PA COMPLAINS ABOUT ISRAELI RAIDS ON WEST BANK

C O N F I D E N T I A L JERUSALEM 000275 SIPDIS SIPDIS NEA FOR FRONT OFFICE; NEA/IPA FOR GOLDBERGER/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/PASCUAL; TREASURY FOR SZUBIN/GRANT/HARRIS/NUGENT/HIRSON E.O. 12958: DECL: 02/13/18 TAGS: ECON EFIN KFTN KWBG IS SUBJECT: PA COMPLAINS ABOUT ISRAELI RAIDS ON WEST BANK MONEY CHANGERS REF: A. 07 JERUSALEM 1820 ¶B. 07 JERUSALEM 2583 ¶C. 07 JERUSALEM 2240 ¶D. 07 JERUSALEM 2546 Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d). ¶1. (SBU) In the early hours of February 12, Israeli security forces raided the offices and homes of fourteen money changers in the West Bank cities of Ramallah, Nablus, Jenin, Tulkarm, and Hebron, and seized NIS 3 million in cash (equal to USD 830,000),along with computer equipment, documents, and several pistols, according to local media reports. At least 15 Palestinians were arrested, but most were released within hours. During the raids, currency exchange shop owners reportedly received notices issued by IDF headquarters ordering that their businesses remain closed for 6-12 months. ¶2. (SBU) The IDF carried out similar raids in September ¶2006. Local press, in covering the February 12 raids, claimed that the Israeli actions occurred despite Palestinian Authority (PA) efforts to tighten anti-money laundering regulations in the past year and boost foreign confidence in banks operating in the West Bank and Gaza. ¶3. (C) Palestine Monetary Authority (PMA) Governor Jihad al-Wazir argued vehemently to Econoff that the Israeli raids were ill timed and counterproductive. He noted PA successes in recent months in closing noncompliant NGOs, restructuring or closing Zakat committees, and enacting anti-money laundering legislation (reftels) intended to make it harder for groups such as Hamas to obtain funds. He reiterated that, in response to USG, Israeli, and PMA concerns about the Palestine Islamic Bank (PIB),he personally had dismissed the bank's board, fired its general manager, and temporarily taken direct control of the bank (ref. D). He added that the PMA completed a licensing program for money changers last year, and, with USG assistance, is currently instituting reporting and monitoring requirements. The Israeli security forces, al-Wazir continued, nevertheless "continue to act unilaterally" against banking and financial institutions in the West Bank. ¶4. (C) Al-Wazir was particularly upset that the raids took place while Prime Minister Fayyad was in Washington, describing the actions as a provocation that would undermine Fayyad's credibility. (Note: Al-Wazir himself had just returned from Washington, where he met with Treasury and State Department officials. End Note.) Al-Wazir also complained that the IDF has no authority to order the targeted businesses to close, and, in the absence of evidence of wrongdoing, they could immediately reopen. Al-Wazir asserted that the Israeli raids and the IDF's assertion of authority over Zone A entities demonstrate that Annapolis has failed to change Israel's approach in the West Bank. WALLES