VZCZCXRO6674
PP RUEHROV
DE RUEHTV #0359/01 0491235
ZNY CCCCC ZZH
P 181235Z FEB 10
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC PRIORITY 5494
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

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 
  
 TEL AVIV 00000359  002 OF 002 
  
  
 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