KARNI REOPENS; GOI SENDS TRANSFER PAYMENTS

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000544

SIPDIS

E.O. 12958: DECL: 02/06/2016
TAGS: ECON KWBG PGOV PREL KPAL IS ISRAELI PALESTINIAN AFFAIRS GOI EXTERNAL
SUBJECT: KARNI REOPENS; GOI SENDS TRANSFER PAYMENTS

REF: A. JERUSALEM 499

B. JERUSALEM 460

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


1. (C) Summary: Following a week of constant and intense
discussions between the Embassy and the Prime Minister,s
office, the MOD, and other high-level officials, the GOI
reopened the Karni crossing and reversed its decision not to
transfer collected tax revenue to the PA. The Ambassador had
argued that the transfers were necessary for present
stability and to ensure that Hamas could not claim that any
failure on their part was due to the PA handing over a
bankrupt authority. Karni will conduct limited operations
for the next few days but should be fully functioning by
mid-week. According to a source in the Ministry of Finance,
the decision on transfer payments will be revisited monthly,
with the security implications of the decision a major
factor. End summary.

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KARNI RE-OPENS
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2. (C) After a week of intense discussions between the
Embassy and high-level GOI officials and Staff at the MOD,
Karni re-opened February 5 and revenue transfers were
finalized and sent from the GOI to the Palestinian Authority
(PA). Israeli Airport Authority Director Yoram Shapiro
confirmed to us that Karni has re-opened for the first time
in three weeks. The Ambassador had been in constant
discussions with the Prime Minister,s office and Minister of
Defense Mofaz to push for a quick opening of the crossing
once security concerns regarding a possible tunnel had been
met. Brig. General (Ret.) Baruch Spiegel, MOD advisor, said
that security coordination with the PA on Karni was good but
that it would not extend beyond the present crisis. Although
no tunnel was found and despite the fact that Spiegel
believes intelligence on the tunnel is still &active,8 both
he and COGAT head Major General Yosef Mishlev urged the
Defense Minister to reopen Karni.


3. (C) The latter told the Ambassador he had reluctantly
approved he request despite misgivings about the continuing
security threat to the crossing. After a month,s closure,
humanitarian concerns had tipped the balance in its favor.
However, he warned that future problems or failure of the
Palestinians to respond to GOI concerns about operation of
the Rafah crossing could easily push the GOI to treat Karni
and the crossing at Erez as if they were international points
of entry.


4. (C) Shapiro said that the crossing is handling a limited
amount of traffic for the first few days after resuming
operations. He expected that it would be back to full
operations by February 8. According to USAID sources, the
crossing was open until 10:00pm on February 5 and processed
70 trucks, including 40 containing agricultural produce.
Prior to the closure on January 15, up to 93 cargo loads each
day crossed into Israel at Karni.


5. (C) After the opening of Karni yesterday, Spiegel
convinced General Mishlev to phone Muhammad Dahlan and ask
the PA to consider the use of the Kerem Shalom crossing as an
alternative for agricultural goods. According to Spiegel,
Dahlan had replied that he would work on the issue in a
positive way.

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Revenue Transfers Finalized
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6. (C) Last week the Ambassador and Embassy officers were
also in constant contact with the Prime Minister,s office,
the Minister of Defense, the Ministry of Finance, and
Minister of Foreign Affairs Livni to urge them to reverse the
initial decision not to transfer PA tax revenue collected by
the Ministry of Finance this month. As the week progressed
there was a mounting groundswell of support in the
bureaucracy for a change in position. General Spiegel told
us last week that the major ministries, including the
Ministry of Defense and the Ministry of Finance had taken on
the Embassy,s argument that the transfers were necessary for
the present stability of the political situation and to
ensure that Hamas could not claim that any failure on their
part was due to the PA handing over a bankrupt authority.


7. (C) The Cabinet decision to change the policy was by
clear consensus, according to Rani Lobenstein, advisor to the
Minister of Finance, but Alternate Prime Minister Olmert was
&feeling the heat.8 This was especially true, Rani said,
because the decision was made on the same day as a
terrorist-knifing incident on a minibus in Petah Tikvah.
Rani said the Alternate Prime Minister was also expecting a
political backlash from criticism by Likud. Lobenstein
confirmed newspaper reports that the policy would be
revisited monthly and that Minister Mofaz would make a
recommendation to the Alternate Prime Minister about the
security implications of a decision. Lobenstein emphasized,
however, that as an advisor to the Minister of Finance, a
position also presently held by the Alternate Prime Minister,
he was confident that the Ministry of Finance,s position
would strongly influence the decision.

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