NABLUS AREA BUSINESSES: CONTRAST BETWEEN CONSUMER

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 -------------- -------------- ¶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 -------------- --- ¶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