VICE PRIME MINISTER SHALOM ON HIS NEW REGIONAL

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001338

SIPDIS

E.O. 12958: DECL: 06/17/2019
TAGS: EAID PREL KWBG KPAL IS
SUBJECT: VICE PRIME MINISTER SHALOM ON HIS NEW REGIONAL
DEVELOPMENT ROLE

Classified By: Ambassador James B. Cunningham; reasons 1.4 b/d


1. (SBU) Summary: Ambassador met with VPM and Minister for
Regional Development Sylvan Shalom on June 18 to discuss the
latter's coordinating role in the GOI interministerial
committee on West Bank economic development. Shalom outlined
his role, which is limited at this point to trying to
coordinate removal of bureaucratic obstacles to four major
industrial projects on the West Bank: the German project at
Jalameh, the French project in Bethlehem, the Japanese
project near Jericho, and what Shalom hopes will be a joint
Israeli-Palestinian-Korean tourism development on the Jordan
River at Qasr al-Yahud. The Minister said he is also charged
to develop or expand economic relations with Egypt, Turkey,
Jordan, the Gulf States and North Africa; he asked that the
USG lend a hand to the latter effort as appropriate. Noting
that the Minister's portfolio also included development of
the Galilee and the Negev, the Ambassador cited observations
from his recent visits to Haifa, Nazareth and the Negev
indicating significant alienation of Bedouin and
Arab-Israelis. Shalom agreed that this was a problem and
said he intended to use his Ministry's budget to begin
addressing some of these concerns, in collaboration with
Minister for Minority Affairs Braverman. Here, too, said the
Minister, there were ample opportunities for the United
States to play a helpful role. Finally, the Minister noted
his upcoming visit to New York on June 24, and said that if
he could arrange meetings with State, NSC and the World Bank
(Zoellick),he would travel to Washington on the 25th and
26th. End Summary.


2. (SBU) Ambassador called on Vice Prime Minister, Minister
for Regional Development, and Minister for Development of the
Galilee and the Negev Sylvan Shalom on June 18. Shalom
highlighted examples of the strong support Israel had
received from then-Senators Obama and Clinton during his
earlier stint in the GOI. The Ambassador said Israel could
continue to count on strong support from the United States,
though as in all close relationships, there would be plenty
of occasions where we would disagree. Shalom said his
experience with the U.S. Congress had led him to two specific
conclusions: there was strong bilateral support for Israel,
and there was strong bilateral opposition to settlements.


3. (C) The Ambassador asked Shalom to explain his new role as
Minister for Regional Development. Shalom said he had been
given a budget and the right to hire 80 staff, twice as many
as the Ministry had in its earlier iteration under Shimon
Peres. He said that he wanted it to become a real Ministry
with well-defined responsibilities. The Minister said his
current mandate focused on two broad areas: coordinating
removal of bureaucratic obstacles to progress on major
industrial development projects in the West Bank, and
cultivation of more robust economic/commercial relationships
with other countries in the region, ranging from North Africa
to the Gulf. He explained that he was the "motor" for the
interministerial committee on West Bank development chaired
by the Prime Minister. Shalom said his mission was to
identify opportunities and problems, and to take the
decisions of the committee and make sure that they were
implemented, coordinating removal of bureaucratic obstacles
raised by other ministries. He said that work was thus far
(the Committee has met once) limited to supporting progress
on the German industrial zone in Jalameh, the French IZ in
Bethlehem, the Japanese IZ near Jericho, and a joint
Israeli-Palestinian-South Korean tourism development at Qasr
al-Yahud (putative site of Jesus' baptism).


4. (C) The Ambassador interjected that there were many other
policy tools Israel could use to give the Palestinians more
room for economic growth in the West Bank. He cited a more
open labor policy for Palestinian workers in Green Line
Israel, elimination of double taxation of Palestinian firms
doing business both in Israel and the West Bank, improvements
on movement and access in the West Bank, more permits for
business people to travel to Israel, and elimination of
dual-use import restrictions for known businesses. While
some of these things needed to be done carefully, the
Ambassador said, they all would have a direct, positive
impact on West Bank economic growth and on support for the
Palestinian Authority. He pointed to the impact that recent
relaxations of movement and access restrictions were already
having on ability of Palestinians to move cargo and engage in
other productive activities.


5. (C) Shalom said these were all worth exploring and
committed to working with the USG, as he was doing with
Quartet Representative Blair and UN Senior Coordinator Serry.
He pointed out that some of these issues might require U.S.
policy support, adding that, as important as they might be,
economic policy tools could not substitute for real progress
on the peace process as a whole. Shalom said it was urgent

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that negotiations resume, and if the PA doesn't think it is
worth talking to Netanyahu, they would lose nothing by giving
it a try and then, if the effort seemed unfruitful, saying it
had been unfruitful and stepping away from it. Shalom said
if PM Fayyad does not want to talk to Netanyahu, then perhaps
the USG could "encourage him to talk to me; here, there,
publicly, privately, it doesn't matter." The Ambassador
responded that the U.S. is telling the PA that it should not
put up barriers to discussion, and should regard PM
Netanyahu's speech as a list of negotiating goals, not a list
of preconditions to negotiation.


6. (SBU) Turning to Shalom's role as Minister for Galilee and
Negev development, the Ambassador highlighted his recent
visits to Haifa, Nazareth and the Negev. He outlined U.S.
educational support activities in communities in these
peripheral regions, and expressed concern at the evidence of
minority alienation, especially in these outlying areas.
Shalom agreed that this was a problem, and said he had a
number of ongoing and prospective programs aimed at
addressing the issues raised by the Ambassador. He said his
staff would send the Embassy a list of GOI projects so we
could better assess where we could collaborate with his
officials and support the mutual goals of our respective
programs. The Ambassador passed Shalom a message from the
head of Ben Gurion University in Be'er Sheva, noting her keen
interest in meeting with the Minister to discuss Negev
development. Shalom said he had done his undergraduate work
in economics and accounting at Ben Gurion, and looked forward
to meeting her. He added that he would really like to
establish a university of similar caliber in the Galilee,
though he was facing resistance from existing universities.


7. (SBU) In response to the Ambassador's question about how
Shalom's role compared to that of Minister for Minority
Affairs Braverman, Shalom explained that Braverman was the
GOI's "Ambassador" to the Arab community, focused on
Arab-Israeli issues writ large, but that he had no budget.
He said he would be meeting with Braverman on June 21 to
coordinate work and develop project ideas that could be
supported from his Ministry's funds. He conceded that there
were some turf issues that would have to be managed. The
Ambassador asked if Shalom considered himself responsible for
the issue of unrecognized Bedouin villages and implementing
the Goldberg Report (calling for the GOI to address Bedouin
concerns). Shalom replied that Braverman had the lead on the
subject, although he would be involved as well given his
responsiblities for the Negev.


8. (SBU) The Minister said he would be traveling to New York
to give a speech on June 24, and hoped to visit Washington
later that week to meet with State, NSC and World Bank
officials. (Note: Embassy and NEA/IPA have already been in
contact to set up appropriate meetings. End Note).

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CUNNINGHAM