D/Sec Lew Discusses Assistance Cooperation with MFA and

UNCLAS TEL AVIV 000434

SENSITIVE
SIPDIS

STATE FOR D, F, and NEA/IPA

E.O. 12958: N/A
TAGS: EAID EINV PREL OECD UNESCO IS PA
SUBJECT: D/Sec Lew Discusses Assistance Cooperation with MFA and
MASHAV


1. (SBU) Summary: Deputy Secretary Jacob J. Lew met February 21 with
Deputy Foreign Minister Danny Ayalon, and separately with MFA
Director General Yossi Gal and MASHAV (Israel's foreign aid agency)
head Haim Divon to discuss bilateral cooperation in development
assistance and Israel's OECD accession, among other issues. In both
meetings, it was agreed that the U.S. and Israel would explore the
possibility of coordinating our development assistance efforts where
feasible. DFM Ayalon also asked for USG assistance in placing an
Israeli candidate as Assistant Director General for International
Cooperation at UNESCO.
MASHAV-USAID Cooperation
--------------

2. (SBU) On February 21, D/Sec Lew met with GOI Deputy Foreign
Minister Danny Ayalon, MFA Director General Yossi Gal and MASHAV
(Israel's Foreign Aid agency in acronym) head Haim Divon to discuss
shared interests in development assistance, Israel's OECD membership
accession, and Palestinian WTO observership. Ayalon was
accompanied by Deputy DG for North American Affairs Barukh Bina; Gal
was joined by Irit Ben-Abba, Deputy DG of Economic Affairs and
Gershon Kedar from the North American Department. D/Sec Lew was
accompanied by DCM, Deputy Special Envoy for Middle East Peace Mara
Rudman, and Piper Campbell and Jennifer Butte-Dahl of his staff.

3. (SBU) Divon had just returned from Haiti, and described the
situation there as dire in humanitarian and infrastructure terms.
He praised the USG presence and role in Haiti, noting it was an
essential component that lent some sense of order and security.
Without the important U.S. military role the situation would be far
worse. Israel's own efforts in Haiti in the short term remained
post-trauma medical care and assistance with water and sanitation to
avoid post-catastrophe diseases like cholera. Long term, Israel
expects to work with capacity building in Haiti's public health
infrastructure, and agricultural sector, including low pressure
irrigation systems and other water technologies - areas in which
Israel specializes.

4. (SBU) Haiti was the first of four areas in which Divon proposed
the U.S. and Israel work in partnership. He also noted Indonesia,
India and Sub-Saharan Africa. In Indonesia, Israel trains
practitioners in emergency preparedness, emergency medical services,
and focuses particularly on Banda Aceh province, which was heavily
affected by the 2005 tsunami. Gal noted the quiet, helpful
assistance of the U.S. in working to strengthen ties between
Indonesia and Israel. Divon went on to discuss MASHAV's work in
India, which presents a desperate need for agricultural outreach and
new technologies. MASHAV can offer expertise in tropical fruit
crops (mangos, pomegranates, olives, citrus) and water management
tools (irrigation and wastewater treatment). Because 45% of India's
people still work in the agricultural sector, this is a priority for
the Indian government; desperation among farmers has led to a rash
of suicides. Sub-Saharan Africa also presents the need for a
MASHAV Techno-Agriculture Innovation for Poverty Alleviation (TIPA)
program. Divon noted that USAID and MASHAV already work jointly on
agricultural programs in Ethiopia and Kenya.

5. (SBU) Dep FM Ayalon raised a recently signed MOU between Israel
and Germany laying out specified areas of expertise and noted that a
similar framework between the U.S. and Israel would be helpful D/Sec
Lew took note of the potential for USAID and MASHAV cooperation and
noted Secretary Clinton's personal interest in the idea of
trilateral cooperation. Lew agreed with both Ayalon and Gal (in
separate meeting) that the U.S and Israel share common strategic
interests and that opportunities for coordination should discussed
further at the technical level. Lew pledged to discuss with USAID
Administrator Shah upon his return to Washington. Divon also
brought up the idea of an annual USAID-MASHAV dialogue, which can be
further discussed at the technical level.

6. (SBU) Divon announced that Israel would host the 27th
International Women Leaders Conference in 2011. Although the date
had not yet been fixed, International Women's Day (March 8th) is one
option, and the GOI would like to invite the Secretary to be the
keynote speaker. Lew said he would convey this invitation to the
Secretary. Ayalon asked that if the Secretary were unable to accept
the invitation, the USG would consider sending another appropriate
female leader in her stead.
Towards OECD Accession
--------------

7. (SBU) Gal introduced the OECD accession topic noting that the end
of the process was near. Irit Ben Abba detailed the timeline from
now until May 29, when ideally the OECD Council will announce the
acceptance of the three applicant countries as members. Due to the
recently reached U.S.-Israel IPR agreement, the OECD Trade Committee
can favor Israeli accession - although the EU now seeks a roadmap
toward a comparable bilateral IPR agreement of its own. Ben-Abba
was confident of Trade Committee approval, however, and also of
approval from the Anti-bribery Committee at its March 16 meeting.
The Statistics Committee remained a concern; the GoI had just
submitted new language for the footnote concerning Israeli
statistics, which include data from outside of green-line Israel.
The issue is subject to politicization, which could spread to the
three sessions of the OECD Membership Council scheduled before the

end of May. There is also a question whether the PA will take some
action to deter approval. While the GoI expects political
statements, it may want some help from the U.S. to contain them.

8. (SBU) Lew observed that until now the accession process had not
been politicized, and he hoped it would not become so. He assured
the Israelis that the U.S. was following the issues carefully.
Addressing Palestinian Issues
--------------

9. (SBU) DFM Ayalon said that Israel would like to intensify its
cooperation with the U.S. on Palestinian economic development. He
noted that Israel would like to strengthen Israeli-Palestinian
business to business contacts and work to further integrate the
Palestinian and Israeli economies through the introduction of a
private sector model where Israeli businessmen and experts could
talk directly to their Palestinian counterparts. This made sense
since eventually Israel would be the largest market for Palestinian
goods and services.

10. (SBU) D/Sec Lew noted that Palestinians needed an easier flow
of goods and greater predictability, since they did not know on a
daily basis what Israeli-imposed restrictions would allow them to
do. Stressing that "uncertainty is a barrier to business
investment," Lew noted that the biggest need was for economic
development that created jobs. Improved security conditions were
the prerequisite for economic development. Ayalon said that Israel
had expected Saudi Arabia to make a significant financial investment
- perhaps $10 billion - to help the Palestinians develop an
industrial base in the West Bank but was disappointed that instead
the Saudis mostly supported Palestinian expenditures. Ayalon then
claimed that Palestinians receive per capita double what Europeans
received under the Marshall Plan, in adjusted dollars.

11. (SBU) Lew noted the challenges inherent in working in Gaza,
highlighting the recent Israeli changes in visa rules. Ayalon
claimed that Israel's policy of limiting Gaza access and isolating
Hamas had been vindicated, since polling showed that if a democratic
election were held in Gaza today, Hamas would receive only 18
percent of the vote. Ayalon said that there was no lack of food or
medicine in Gaza, and that Israel was trying to loosen restrictions
on the entry of construction material. Israel had two special
concerns about the entrance of goods into Gaza: first, that there
needed to be an effective monitoring mechanism, and secondly, that
Hamas didn't get credit for items that get in. In response to a
question from the D/Sec about Hamas's income from the tunnels,
Ayalon said that Hamas was flush with shekels and had tried to use
Israeli banks to convert them to dollars in order to do business
with Iran; Israel "had not allowed" the currency conversion.

12. (SBU) Gal and Ben-Abba expressed frustration at the lack of
direct MFA-PA contact. There has been no meeting of the Joint
Economic Committee (JEC) since September 2009 to discuss issues of
concern, although this was one of the Oslo Accord's best legacies.
Instead, Gal said, the PA brings up issues with Mitchell or the
Quartet. Deputy SEMEP Rudman noted the difficulties former PA
Minister of National Economy Bassem Khoury faced as a result of the
last JEC meeting, and suggested that the PA appeared open to
re-establishing the dialogue provided that assurances were
forthcoming from the GoI that politicization of the meetings would
not reoccur. Gal and Ben Abba surmised this would be possible.

13. (SBU) Ben-Abba criticized the PA boycott of Israeli products,
noting this was not behavior that merited giving the PA WTO observer
status. Gal said that Fayyad claims it is a boycott only against
West Bank Jewish settlement exported goods, not a full boycott. Lew
asked about the ability to distinguish between them, and Gal agreed
it was problematic. Nonetheless, Gal said a formal policy of
boycotting imports is incompatible with WTO member responsibilities.
D/Sec observed that exposure to WTO disciplines would be valuable
for the PA and assist in facilitating positive resolution of these
types of issues. He suggested that issues such as the boycott and
bureaucratic constraints to economic progress would best be
addressed at the working level through the JEC.

14. (SBU) Before closing the meeting, Gal said the PA needs to share
its long-term vision for its economy and how it intends to attract
more investment and R & D. The AHLC is the venue for discussions to
pursue this, and he hoped for improved contact in the future. Lew
noted that he was indeed struck by the depth of the PA's strategic
vision and their often-expressed desire to gradually reduce their
need for outside assistance.

Funding for Bi-National Foundations
--------------

15. (SBU) D/Sec Lew raised this issue in order to head off any
potential misunderstanding with Israel. Israel had put $55 million
aside to increase the endowments of the three binational
foundations, including the Binational Industrial Research and
Development Foundation (BIRD) and had requested that the U.S. do the
same. Lew noted that budget constraints would make that very
difficult for us at this time, since we had just submitted our 2011
budget to Congress (which did not include additional funding for
this initiative) and the fiscal environment was also extremely
tight. He added that the U.S. was proud of the work of the

foundations and committed to seeking creative collaboration on
technology issues, perhaps by facilitating private sector
involvement or through other means. Ayalon responded that Israel
understood that the money was not available now and would relay that
information to his GoI colleagues, but added that he would
appreciate further discussion of possible U.S.-Israeli cooperation
in this area.

Israeli candidate for UNESCO ADG
--------------

16. (SBU) Ayalon said that Israel was working hard to overcome its
diplomatic isolation. He flagged Israel's having recently joined
JUSCANZ in Geneva and its hope to join JUSCANZ and WEAG in New York
so that it could present candidates for UN positions. Israel wanted
to submit a candidate to be Assistant Delegate General for
International Cooperation and Communication at UNESCO, and asked for
U.S. intervention with new UNESCO Director General Bokova, who "owes
you guys her life."
CUNNINGHAM