UNCLAS JERUSALEM 002244

SENSITIVE
SIPDIS

STATE FOR NEA/IPA AND EEB, NSC FOR KUMAR, STATE PASS TDA
FOR KRESS/BATANEH, USAID FOR BORODIN

E.O. 12958: N/A
TAGS: ECON ETRD EINV KPAL KWBG IS
SUBJECT: NABLUS AREA BUSINESSES: CONTRAST BETWEEN CONSUMER
SPENDING AND EXPORT-ORIENTED GROWTH

REF: JERUSALEM 1765


1. (SBU) Summary. Private sector contacts report
consumer-fueled economic improvement in Nablus resulting from
movement and access easings, new business from visiting Arab
Israelis, and the continued payment of PA salaries. However,
stone and marble companies operating in the area continue to
struggle with Israeli restrictions in Area C, equipment
seizures, the costly and time consuming back to back process
for exports, and disappearing ties with Israeli middlemen who
used to purchase their stone. End Summary.

Jamma'in Quarries in Area C Shut Down, Equipment Seized
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2. (SBU) EconOffs visited Nablus area businesses on December
9 to discuss economic conditions and business trends in the
wake of movement and access easings over the past year.


3. (SBU) The small town of Jamma'in depends on and is
surrounded by quarries, with some houses perched on the very
edge of 50 foot deep holes, but the town's 80 quarrying
operations are prohibited by the GOI from expanding their
operations to the surrounding 500 dunnums (about 125 acres)
of Area C land. Despite these restrictions, about 20 small
companies had been working quarries in the area since the
mid-1990s, and have recently faced equipment seizures and
fines of up to NIS 24,000 (about USD 6,300) from the IDF.
After the latest seizure of several pieces of quarrying
equipment in November, the quarries that had been operating
in Area C shut down (one-quarter of Jamma'in's overall
production), putting over 150 people out of work.


4. (SBU) Overall, Jamma'in's quarries employ 1500 people
(many from Hebron, Nablus, Ramallah, and the surrounding
villages), and residents estimate that income from the
quarries support up to 30,000 people. The local stone union
estimates that roughly 70% of its stone is sold to Israelis,
who then re-sell it to Israelis and international buyers, and
30% is exported to Jordan. Business is markedly worse this
year than last, according to Jihad Fatallah, head of the

Jamma'in Union of Stone and Marble, both because of the Area
C restrictions and due to increasing difficulties
establishing ties with Israeli middlemen as a result of the
tighter policing of Israelis entering Area A with commercial
vehicles. Like most of our private sector contacts, Fatallah
said that the back to back process at crossings between the
West Bank and Israel (Jamma'in uses Sha'ar Ephraim) adds
considerable cost, breakage, and time to the export process.

A "Pointless" Permit Process
--------------


5. (SBU) The Israeli permit process for Area C quarrying
requires the applicant to submit maps and details about the
proposed quarrying operation to the Coordinator of Government
Affairs in the Territories (COGAT) office in Beit El and pay
a fee of approximately NIS 1000 (USD 265), according to the
Jamma'in Union of Stone and Marble. While COGAT tells
applicants to expect a response on applications in six
months, quarry operators in Jamma'in, like their colleagues
from Bethlehem (reftel), call the effort "pointless" and say
they have never received a response on any application.
Ayman Majabi applied in 1995 for a permit to work his quarry
in Area C, but never received a response. He reapplied this
month, following his equipment seizure, but said he expects
the same result.

Nablus Economy Responds to Arab Israeli Shoppers
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6. (SBU) Separately, Nablus businessman and Anabtawi Group
Chairman Ziad Anabtawi said business is up from 5 to 15% this
year throughout his group of companies, which include a
distributor of imported consumer products, a distributor and
bottler of vegetable oils imported from the U.S., a
supermarket, and a Jerusalem-based logistics company.
Anabtawi said business has also markedly improved within
Nablus - particularly over the November Eid holiday - due to
the increased numbers of Arab Israelis now able to enter the
city, the payment of PA salaries, and the movement and access
easings for local residents. He pointed to the small
surrounding villages that had commercially re-oriented
towards Ramallah as a result of the previous restrictions
around Nablus, and said they are now returning to Nablus for
their business needs.



7. (SBU) Despite these improvements, Anabtawi noted that the
Nablus economy still lags 25% behind where it was in 2000.
In order to capitalize on the security gains and economic
improvement, he emphasized the need to attract the Nabulsis
who had left for Ramallah and abroad during the difficult
years following the Intifada, as well as investment and
businesses. Job opportunities, improvements in the
educational system, and tax and other business incentives
would all help.

RUBINSTEIN