PM NAZIF, CODEL TIERNEY DISCUSS

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 000938

SIPDIS

E.O. 12958: DECL: 05/06/2018
TAGS: PREL PGOV ECON IS EG
SUBJECT: PM NAZIF, CODEL TIERNEY DISCUSS
ISRAELI-PALESTINIAN CONFLICT, GAZA BORDER, EGYPT'S ECONOMY

Classified By: ECPO Mincouns William R. Stewart for reason 1.4 (b).


1. (SBU) Summary: Prime Minister Ahmed Nazif met March 24
with Representatives John Tierney (D-MA),James Moran (D-VA),
Maurice Hinchey (D-NY),Betty McCollum (D-MN),Keith Ellison
(D-MN),Barbara Cubin (R-WY) and then-Ambassador Ricciardone.
PM Nazif praised President Bush's efforts to achieve
Israeli-Palestinian peace, and counseled the U.S. to urge
moderates on both sides to take steps toward peace. The PM
said Egypt had told the Palestinians it does not want a
repeat of the January 2008 Gaza border breach. He called for
renewed negotiations between Israel, the PA and Egypt on
securing the Gaza border. The PM said that Egypt's current
inflation poses challenges to the country's working poor. He
described conditionality on U.S. military aid to Egypt as a
"sensitive issue." End summary.

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Israeli-Palestinian Conflict
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2. (SBU) PM Nazif said that the Israeli-Palestinian conflict
is a core issue in the region, and that the GOE appreciates
President Bush's efforts to achieve peace. He regretted that
the international community did not invest in creating jobs
and infrastructure in Gaza following Israeli disengagement in
2005 as a way to prevent Hamas from taking over Gaza. The PM
said Egypt believes only strong Israeli governments will be
able to make peace with neighboring Arab states.
Representative Tierney said he would like to see a continued
U.S. focus on Middle East peace, in close cooperation with
Egypt.


3. (C) The PM said both Israel and the Palestinians need
urging and encouragement to take positive steps forward to
overcome the influence of extremists on both sides. He said
that Hamas refuses to stop firing rockets, and that Israeli
extremists do not want a solution to the conflict and cite
Hamas rocket fire as a pretext to oppose territorial
concessions. He said that Egypt tells the Israelis "not to
over-react" to Palestinian provocations, and tells the
Palestinians to stop their rocket attacks. The PM commented
that the rocket fire harms Palestinian interests more than
Israeli interests. Representative Ellison noted a recent
poll in the Israeli media stating that 65 percent of the
Israeli public wants a cease-fire and GOI negotiations with
Hamas.

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Gaza Border
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4. (C) Regarding the Palestinian border breakout at the Rafah
crossing in January, the PM said that approximately 700,000
Palestinians entered Egypt, and President Mubarak made the
difficult decision to absorb these Palestinians temporarily.
Although the influx of Palestinians was beneficial for the
Egyptian economy, Egypt eventually needed to send the
Palestinians back into Gaza. The PM said that Egypt has told
the Palestinians that it does not want such a breach to
recur; at the same time, Egypt has made clear to Israel that
it cannot "imprison" the 1.5 million Palestinians in Gaza by
permanently sealing the border.


5. (SBU) The PM described the current situation on the Gaza
border as "sensitive," and expressed disappointment that the
Hamas takeover had dissolved the 2005 Agreement on Movement
and Access between Egypt, Israel, the PA and the EU. He said
that currently only the Egyptians and Israelis monitor their
sides of the border. The PM said there needs to be a
three-way negotiated agreement between Egypt, Israel and the
Palestinians on the border. Egypt "does its best" to prevent
cross-border tunneling and smuggling, and is currently
building a border wall. He noted that the Camp David Accords
limit the number of Egyptian Border Guard Forces deployed on
the border.

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Egyptian Economic Development
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6. (SBU) PM Nazif told Codel Tierney Egypt realized in the
1970's that peace with Israel was a necessary condition for
Egypt's economic development. He said that "so many wars
with Israel" took their toll on Egypt's economy and society.
Representative Tierney noted that economic development in
Northern Ireland helped contribute to the peace there. The
PM said that terrorism inside Egypt during the 1990's damaged
the country's tourist industry. He noted that Egypt has
worked hard and "sometimes alone" on counterterrorism. The

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PM said Egypt learned from this experience that as indigenous
terrorists come from poor areas, the GOE needed to address
the economic and social disparities that breed terrorism.


7. (SBU) The PM said that Egypt's current double-digit
consumer goods inflation rate currently poses significant
challenges as many Egyptians spend a large percentage of
their income on food. He said that Egypt's economy had shown
recent gains through diversification across the main sectors.
The government is trying now to bring economic dividends to
Egyptian working people. He said that as the economy has
become more market-focused and less protectionist, Egypt's
poor have suffered. Representative Tierney noted that
economic gains often do not trickle down to a society's
working poor.

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Conditionality on Military Aid
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8. (SBU) PM Nazif said that conditioning military aid to
Egypt is a "sensitive issue." He noted that the U.S.
increased military aid to Israel without conditionality, but
decreased military aid to Egypt and Jordan. He said that
Egypt needs peace on its eastern border with Israel.
Representative Hinchey praised the Egyptian-Israeli peace
accord as an example for the region.


9. (U) Codel Tierney cleared this message.
SCOBEY