1. (C) Summary/Comment. Member of Knesset (Kadima) and
former Deputy PM, Defense Minister and IDF Chief of General
Staff Lt. General (retired) Shaul Mofaz briefed the
Ambassador November 9 on the peace plan that he announced at
a press conference the previous day. Mofaz' plan provides
for the establishment of a Palestinian state with temporary
borders on sixty percent of the West Bank within a year or
two, followed by intensive final status negotiations. Mofaz
said his plan avoids a drawn out final status negotiating
process by combining the step by step approach with final
status negotiations. He stated that it would change the
regional atmosphere by moving quickly to the creation of a
Palestinian state without initially requiring the removal of
settlements or IDF bases in the West Bank. Regarding Gaza,
Mofaz said it would be part of the Palestinian state as soon
as the "legitimate Palestinian Authority" controls it.
(Note: Mofaz' press conference touched off a controversy due
to his stated willingness to negotiate with Hamas if they
agreed to negotiate on the basis of his plan.) Mofaz said
he has discussed his plan with members of the cabinet and
"about eighty" members of Knesset, although not yet with
Kadima Party head Livni. He said that despite Israeli
popular skepticism about the possibility of negotiating a
stable peace with the Palestinians, there is still broad
support for a two-state solution. His plan, he stated, is
the only initiative that would achieve both. He dismissed a
public statement by Saeb Erekat rejecting his plan, saying
that if the U.S. supported the plan, the PA would come
around. Mofaz will be in Washington next week and is
interested in meeting Administration officials.



2. (C) Comment: Mofaz is challenging Livni for the
leadership of Kadima, and his proposal is an attempt to take
the peace issue away from her. As a reputed hardliner, he
is also challenging Netanyahu with a specific if imperfectly
formed proposal, placing himself on the political seam
between Likud and Kadima. This may lay the groundwork for
eventually pushing Kadima into the governing coalition.
Livni has insisted on remaining outside the coalition because
the Netanyahu government is not serious about peace.
Netanyahu's own attempt to portray himself now as a peace
activist, and the Mofaz initiative, may increase the pressure
on her from disgruntled Kadima MK's who want to get back into
government. End Summary/Comment.

Mofaz' Plan


--------------------------





3. (C) Shaul Mofaz launched his peace plan at a November 8
press conference in Tel Aviv. (We e-mailed a PDF English
version of the plan to NEA, NEA/IPA and NSC November 9.) In
a November 9 meeting with the Ambassador and PolCouns, Mofaz
said that Israel and the Palestinians have been trying to
negotiate a final status agreement for sixteen years without
success. Neither final status negotiations nor step by step
approaches have worked. Stressing the urgency of moving
toward a two-state solution, Mofaz said the biggest threat
facing Israel is not a nuclear Iran but the prospect of
Israel turning into one state for two nations. Negotiations
at this point could drag on for another sixteen years, time
that Israel cannot afford as it faces a worldwide loss of
legitimacy.



4. (C) Mofaz said his idea is to approach the problem in two
phases. In the first phase, a Palestinian state with
temporary borders would be established on sixty percent of
the West Bank. This would include all of Areas A and B
(forty percent of the West Bank), as well as an additional
twenty percent from Area C. Although Mofaz noted that his
published plan does not include any maps in order not to
limit the negotiating freedom of the GOI, he assured the
Ambassador that the temporary borders would be drawn in such
a way that ninety-nine percent of the Palestinian population
of the West Bank would live in the new Palestinian state
without requiring the removal of any settlements or IDF
bases. Phase One could be carried out within one to two
years, and would allow Israelis and Palestinians to rebuild
trust while gaining U.S. and moderate Arab support. At the
end of Phase One, the Palestinians would agree on the end of
conflict and Israel would extend its sovereignty to the large
settlement blocs, which would become Israel's eastern border.
Movement toward a Palestinian state could start within six
to seven months, Mofaz said, and would be coordinated with
international efforts to develop the infrastructure of the
Palestinian state. Mofaz also said he would accept the
presence of international security forces to assist the
Palestinians with security.



5. (C) Phase Two would consist of intensive final status
negotiations, with a provision for U.S. mediation to close

TEL AVIV 00002465 002 OF 002


gaps. Israel would prepare for the evacuation of what the
plan refers to as "isolated settlements" by passing a
compensation law in the Knesset. Mofaz said that while it
was currently impossible politically to evacuate settlements,
under the new atmosphere created by his plan, the GOI could
evacuate the 62,000 settlers outside the blocs without
disturbing the 238,000 settlers inside the blocs. Mofaz
estimated that half the "outside" settlers would evacuate
voluntarily, and that the cost of resettling and compensating
the entire group would be about NIS twelve billion (about
3.24 billion dollars). At the end of the process, Mofaz
said the Palestinians would get "almost all the 1967
territory but not the 1967 borders" due to land swaps. Mofaz
repeated, as he had said at the press conference, that he
would "guarantee" the Palestinians that the final arrangement
would grant them a state with "at least ninety-two percent"
of the West Bank.



6. (C) The Ambassador asked whether Gaza would be part of
the Palestinian state in Phase One. Mofaz said it could not
be since the Palestinians would not agree to include Gaza as
long as it remains under Hamas control. Gaza would be part
of the Palestinian state as soon as the legitimate
Palestinian Authority has control. (Note: In his November 8
press conference, Mofaz generated a controversy due to his
comment that he would negotiate with Hamas if Hamas agreed to
negotiations based on his plan. Israeli media reports
November 10 suggest that Mofaz is conferring with legal
experts about the legality of meeting with senior Hamas
officials, but he did not mention this in his meeting with
the Ambassador other than noting that if Hamas agreed to
negotiate it would no longer be Hamas.)

Israeli Political Support for the Plan


--------------------------





7. (C) Mofaz said his plan is a "balanced" proposal which he
has discussed broadly within the Israeli political system.
He asserted that there is considerable support for it within
the cabinet, including Ehud Barak as well as President Peres
from outside the cabinet, although some key ministers are
opposed to it. The cabinet has reviewed various peace
options, including a permanent status agreement, IDF further
redeployments, and a Palestinian state with provisional
borders, adding that he thinks his plan is the "best way" to
move forward. Mofaz said he has discussed it with "about
eighty" members of Knesset, including many in Likud, although
apparently not with Kadima Party head Tzipi Livni. Mofaz
said that many in Likud understand that Israel needs a peace
plan in order to change the current "bad atmosphere."



8. (C) After the PA holds elections, Mofaz said it will be
up to Netanyahu to decide how to move forward. Negotiations
alone would be a mistake since they would drag on for years
while the region slides toward war. Netanyahu's idea of
economic peace has positive elements, but alone it will not
solve the problem. Mofaz said he watched a November 8
television interview with Saeb Erekat in which Erekat firmly
dismissed the idea of a Palestinian state with temporary
borders, but said he thought he it would be possible to
convince the Palestinian leadership of the benefits of his
plan after the PA holds elections, especially if the U.S.
backs the plan. Mofaz said time is not working in the
interests of either Israel or the moderate Palestinians, but
the problem can be solved with the right leadership. Mofaz
said that with his plan, a Palestinian state could be
established by the end of 2011, adding that his message is
that negotiations alone are not enough. Mofaz noted that he
has been working with a group of Israeli experts and is ready
to share the details of his plans for technical issues such
as water sharing and infrastructure development.

Agree with Obama on the Need to Move


--------------------------





9. (C) In response to the Ambassador's question, Mofaz said
he thought the current Israeli coalition could adopt his
plan. Most of the coalition recognizes that although
Israelis are skeptical about peace with the Palestinians,
they want a solution and are in need of hope for the future.
Mofaz said he agrees with President Obama on the urgency of
the need to move forward, but cautioned that we must find the
right mechanism. The Ambassador commended Mofaz for having
concluded that Israel needs to act. Mofaz agreed that the
time as come for action, since otherwise the situation will
only get worse. Mofaz said he will be in Washington November
18 and expressed interest in meeting Administration officials
during his visit.
CUNNINGHAM