C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 000810

SIPDIS

E.O. 12958: DECL: 02/27/2016
TAGS: PGOV PREF KWBG KPAL ECON IS EG HUMANITARIAN AID GOI EXTERNAL
SUBJECT: GOI MAPPING OUT CRITICAL HUMANITARIAN PA PROJECTS
THAT SHOULD RECEIVE AID

Classified By: Deputy Chief of Mission Gene A. Cretz for reasons 1.4 (b
,d).


1. (C) Foreign Affairs Advisor to the Prime Minister Shalom
Tourgeman told NEA DAS Elizabeth Dibble February 23 that,
without causing a humanitarian crisis, the GOI seeks to limit
assistance to the Palestinian Authority (PA) to show Hamas
that adherence to its current positions comes at a price.
Tourgeman said the GOI is now "mapping out" the types of
assistance it would consider humanitarian in nature and how
best to channel that assistance. The international community
should not go around Hamas to bail the PA out of its economic
situation, Tourgeman underlined, since the Palestinian people
will credit Hamas for providing such assistance. Tourgeman
indicated that the GOI is also considering whether to cease
its role as customs collector for the PA. DAS Dibble agreed
that the international community cannot conduct business as
usual with a Hamas-led PA. She stressed, however, the
importance of avoiding a Palestinian economic collapse that
would lead to an economic crisis and that the GOI's chances
of achieving EU and Quartet unity on assisting the PA would
be greater if limitations, especially on humanitarian
assistance, are not too severe. She noted that by ending its
role as customs collector, the GOI would, in fact, abrogate
the Paris Protocol. End summary.


2. (C) Tourgeman was accompanied by his assistant, Ari
Varon, and MFA First North American Department Director Dan
Arbell. DCM Cretz, Deskoff Logerfo, and Poloff notetaker
accompanied DAS Dibble.

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Punishing, but Not Punishing the Palestinians
--------------


3. (C) Tourgeman began the February 23 meeting with DAS
Dibble by asserting that some 45% of Palestinians voted for
Hamas knowing that by doing so they were voting against

international assistance to the PA and against relations with
Israel. He said that Israel does not want to punish the
Palestinian people, but argued that in order to change a
Hamas-led PA, the Palestinian public should know that their
support for Hamas comes at a price. Tourgeman expressed
concern that the EU and the Russians are looking for ways to
bypass Hamas and still assist the PA. "This is not the way,"
he underlined. The Palestinian people need to feel there has
been a negative change, Tourgeman underlined. "If Hamas sees
that international assistance is still coming to the PA,"
Tourgeman said, "(Hamas) won't feel responsible (for the
people)." "We can't be more responsible to the Palestinian
people than Hamas," Tourgeman added. He acknowledged,
however, that Israel "will be the first to pay the price" if
there is a humanitarian crisis in the PA. (Note: In a
meeting immediately following that with Tourgeman, MFA
Director of International Organizations Roni Ya'ar told
Dibble he had just received a read-out from Tourgeman and
Ya'ar stressed the GOI's interest in meeting the humanitarian
needs of the Palestinian people. End note.)


4. (C) Tourgeman expressed concern that the Palestinian
people will credit Hamas with providing government services
and salaries, even if the assistance comes from the
international community. He stressed the need to draw a firm
line from the start on what type of assistance to the
Palestinians the GOI will accept, and expressed concern that
EU and Quartet unity in dealing with Hamas will deteriorate
over time as they consider more types of assistance to be
humanitarian. DAS Dibble underscored that the USG does not
want to bail out Hamas, but stressed that no one wants to see
a humanitarian crisis in the Palestinian territories. She
underlined the importance of assessing how to show Hamas that
it must change, while at the same time preventing an economic
collapse. Dibble agreed that international unity in dealing
with Hamas is wobbly, adding that where the line is drawn on
assistance will determine the extent and viability of this
unity.


5. (C) Tourgeman said that the GOI is still discussing these
issues with the EU and Russia, adding that the GOI is not
sure how long the latter will "be on board." He said that on
February 28, the GOI will discuss "how to deal with Russia"
on this issue. Tourgeman said -- but did not elaborate as to
why -- that the GOI is already worried about the Jordanian
and Egyptian positions.

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GOI Determining PA's Basic Needs
--------------


6. (C) The main task for the GOI now, Tourgeman said, is to
determine the basic needs of the Palestinian people and how
best to channel assistance to meet those needs. At the same
time, he said, it is necessary to prevent Hamas from taking
credit for providing for those needs. Tourgeman divided
assistance to the PA into direct budget assistance and
project funding. The GOI, according to Tourgeman, is in the
process of "mapping out" and prioritizing which of some 50-55
Palestinian infrastructure and assistance projects now in the
pipeline it would consider to be humanitarian -- and
therefore considered eligible for outside assistance -- and
which it would not so consider. (Note: Tourgeman did not
indicate what types of projects these are or whether they are
foreign funded. Also, it is not clear to what extent
Tourgeman's explanation here represents the official GOI
position. End note.) Tourgeman said that the GOI does not
recognize most infrastructure projects as humanitarian,
unless they also serve Israeli interests, such as sewage or
other environmental projects. In response to Dibble's query,
Tourgeman said that civil society projects such as
institution-building, would not be considered humanitarian.
Within the PA budget, Tourgeman said that allocations for
food, medicine, health, and some energy and infrastructure
needs, such as water, would be considered humanitarian.


7. (C) Education assistance is much more problematic,
Tourgeman said. On the one hand, he said, the GOI wants PA
schools to continue to function, but, on the other hand, he
noted GOI concern that Hamas will begin using anti-Israeli
textbooks and curricula. Tourgeman assessed that Hamas would
not take over the PA school system for another year, so the
GOI has some breathing space to address this issue. He
speculated that Hamas timed the 10-year cease-fire it has
advocated to what he termed the graduation of a generation of
mullahs. In this case, Tourgeman asked, "do we want to pay
teachers' salaries?" Tourgeman expressed strong opposition
to the use of assistance to pay salaries, arguing that it is
impossible to pit one group of public employees, such as
teachers, against others, such as security forces.
Tourgeman indicated that money to support workers in some
public sectors could be channeled through NGOs, but he was
adamant that it should not go through the PA.


8. (C) In response to the DCM's query, Tourgeman said that
the non-transferred tax revenues should not be used to fund
public services, as the Palestinian people would perceive
these benefits as derived from Hamas. Tourgeman added that
the same applies to the annual USD 200 million in mainly Arab
assistance to the PA, reasoning that by using these funds to
provide public services, other funding would be freed up for
Hamas to use for other purposes. Tourgeman said that Iran
has already promised to provide the PA with assistance, and
he asserted that these funds could bankroll terrorist
activities. Tourgeman claimed that the GOI had blocked the
tax transfer from the PA for two years in the past, and this
had not resulted in any financial crisis to the PA. Dibble
noted that a crisis was averted then because of USG and other
assistance to the PA.


9. (C) The DCM questioned whether addressing the needs of
the Palestinian people could be met by supporting the private
sector. Tourgeman said that encouraging the private sector
could be a positive direction, but added that this is a
"tricky" area. He said that Hamas could benefit from various
tax and other financial arrangements with the business
sector, including what he said are money-laundering
scenarios. He claimed that private sector firms had already
been implicated in schemes by which Hamas or its benefactors
abroad paid on behalf of Gaza merchants for foreign-origin
goods destined for Gaza, then received reimbursement in Gaza
from the respective merchant.

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GOI Thinking on Customs and Crossings
--------------


10. (C) In response to Dibble's query, Tourgeman said that
the GOI is now considering whether to move toward "total
separation" from the PA, including whether to continue
collecting customs on behalf of the PA. The result of a
decision to stop collecting customs, Tourgeman said, would be
that goods would enter the PA without having been taxed.
Dibble noted that if the GOI takes this path, it would, in
fact, be abrogating the Paris Protocol, while at the same
time demanding from any Hamas-led government adherence to
prior Israel-PA agreements. Tourgeman agreed that this is a
contradiction, but stressed that Hamas's victory in the PA
elections created a new situation and the GOI cannot continue
with business as usual. Responding to the DCM's question as
to why the PA could not collect the customs, Tourgeman said
that the PA simply does not have a system in place to do
this. Tourgeman also indicated that the GOI is considering
the issue of keeping the crossings open.


11. (C) Tourgeman argued in response that the USG supports
the use of pressure on the Iranian population to convince
them to change their government. "Why not support the same
(strategy) with the Palestinians?" Tourgeman asked. Dibble
noted that Iran is a sovereign nation with control over its
own borders and over the daily lives of its people, while the
PA is not a state and does not have such control. She added
that the USG is not trying to punish the Iranian people.
Tourgeman argued that the PA acts like a state and should be
treated as such. He said that most Palestinians want to
abandon terrorism and voted for Hamas in protest against
Fatah. The question, he said, is how to get them to want to
change their regime.

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Time is of the Essence
--------------


12. (C) Tourgeman stressed that the GOI does not feel that
it can wait six or even three months to show Hamas that it
will pay a price for not changing its positions. He said
that "the one virtue of Hamas is its sensitivity to public
opinion, and we should use it." Tourgeman stressed that
going around Hamas and using PA President Abbas to channel
funding is dangerous and will play into Hamas's hands. Hamas
would then use Abbas, Tourgeman argued, to deal with
international assistance. Tourgeman said that Abbas should
be strengthened, but in a separate way (note: Tourgeman did
not elaborate). Dibble underlined that it is as yet
uncertain how Hamas will act, but that the USG position is
against reverting to business as usual with the PA. She
stressed the need to show the Palestinian people that
assistance they receive is coming from the international
community, not from Hamas.

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Abbas's Speech
--------------


13. (C) In closing, Tourgeman expressed dissatisfaction with
Abbas's recent speech, questioning whether it had any
positive message. Tourgeman accused Abbas of ignoring the
international community's concerns about Hamas in the speech
and not calling for Hamas's recognition of Israel. Dibble
acknowledged a divergence of views between the U.S. and
Israel on the Abbas speech. The DCM asked what the GOI would
consider Hamas recognition of Israel. Tourgeman said this
issue "is not debatable," that recognition has to be
"legislated" and that Hamas has to annul its covenant.

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