INCENTIVES TO WEST BANK SETTLEMENTS MAY PERSIST

UNCLAS SECTION 01 OF 02 TEL AVIV 001462

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE. NSC FOR SHAPIRO/KUMAR. JOINT STAFF
FOR LTGEN SELVA

E.O. 12958: N/A
TAGS: PREL PGOV KWBG IS
SUBJECT: INCENTIVES TO WEST BANK SETTLEMENTS MAY PERSIST


1. (U) On 5 July, the Knesset Finance Committee broadened the
criteria by which the government will grant National Priority
Area (NPA) status, which could allow the continuation and a
potential increase of incentive benefits for West Bank
settlers. The NPA bill gives the GOI the legal authority to
determine NPA zones based on the following criteria: security
and socio-economic conditions, the GOI's periphery index,
strategic location of communities, and other special
circumstances. The Knesset committee also erased language
stipulating that benefits of NPA status would apply to
eligible communities "in the state" so as to prevent
challenges from groups arguing that settlements in the
Occupied Territories are not within the State of Israel.
(Note: The NPA bill is part of the Israel's Arrangements
(budget) Bill and is expected to be passed as early as next
week. Embassy's in-depth assessment of the types of
incentives provided to West Bank settlers can be viewed on
the Embassy's classified website at
http://www.state.sgov.gov/p/nea/telaviv/ under the link
"Reporting Attachments." End note.)


2. (U) The new draft of the NPA bill, if approved, will
cancel the 24 August 2008 decision by the Olmert
Government(Cabinet Resolution 3960),which stated that a
community's distance from Tel Aviv (the "Periphery Index")
would primarily determine its eligibility for NPA status. If
applied strictly by the periphery index criteria, NPA status
could only be granted to the Galilee, the Negev, and remote
settlement communities in the Jordan Valley and the Southern
Hebron Hills. (Note: Olmert's approach still left broad
discretion for individual ministers to unilaterally extend
NPA status in "special circumstances." End note.) Hagit Ofran
from Peace Now told Econoff on 6 July that the Committee's
discussions left little doubt that the goal of the NPA draft
changes was to allow greater inclusion of settlement
communities. According to Ofran, some settler leaders
(non-Knesset members),including Ariel Mayor Ron Nachman,
participated in the Finance Committee's discussions. Ofran
further added that discussions emphasized the importance of
the security criterion, which will likely benefit settlers
who live under tighter security constraints than most
Israelis.


3. (SBU) Comment: Once the Arrangements Bill has passed, the
Prime Minister's Office will have to make a list of the
communities that will be eligible for the National Priority
Area subsidies. Embassy has already registered our concern
with PMO staff over this blatant opening of the NPA to the
settlements, though the redraft may have little actual
impact, as the previous bill already granted significant
discretion for individual ministers to provide incentive
benefits to settlement communities. Nonetheless, we will be
meeting with senior PMO officials and staff of potentially
subsidizing ministries (e.g., Housing and Construction, and
National Infrastructure) over the next few weeks to get a
sense of what the Finance Committee's actions could mean on
the ground.































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