DG ABRAMOVICH DISCUSSES STRATEGY WITH D/S KIMMITT:

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 003528 SIPDIS SIPDIS E.O. 12958: DECL: 12/09/2017 TAGS: ECON PTER KNNP KWBG IR IS SUBJECT: DG ABRAMOVICH DISCUSSES STRATEGY WITH D/S KIMMITT: PARIS DONOR MEETING, IRAN SANCTIONS REF: TEL AVIV 3526 Classified By: Ambassador Richard H. Jones for reasons 1.4 (b/d). ¶1. (C) SUMMARY: On December 7, Deputy Secretary of Treasury Robert Kimmitt and the Ambassador met with Foreign Ministy Director General Aaron Abramovitch. The DG emphasized the need for Palestinian economic development, but emphasized that Israeli security forces would be required in the West Bank for some time. On the settlement of civil claims by terror victims against Palestinian Authority (PA) assets, Abramovich said the Government of Israel (GOI) was capable of reaching creative solutions -- but any attempt to solve the problem through a UN Security Council Resolution (UNSCR) or through Knesset debate was likely to backfire. Kimmitt stressed the importance of a funding mechanism for the December 17 donors' meeting in Paris that was protected from such claims, while pressing Palestinian Prime Minister Salam Fayyad to set up a settlement fund. Kimmitt assured Abramovich that Treasury policy on Iran had not changed as a result of the National Security Estimate (NSE),and the two discussed strategy and next steps on Iran sanctions. END SUMMARY. -------------- Searching for Peace AND Security -------------- ¶2. (C) Abramovich assured Kimmitt that the GOI supports the December 17 donors' meeting in Paris, and that Foreign Minister Tzipi Livni will lead the Israeli delegation with the aim of building a stronger Palestinian economy. The situation on the ground is problematic, said Abramovich, as the only thing preventing more violence in the West Bank is the presence of Israeli security forces. Abramovich expressed hope that the GOI could build on the recent success of Palestinian policing in Nablus, but said it would not happen quickly. The dilemma, said Abramovich, is that in order to create the atmosphere for peace it is necessary to reduce security measures, but if this leads to terrorist attacks there will be no peace process. We have to create Palestinian growth, said Abramovich, while keeping terror from the streets. -------------- -------------- Terror Lawsuits Potential Factor at Donor Conference -------------- -------------- ¶3. (C) Kimmitt inquired about attachment of Palestinian assets in Israeli courts stemming from civil suits by terror victims of terror in the United States. Abramovich confirmed that the courts had ordered the GOI to withhold sufficient Palestinian customs revenue to honor possible Israeli awards to the victims. In his experience as Director General at the Ministry of Justice, Abramovich said the GOI had found solutions to similar problems. Kimmitt and Abramovich agreed that the United States and Israel are both required to abide by the decisions of their courts, and ensure that the rights of victims are properly addressed. At the same time, said Kimmitt, the PA must have sufficient resources to govern effectively. ¶4. (C) Kimmitt also expressed concern that litigation could be used as an excuse by foreign governments to withhold pledges at the Paris meeting. He suggested the Development Fund for Iraq, which was protected from claims against the former Iraq regime, as a possible model for the Palestinians. Kimmitt said he recommended to Fayyad that the PA establish a claims process and set aside money to settle claims. He added that Fayyad understands the United States will not intervene to protect the PA from the court system, but that future assets could be protected. Abramovich indicated that the GOI would oppose any solution reached through a UNSCR, which would be viewed as interference in the Israeli legal system. Given opposition in the Knesset to any move that would protect the PA from terror victims, Abramovich said the best solution would be procedural without parliamentary action. ¶5. (C) Kimmitt responded that a UNSCR is often necessary for enbabling EU action, and that it might help in the United States as well. He explained that that a resolution would only require states to abide by the laws of their own legal systems, which would include respecting the rights of victims of terror, and would be targeted to address the future TEL AVIV 00003528 002 OF 002 delivery of funds to the Palestinians. The key, said Kimmitt, is to make sure that donors contribute. Abramovich promised the GOI would examine the issue. In general, Kimmitt said there was a need for a new mechanism for providing Palestinian assistance, with the impending expiration of the Transitional International Mechanism. The most important issue, said Kimmitt, is making sure that the money does not end up with Hamas. -------------- NIE Changes Little for U.S. -------------- ¶6. (C) On the release of the NIE, Kimmitt repeated his earlier statements to the Prime Minister that Treasury would not alter its policy toward Iran (reftel). Kimmitt said Iran must still live up to its IAEA obligations, and back away from long-range missile development. Kimmitt said that due to sanctions, the Iranian business community is having trouble accessing finance, and the Supreme Leader and the Majlis are becoming increasingly concerned about the state of the Iranian economy. "We will be unrelenting on this," said Kimmitt. Abramovich expressed his respect for Treasury's efforts in the field, which he considered more effective than UNSC sanctions. He worried that the NIE would erode support from other countries, such as Germany, Italy, Russia, and China, and characterized the latter as a "vacuum cleaner" for new business created by sanctions. Abramovich said a third UNSCR was important to create international consensus on what the GOI still considers a dramatic danger. ¶7. (C) Abramovich noted that Livni recently returned from a visit to Slovenia, the country next in line to lead the EU, where she raised the importance of a strong policy on Iran. Kimmitt agreed on the strategy, and warned that Slovenia could be influenced by the Italians and others. Japan is also critical, said Kimmitt, as they are about to take over leadership of the G7 -- but they face complex domestic issues. He noted that Iran was shifting business to smaller banks and southern Europe, and that Austria was seeking out new Iranian business. He warned that businesses in India might also be seeking to benefit from sanctions. ¶8. (C) Repeating an earlier suggestion made to U/S Nicholas Burns, Abramovich proposed that China might be willing to back additional UN sanctions if promised a long-term supply of oil from Gulf countries. Politically it might be a good idea, responded Kimmitt, but economically the market is tight and OPEC is not increasing production. Kimmitt said he would look at the statistics on Chinese consumption of Iranian oil. ¶9. (U) D/S Kimmitt cleared this cable. ********************************************* ******************** Visit Embassy Tel Aviv's Classified Website: http://www.state.sgov.gov/p/nea/telaviv You can also access this site through the State Department's Classified SIPRNET website. ********************************************* ******************** JONES