GOI PREPARING FOR DECEMBER 12-13 TALKS WITH

C O N F I D E N T I A L TEL AVIV 003487

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/02/1017
TAGS: PREL PGOV KIRF VT IS
SUBJECT: GOI PREPARING FOR DECEMBER 12-13 TALKS WITH
VATICAN, EXPECTS RESPONSE ON TAXATION PROPOSAL

REF: A. TEL AVIV 2800 (AND PREVIOUS),B. VATICAN 183

(AND PREVIOUS),C. JERUSALEM 1491 (AND PREVIOUS

Classified by Ambassador Richard H. Jones for reason
1.4 (b) and (d).


1. (C) (Note comment para 4.) MFA Director for Inter-
Religious Affairs Bahij Mansour told Poloff December 3
that the GOI hopes to make significant progress during
the next round of talks (December 12-13) with the
Vatican over outstanding issues related to the
Fundamental Agreement. The talks are scheduled to
start at the working level on December 12, and
conclude at the principals' level the following day.
MFA DG Aharon Abramovich will lead the Israeli
delegation on the second day. Mansour said he
expected the talks to focus exclusively on the
outstanding taxation issues; the issues of state
compensation for confiscated property and Church
access to Israeli courts are not on the agenda.


2. (C) Mansour said the GOI is expecting a Vatican
response to two proposals made during the last
(November 7) negotiating session. Under these
proposals, Vatican institutions would be treated like
other not-for-profits in the taxation category of
"Most Favored Organization" (Ref A). Additionally,
the "arnona" tax (Israeli property tax collected by
local authorities) would only apply in cases where
Church institutions were making profits on local
businesses. He cited the Latrun Winery, operated by a
Trappist Monastery, as an example of the kind of
Church operation that would still be subject to arnona
taxation under the new proposal. Mansour thought that
if the Vatican accepted the proposals, "the taxation
issue could be wrapped up in a day."


3. (C) In a meeting with DG Abramovich December 6, the
Ambassador reiterated U.S. interest in the GOI-Vatican
negotiations, and urged the GOI to negotiate in good
faith and to make a sincere effort to conclude the 13
year-old talks in a timely manner. Abramovich assured
the Ambassador that was his intention and expressed
irritation at recent public statements by Nuncios
Franco and Sambi (see below). He wondered if the
Vatican wasn't attempting to play a double game --
praising GOI efforts in private while excoriating them
in public via unofficial "personal" comments.

Comment: Time to Mend Fences and
Push for the Finish Line
--------------


4. (C) While we agree with Ref. B assessment that GOI-
Vatican relations are suffering under the weight of
the seemingly unending negotiations, we also believe
the atmosphere has been tainted by acrimonious
relationships among working level negotiators on both
sides. The MFA's point person for the talks, Bahij
Mansour, can be difficult to deal with and does not
often communicate clearly, while the Vatican's lead
negotiator, Fr. David Jaeger, has developed a
reputation in GOI circles as impatient and
undiplomatic. (Mansour criticized what he described
as Jaeger's "unhelpful and overly critical" comments
during recent talks with USG officials in Washington.)
Moreover, as a former Jew who was born in Israel and
who later converted to Catholicism, Jaeger is
suspected in Israel -- where conversion is largely
taboo -- of having an ax to grind against the state of
his birth. GOI-Vatican relations are also being
strained by the GOI's recent decision to limit visas
for Arab Christian clergy operating in the West Bank
and Israel, and the Holy See's new readiness to allow
public criticism of Israel by senior officials such as
the Papal Nuncio to Israel Antonio Franco and his
predecessor Pietro Sambi (now the Nuncio in
Washington). In order to overcome these stresses and
to head off a deterioration in bilateral relations --
with the consequences that could entail for interfaith
relations -- we think it will be necessary for both
sides to make a deliberate, high-level determination
to put grievances, and to a certain extent principles,
aside and push the negotiations through to a timely
conclusion.

JONES