SHIMON PERES ON PALESTINIAN 'COHABITATION'

UNCLAS SECTION 01 OF 02 TEL AVIV 000518

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E.O. 12958: N/A
TAGS: EAID EFIN EG IS JO KWBG PGOV PINR PREL ISRAELI PALESTINIAN AFFAIRS GOI EXTERNAL GOI INTERNAL ISRAEL RELATIONS
SUBJECT: SHIMON PERES ON PALESTINIAN 'COHABITATION'

REF: TEL AVIV 391

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Accordingly.


1. (SBU) Summary: In a February 1 meeting with the
Ambassador, Shimon Peres reiterated a pitch for U.S.
financial support for Negev/Galilee development and political
support for private-sector-led development of the Jordan
Valley. The Ambassador stressed the importance of supporting
the caretaker PA government and President Abbas, including
the continuation of VAT and customs transfers. Peres
reported that Abbas had made three demands of Hamas (see para
2 below). Peres, although not currently in government, said
he expects a continuation of GOI support unless/until a Hamas
government is formed that remains hostile to Israel. Peres
said Kadima's parliamentary list would reflect the Israeli
electorate, and would prove to be a "new center" in Israeli
politics. He discounted the political threat posed by
Netanyahu. End Summary.

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ABBAS MAKES DEMANDS ON HAMAS
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2. (SBU) Shimon Peres likened the Palestinian political
situation to a period of 'cohabitation' akin to the period of
Mitterrand/Chirac powersharing in France during the 1980s.
He argued that President Abbas retained responsibility for
security and negotiations, but acknowledged that the PA
President would not likely control the Finance Ministry in a
Hamas-led government. Peres reported that President Abbas
had made three demands of Hamas:

-- that Hamas respect the positions of "international
legitimacy" adopted by the international community;

-- that Hamas accept Arab League positions, including the
Beirut Declaration;

-- that Hamas respect agreements between Israel and the
Palestinian Authority, including Oslo and the roadmap.

Peres agreed with the Ambassador's assessment that Hamas
would soon face contradictions between its desire to govern
(the PA) and running a terror campaign. Peres predicted that
the initial Palestinian enthusiasm about Hamas will evaporate
with time. If Hamas cannot pay salaries of the PA, including
security forces, that will be the end of Hamas, according to
Peres. The Ambassador said that the reality of governing
would soon intrude on Hamas ideology.

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ISRAEL ISN'T CORNERED; KADIMA ISN'T HURT
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3. (SBU) Peres expressed confidence in Israel's ability to
deal with the consequences of the January 25 election. The
Ambassador asked Peres about relations with the PA. Peres
said he expects that the GOI "won't change," i.e. Israel
would continue to cooperate with the caretaker PA government,
including transferring VAT and customs revenues. "We
shouldn't proceed as if we are the ones that want to cut Abu
Mazen off," Peres stressed. Peres added that Palestinian
developments had not hurt Kadima. He discounted the
political threat posed by Netanyahu: "He wants to be on the
Right and be perceived as in the Center, but this is
unconvincing."

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HELPING THE PALESTINIAN ECONOMY:
LOOK TO NEIGHBORS, NOT ISRAEL
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4. (SBU) In response to the Ambassador's question, Peres
said a delay in the formation of a Palestinian government
would not affect Israeli politics unless bombs start going
off. Peres argued that economic means must be found to fight
"the reasons for terror." The Ambassador noted, in this
regard, that the Karni crossing had been closed for three
weeks, but Peres seemed unconcerned by the impact of this
closure on the Palestinian economy. He suggested that the
Palestinians could export produce via El Arish, Egypt, rather
than through Israel. Peres also pitched
Israeli-Palestinian-Jordanian cooperation from the Red Sea to
the Yarmouk River in Israel's north -- a sort of Jordan River
Authority that would rescue the Dead Sea while building on
the success of the QIZ concept. Peres said private financing
could be relied upon for such an initiative (see reftel for
elaboration on Peres' thinking).

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NEGEV/GALILEE DEVELOPMENT:
A PITCH FOR U.S. FINANCIAL SUPPORT
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5. (SBU) Peres confirmed that he will re-engage on
Negev/Galilee development planning should Kadima win election
on March 28. He recalled the GOI's ten-year plan to invest
17 billion shekels (approximately four billion USD) in the
Negev over ten years, starting with a one billion shekel
outlay in 2006. Peres noted that he had spoken recently to
the Secretary about the Israeli request for 2.1 billion USD,
two-thirds of which would go to Negev/Galilee development and
another third for security along the Israel-Egypt border and
to cover the costs of disengagement. He hoped such funding
could be requested in a February supplemental request to
Congress.


6. (U) Peres said 150 thousand Negev Bedouin are ripe for
democracy and modernity, and claimed (note: unconvincingly to
us) that the Bedouin would welcome the opportunity to live in
modern high-rise apartments clustered in rapidly expanding
Negev towns such as Rahat. The Ambassador commented that
Israel had good reason to create economic incentives for
developing the Negev and Galilee. Both agreed that the
Olmert government had been correct in removing the illegal
outpost of Amona in the West Bank.

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