BAR-ON DISCUSSES POLITICAL SCENE, COOPERATION ON

C O N F I D E N T I A L SECTION 01 OF 03 TEL AVIV 000990

SIPDIS

E.O. 12958: DECL: 03/10/2016
TAGS: PREL PGOV SENV KWBG IS GOI INTERNAL ELECTIONS ISRAELI PALESTINIAN AFFAIRS
SUBJECT: BAR-ON DISCUSSES POLITICAL SCENE, COOPERATION ON
WATER AND GAS WITH THE PA

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


1. (C) Summary: National Infrastructures Minister Ronnie
Bar-On told the Ambassador on March 9 that Likud and Labor
officials are attacking Kadima because they do not have a
political vision of their own. He characterized Binyamin
Netanyahu as unelectable, and said that Amir Peretz is a
"non-issue" and does not have the necessary experience to run
a government. Bar-On claimed that Kadima's top ten
candidates have more experience in both the Knesset and the
government than Likud and Labor combined. Moreover, the
party has a vision to fight terror, and has stated the three
pre-conditions necessary for a Hamas-led Palestinian
Authority (PA) government to gain Israel's recognition. He
also said that Israel under Kadima enjoys stronger than ever
support from the U.S. and the international community because
other countries, particularly Arab states, now see it as a
bulwark against radical Islamic groups gaining power in other
countries. On GOI plans to manage its cooperation with a
Hamas-led government on issues such as water and sewage,
Bar-On said that Israel would not cut off electricity and
water to Palestinians, and would continue regular maintenance
on grids and water/sewage pipelines. He added, however, that
Israel would not be willing to put Israeli maintenance
workers in danger if a pipeline is attacked. He also said
that the GOI remains interested in buying gas from the
Palestinian Authority (PA) and British Gas (BG),despite the
fact that this may conceivably benefit a Hamas-led
government. He explained that Israel cannot "be stuck with
one supplier," and that the GOI would "check where the money
goes," so it does not fall into Hamas hands. The Ambassador
told Bar-On that Post has been following reports about
stalled negotiations between the Yam Thetys Group (YTG, a
U.S.-Israeli joint venture) and the Israel Electric
Corporation (IEC) for the sale of additional YTG gas to IEC
until Egyptian gas comes online in 2007. The Ambassador
informed Bar-On that he has written a letter to the chairman
and chief executive officer of IEC to indicate Embassy
support for the deal, and presented a copy of the letter to
Bar-On. Bar-On thanked the Ambassador for the letter, and
said he has not yet taken a position on this matter. The
Ambassador asked about other reports that an association of
independent power producers has proposed changes to Israel's
Natural Gas Law that would unfairly restrict YTG's ability to
sell at market prices. Gabby Levy, the Infrastructure
Ministry's director of international relations, responded
that the ministry has not taken a decision on this either,
but would inform the Ambassador when it has. End summary.

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Likud and Labor Attack Kadima
Because They Have No Vision...
--------------


2. (C) National Infrastructures Minister Ronnie Bar-On told
the Ambassador on March 9 that the Likud and Labor parties
are attacking Kadima with "nonsense" because they do not have
a political agenda or a political vision of their own. He
said that "everyone knows we're running the next government,"
so Likud and Labor officials are concentrating their efforts
to lower Kadima's numbers as much as possible before the
elections on March 28. He claimed that Binyamin Netanyahu is
unelectable, and that Amir Peretz is a "non-issue." He
explained that Peretz's only experience is running the
Histadrut labor union, and that over the past ten years
Peretz led over 600 strikes, which cost the Israeli economy
NIS 260 billion and none of which benefited the poor.


3. (C) Bar-On continued that Likud is living in a "fantasy
of power." He described Likud officials as believing that
even more force deployed against Palestinians can resolve the
conflict, and contended that there are some in Likud who
believe Israel should go back into the Gaza Strip and the
northern West Bank. He said that Labor, on the other hand,
is living in a "fantasy that everything will be OK." He
commented that Peretz will go to Palestinian Authority (PA)
President Mahmud Abbas and "hug him," but said that Kadima
knows Abbas is not willing to confront Hamas. He added that
Labor is divided into two groups: those who follow Peretz,
meaning that they accept the Geneva Plan, a division of
Jerusalem, and right of return, and those who are against
Peretz, such as former Housing Minister Yitzhak Herzog.

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...But Kadima Has Experience
--------------


4. (C) In contrast to Likud and Labor, Bar-On asserted that
Kadima has more experience in both the Knesset and the
government than the two parties combined. He said Alternate
Prime Minister Ehud Olmert, as mayor of Jerusalem, was
responsible for 700,000 people, the second biggest budget of
any Israeli city, and the complicated problems of Arabs and
the ultra-orthodox. He compared Jerusalem to a mini-state to
showcase Olmert's experience. Bar-On also said that Kadima
has a vision to fight terror, has issued the three
pre-conditions necessary for a Hamas-led PA government to be
acceptable, and enjoys the support of the U.S. and the
international community. He remarked that Kadima officials
recognize that the "international situation (for Israel) is
the best of all times" because all countries, and
particularly Arab states, understand that the phenomenon of
radical Islamic groups taking over the government could
spread to their countries as well. Bar-On commented that
Israel is now in a transitional period because the PA is a
Hamas authority, but the international community is still
waiting for a Hamas government to be assembled. He said that
when the time comes, Israel will stop all payments to the PA.
The Ambassador said that the USG is also taking the position
that the PA should receive no funds. He explained, however,
that the USG, unlike the GOI, differentiates between the
legislative and the executive branches of the PA. Bar-On and
the Ambassador agreed that humanitarian assistance to the
Palestinian people should also continue but not be channeled
through the PA.


5. (C) Bar-On said that ultimately Israel needs a government
that has both stability and the ability to govern. He
explained that in the 58 years since the establishment of the
Israeli State, there have been 31 governments instead of the
14 there "should have been," assuming that governments would
have completed their four-year terms. He remarked that in
his own ministry, there have been 16 ministers in ten years.
He commented that the quick turnaround makes it difficult for
ministers to run their ministries because they need 3-6
months to learn the job before they can start long-term
planning, and by the time they have plans in mind to execute,
they are "kicked out." Bar-On noted that a government also
has to have the ability to govern, and it does so by building
coalitions with other parties. He said that the problem,
however, is when coalition partners break up into smaller
factions, and noted that the 16th Knesset ended with what he
said were over 20 factions. He cited Shinui and the Likud
rebels as examples of internal party break-ups, and claimed
that Kadima just wants to form a "nicely portioned
(coalition)" with a single other party with "no internal
problems."

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Cooperating on Water and Energy
With a Hamas-led Government
--------------


6. (C) The Ambassador asked how the GOI plans to manage its
cooperation with a Hamas-led government on important issues
such as water and sewage. Bar-On responded that Israel would
not cut off electricity or water for Palestinians, and would
continue to do regular maintenance on its grids and
pipelines. He said, however, that the GOI is not willing to
put Israeli maintenance workers in danger if a pipeline is
attacked.


7. (C) The Ambassador asked about press reports that the GOI
is still interested in purchasing gas from the PA and British
Gas (BG),despite the fact that this may benefit Hamas.
Bar-On confirmed that Israel remains ready to buy Gaza gas
because it cannot "be stuck with one supplier." He explained
that Israel currently purchases gas from the Yam Thetys Group
(YTG is a joint U.S.-Israeli venture),but that this gas will
run out in ten years. He remarked that the GOI has Egyptian
gas coming to Israel in 2007, but claimed without elaborating
that Egypt is "playing games with private buyers." To try to
establish more energy security, Israel is willing to buy gas
from the PA-BG, and will simply "check where the money goes"
to avoid benefiting Hamas, according to Bar-On. He mentioned
that this deal will also benefit ordinary Palestinians. He
explained that the gas would only come onshore in Ashkelon,
and that Israel would be willing to build a pipeline from
Ashkelon to Gaza to transfer the gas. (Note: Bar-On was
implying that the only way for the PA to have access to its
own gas would be to sell it to Israel via a pipeline to
Ashkelon, and for the GOI to build a pipeline from Ashkelon
to the Gaza Strip. This is not entirely correct, however.
BG officials have told econoff in the past that if the PA-BG
decide to sell the gas to Egypt instead of Israel, BG could
build a pipeline from the Gaza Marine field to al-Arish,
Egypt, and overland from al-Arish to Gaza. End note.)


8. (C) Bar-On commented that the GOI is also interested in
building pipelines for oil and gas from Ashkelon to Eilat,
and that it hopes to implement the Red-Dead Sea canal
project, part of which would involve supply of desalinated
water to Jordan. He explained the Red-Dead project is being
supported by the World Bank, which has recruited donors to
undertake a $15 million feasibility study. The Ambassador
noted that U.S. experts should be involved in the feasibility
study, and Gabby Levy, the ministry's director of
international relations, replied that the U.S. had donated
money to the World Bank to undertake the study.
--------------
Yam Thetys-Israel Electric Corporation
--------------


9. (C) The Ambassador told Bar-On that Post has been
following reports about stalled negotiations between YTG and
the Israel Electric Corporation (IEC) for the sale of
additional gas to IEC until the Egyptian gas comes online in

2007. (Note: Officials from Noble Gas and Delek, the U.S.
and Israeli partners that comprise YTG, respectively,
recently told the Ambassador that they have seen and heard
reports that the Ministry of National Infrastructure is
pressuring IEC not to buy additional gas from YTG. End
note.) The Ambassador informed Bar-On that he has written a
letter to the chairman and chief executive officer of IEC to
indicate the Embassy's support for the YTG-IEC deal, and
presented a copy of the letter to Bar-On. The Ambassador
noted that YTG has invested $500 million in Israel to date,
has had a close relationship with IEC for several years, and
is offering IEC the gas at prices lower than in the U.S. and
EU, and cheaper than alternate fuels. Bar-On thanked the
Ambassador for the letter, and said he has not yet taken a
position on this matter. The Ambassador asked about other
reports that an association of independent power producers
(IPPs) has proposed changes to Israel's Natural Gas Law to
force natural gas suppliers to sell to the state-run Israel
Natural Gas Lines (INGL) at a fixed price. (Note: This
would create a gas monopsony, which would benefit the IPPs at
YTG's expense. End note.) Levy responded that the ministry
has not taken a decision on this either, but would inform the
Ambassador when it has.

--------------
Travel Warning From a Friend?
--------------


10. (C) Bar-On questioned the need for a travel warning, and
asserted that the latest USG version is a problem "coming
from our friend," the U.S., and particularly during the
summer months. The Ambassador responded that the USG added
five lines to the travel warning to Israel because crime has
taken place in several popular places, including Herzliyya
Pituach where many U.S. diplomats and other American citizens
live. He explained that the Embassy has warned its employees
of crime dangers and under the "no-double standard" policy in
place since the Pan Am 103 bombing, much warn all U.S.
citizens.

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