COGAT DANGOT ON PEACE PROCESS, WEST BANK AND GAZA

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 000359

NOFORN
SIPDIS

NSC FOR SHAPIRO/KUMAR, SEMEP FOR RUDMAN/HARDEN, TREASURY
FOR A/S BAUKOL

E.O. 12958: DECL: 02/17/2020
TAGS: EAID, PTER, KPAL, KWBG, IS
SUBJECT: COGAT DANGOT ON PEACE PROCESS, WEST BANK AND GAZA

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

1. (C/NF) Ambassador had a wide-ranging discussion with Gen.
Eitan Dangot, Coordinator of Government Activity in the
Territories (COGAT) on February 16 in which he urged movement
on various aspects of West Bank and Gaza issues. Dangot said
he expected the GOI to authorize on February 18 transfer of
as much as 300 million surplus shekels from the Gaza banks
back into Israel. If approved, actual transfer should take
place within a matter of days. He was more negative on
transfers of dollars, noting that the GOI was allowing in $30
million a month for UNWRA operations and salaries. However,
the GOI would be reluctant to do anything that would make it
easier for Hamas to pay its salaries in hard currency or to
support the tunnel economy. The Ambassador argued that the
transfers were important to preserve the PA-regulated banking
system, and noted that we understood the security services
had prepared an options paper for the Prime Minister's Office
which we looked forward to discussing. Dangot reiterated the
GOI view that the economic embargo was putting pressure on
the Hamas leadership in Gaza, as were Egyptian travel
restrictions on Hamas leaders. Dangot said the GOI had not
given up on negotiating the release of Gilad Shalit, even
though the Damascus-based Hamas leadership had forced the
Gazan leaderhip to be less pragmatic for the moment. Noting
that the GOI had recently expanded the categories and amount
of goods going into Gaza, Dangot added that he was looking at
what more could be done within the current policy
constraints, particularly with one-off, containable
infrastructure projects. He said that he would be meeting
again with UNSCO Robert Serry the week of February 22 to get
a few of the UN projects moving forward, adding that he also
expected to be doing more with USAID in this area. The
Ambassador noted we were still interested in pursuing the UN
reconstruction projects, and that we had worked with the UN
to create end-use assurances that should be satisfactory for
Israel. He also pointed to the commitment that Serry had
made to ensure that the PA got maximum credit for UN-funded
projects in Gaza. Dangot agreed that the PA role was
important, and said he was coordinating carefully with the PA
on Gaza. The Ambassador expressed interest in setting up a
bilateral policy dialogue on Gaza that would look at not only
short-term humanitarian issues, but could also assess how
best to achieve shared objectives in Gaza. Dangot thought
this would be worthwhile and committed to participating in
such a dialogue.

2. (C/NF) Dangot said he had met with PA Prime Minister
Fayyad earlier in the week. He said Fayyad had raised with
him a plan to ask the Egyptians to allow PA customs and
security officials to operate on the Egyptian side of the
Rafah crossing into Gaza, which Dangot told Fayyad would be a
mistake. The Ambassador noted that the Egyptians also might
not find the proposal in their interest. Dangot
characterized Fayyad as gaining in political confidence and
grass roots popularity, though he warned that current
anti-Israel rhetoric in the PA was creating an atmosphere for
renewed violence, noting the recent killings of a rabbi and
an IDF soldier. Dangot also raised concern that PA Minister
of Justice Ali Khashan was once again engaging the
International Criminal Court in an effort to delegitimize
Israel, noting that this would certainly prompt a GOI
reaction (others have raised this with us recently, warning
the PA re-engagement with the ICC will be seen very
negatively). Dangot added that he hoped movement toward
negotiations would begin before the March 27-28 Arab League
summit in Libya. Dangot said that Libya had agreed not to
allow Hamas to take part in the Summit, under pressure from
Egyptian President Mubarak, but worried that this could
change between now and the end of March.

3. (C/NF) On West Bank issues, Dangot said the security
situation remained good and cooperation with the PASF was
better than it had ever been. However, the uptick in hostile
political rhetoric and staging of "spontaneous"
demonstrations -- often, in his view, in areas where there
were no particular problems between the Israelis and the
local population, but which were close enough to Ramallah to
be convenient for PA leadership to participate were of
growing concern. At minimum, these activities made it more
difficult for the IDF to cut back on Area A incursions and to
further reduce movement and access impediments, said Dangot,
and at worst, blurred the distinction between Fatah and Hamas
or other terror groups contending for the West Bank "prize."
Dangot also complained that burning Israeli settlement goods
in a public bonfire in Salfit and the expansion of the trade
boycott to include products from Green Line Israel sent wrong

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signals to both the Palestinian and Israeli populations.

4. (C/NF) Dangot said Fayyad's focus on short-term projects
that yield rapid results was having an impact on the West
Bank economy, citing his willingness to pull the plug on an
ineffective Palestinian effort to invest in the Jenin area
and turn the project over to a Turkish investor with a good
track record. He said the Rawabi project would be another
big shot in the arm for the West Bank. He noted that the
Prime Minister's Office had not yet agreed to redesignate
land from Area C to Area B for the 2.4 kilometer main access
road, but added that COGAT was looking to be helpful in any
other way that it could. On Wataniya, Dangot said that the
GOI intended to withhold the remaining 1.0 MHz of bandwidth
in an effort to force the PA to begin regulating illicit
radio stations. He said 78 radio stations had sprung up in
the West Bank over the past couple of years, many of which
were operating in frequencies that interfered with Israeli
military or civilian aviation signals. Dangot said the GOI
would soon extend operating hours at the Shar Ephraim
crossing, as they had done at the Tarqumiyah crossing, which
should allow more Palestinian goods to be moved at lower
cost. He said the IDF continues to move or remove roadblocks
and to encourage investment.

5. (C/NF) In response to the Ambassador's question, Dangot
said COGAT would do all it could to make the May 2010
Bethlehem Investment Conference a success. The Ambassador
raised NGO and foreign investor visas problems, noting this
was a serious problem for the US and was undercutting the
capacity building effort. Dangot said "We are hurting
ourselves with these policies." He said he had had some
difficulty in getting the Ministry of Interior to discuss the
problems with him, but had finally set up a meeting with
Minister Yishai during the first week of March. The
Ambassador informed Dangot that we were also pushing the MOI,
and that the USG had some thoughts on how to deal with the
various visa and access problems. Dangot asked that Emboffs
brief his staff before the March meeting with MOI (NOTE:
Embassy will give COGAT a copy of the non-paper and
recommendations; we have also passed a copy to Eran Lerman in
the Prime Minister's Office. END NOTE.) The Ambassador
suggested that USAID/SEMEP/Emboffs also brief Dangot on the
work USAID had done on prospects for a "known-trader" secure
supply chain program, which could also give a boost to West
Bank agriculture and industry. Dangot said it sounded
interesting and he would welcome the briefing. The
Ambassador pointed out that Israeli restrictions on dual use
items are another serious impediment. Dangot confirmed that
dual-use imports continue to be a problem for both Israeli
security and Palestinian industry, and applauded Embassy
efforts to work directly with the various security services
who make recommendations on dual-use items.

6. (C/NF) Comment: Dangot is clearly a different sort of
COGAT than we have dealt with in recent years. He has claimed
(and the MOD PolMil Bureau has now grudgingly confirmed) that
he will play a lead role in policy issues related to
Israel-Palestinian relations. The concerns he raised about
PA incitement are becoming a common theme from GOI officials
and Israeli analysts of Palestinian politics alike.

Cunningham