Iran is
increasing pressure and funding for Hizballah attacks against
northern Israel. He told the USG not to be surprised by
Israeli counter measures, such as increased surveillance
overflights.


5. (C) In Livni's view, the PLC elections had increased both
the threat against Israel and the urgency of the GOI's
assistance request. She maintained that a positive response
by Washington would be seen in Israel as support for
disengagement, backing for recent moves against illegal
outposts, and a message to settlers to re-focus their efforts
inside the green line. She also said that USG assistance is
necessary to stop smuggling of weapons and drugs, trafficking
in persons, and infiltration by terrorists -- especially
along the Egyptian border. Livni claimed that Egypt was not
actively patrolling the area south of Kerem Shalom in the
hope that the lack of order will lead to acceptance of an
expanded Border Guard deployment.


6. (C) Livni said she intended to concentrate on proposals
that would be acceptable to Washington. She requested advice
on the level and form of assistance the USG would be willing
to consider. Noting that a meeting to discuss the assistance
proposal had been canceled by the Finance Ministry earlier in
the week, the Ambassador pledged to pass on any GOI requests
for review by Washington. He praised recent GOI moves to
evacuate illegal outposts. MFA Director General Prosor said
that he would ensure that the Finance Ministry contact the
Embassy with details of the Israeli request. Chief of Staff
Dayan expressed concern that the USG's supplemental might be
sent to Congress in February without the Israeli request.
The Ambassador urged the GOI not to overlook Bedouin
interests in its plans for the Negev.


7. (C) Livni predicted that the Israeli-Palestinian conflict
-- and not economic issues -- would determine the winner of
the March 28 Knesset elections. She described the uncertain
security situation as the "weak link" in Kadima's campaign.
She suggested that Washington's initial response to the PLC
elections had not reassured Israelis, although she called the
President's February 1 remarks "wonderful."

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Ambassador Urges Movement on AMA
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8. (C) The Ambassador noted that the Quartet had insisted
that any PA government reaffirm previous agreements,
including the Agreement on Movement and Access, and said the
USG has received PM Foreign Affairs Advisor Shalom
Tourgeman's February 2 letter listing GOI concerns with the
Rafah crossing. Livni said that "Rafah is not working as it
should be." She praised, however, the Egyptian Border Guards
along the Philadelphi corridor, saying "they are doing their
job ... we see their effect." The Ambassador urged the GOI
to revisit AMA issues and look for areas where progress might
still be possible, especially Karni.

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Finding a Role for the MFA in Israeli Export Controls
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9. (C) Following up on a topic from the January 11 Joint
Political-Military Group (JPMG),the Ambassador suggested
that a greater MFA role in Israel's export controls system
would increase transparency and help address past concerns.
Livni agreed and suggested we raise the issue directly with
Defense Minister Shaul Mofaz and/or Alternate Prime Minister
Ehud Olmert to avoid the appearance of a power grab by the
MFA. She noted that this was one of the first issues Mofaz
raised with her after she became foreign minister.

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