February 2009

09CAIRO231 2009-02-09 16:04 2010-11-28 18:06 SECRET//NOFORN Embassy Cairo

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NOFORN
SIPDIS

FOR THE SECRETARY FROM THE AMBASSADOR

E.O. 12958: DECL: 02/09/2019
TAGS: PREL KPAL EG IS QA IR SY
SUBJECT: SCENESETTER FOR REQUESTED EGYPTIAN FM ABOUL GHEIT
MEETING WITH THE SECRETARY

Classified By: Ambassador Margaret Scobey
for reasons 1.4 (b) and (d).

——-
Summary
——-

¶1. (S/NF) Madame Secretary, Foreign Minister Aboul Gheit has
been looking forward to meeting you since your nomination was
first announced. The Egyptian leadership, including
President Mubarak, are encouraged by the Administration’s
immediate attention to the Middle East and your and the
President’s early outreach to them. Overall, the Egyptians
believe they did not receive fair treatment from the previous
Administration and hope to see improvements. Aboul Gheit
likely will explain Egypt’s “soft power”–its ability to
influence regional events without benefit of deep pockets.
He likely will focus more on the strategic challenges of the
region–the peace process and Iran–but may also address some
pending bilateral matters. He may ask for your support for
Egypt to be part of an expanded G8 or G20 and press the
candidacy of Egyptian Culture Minister Farouq Hosny for
Director General of UNESCO. He may not raise human rights
(specifically Ayman Nour), political reform, or
democratization; but you should. Aboul Gheit will want to
discuss Gaza, including smuggling and counter-tunneling;
Iran; and the Israeli-Palestinian peace process. On Iraq and
counter-terrorism, we and the Egyptians see largely
eye-to-eye; intelligence cooperation is close and effective;
and our military-to-military relationship is durable but
stuck in a force-on-force mindset.

¶2. (S/NF) Summary continued: Aboul Gheit is smart, urbane,
with a tendency to lecture and to avoid discussing Egyptian
failings with all-purpose recourse to Egyptian sovereign
pride. However, because this is his first meeting with you
and it is in Washington, he may be more inclined to listen.
You should thank him for Egypt’s continuing regional
leadership, in particular regarding their efforts to bring
about a ceasefire in Gaza, and press him for Egypt to
continue to use their influence and good offices to achieve a
permanent solution to intra-Palestinian infighting and
conflict. You should also stress the need for Egypt to more
effectively insure that Hamas cannot rearm via smuggling
across — or tunneling under — the border with Gaza. Aboul
Gheit will press for your attendance at the March 2 Gaza
Donors Conference in Cairo, and may complain about unhelpful
Qatari and Syrian behavior. He will also want to explore US
intentions towards Iran; President Mubarak told Senator
Mitchell during his recent visit here that he did not oppose
our talking with the Iranians, as long as “you don’t believe
a word they say.” End summary.

————————
Respect and Appreciation
————————

¶3. (S/NF) In terms of regional affairs, Special Middle East
Envoy Senator George Mitchell struck the right chord during
his recent visit to Cairo when he told President Mubarak that
he was here to “listen and hear your advice.” The Egyptians
have long felt that, at best, we take them for granted; and
at worst, we deliberately ignore their advice while trying to
force our point of view on them. You may wish to thank Aboul
Gheit for the vital role Egypt played in bringing about a
ceasefire in Gaza, and its efforts at making it last. You
should ask him what the current state of play is between
Hamas and Fatah and have him describe Egypt’s vision of the
future for the Palestinians, both among their factions, and
vis a vis Israel. Note: Although the Egyptians will react
well to overtures of respect and appreciation, Egypt is very
often a stubborn and recalcitrant ally. In addition, Egypt’s
self-perception as the “indispensable Arab state” is
contingent on Egyptian effectiveness on regional issues,
including Sudan, Lebanon, and Iraq.

—————————————–
Egypt and the Israel-Palestinian Conflict
—————————————–

¶4. (S/NF) Although Aboul Gheit was never enthusiastic about
the Annapolis Peace process, resolution of the
Israeli-Palestinian conflict remains the primary strategic
political goal for the Egyptians. They are proud of their
role as intermediary, well aware that they are perhaps the
only player that can talk with us, the Israelis, and all
Palestinian factions. Mubarak hates Hamas, and considers
them the same as Egypt’s own Muslim Brotherhood, which he
sees as his own most dangerous political threat. Since the

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June 2007 Hamas takeover of Gaza, the Egyptians, under the
leadership of intelligence chief Omar Soliman (the de facto
national security advisor with direct responsibility for the
Israeli-Palestinian account) have shifted their focus to
intra-Palestinian reconciliation and establishment of the
Hamas-Israel ceasefire. Soliman brokered a half-year-long
truce last year, which Hamas broke in December, leading to
the Israeli invasion of Gaza. He has recently re-started
those efforts, with the goal of getting Hamas to agree to a
year-long ceasefire, which should give the Egyptians space to
bring about their political goal of Palestinian
reconciliation under a technocratic, non-partisan government
headed by President Mahmoud Abbas.

—————-
Gaza and Tunnels
—————-

¶5. (S/NF) Smuggling through the Sinai Peninsula and into Gaza
is an old and complicated problem for Egypt. Egypt views a
well-armed and powerful Hamas as a national security threat,
a point driven home in dramatic fashion by the January 2008
border breach when Hamas bulldozed the old border fence and
more than half a million Palestinians poured into Egypt,
unchecked and hungry. Since the closure of the Egypt-Gaza
border following the June 2007 Gaza takeover by Hamas, most
smuggling of consumer goods and weapons has gone underground.
The narrow corridor between Egypt and Gaza is as
honey-combed with subterranean passageways as a gigantic ant
colony.

¶6. (S/NF) Although it is not directly in Aboul Gheit’s
bailiwick, belonging more to the security and intelligence
forces, nonetheless the issue of tunnels and rearming Hamas
is the subject of intense scrutiny (by Israel and the
Congress), and sensitivity (by the Egyptians). Long
criticized by Israel for “not doing enough” to halt arms
smuggling via tunnels, the Egyptians have stopped complaining
and started acting. Egypt has increased efforts to counter
arms smuggling by accelerating its $23 million FMF-funded
tunnel detection program along the Egypt-Gaza border and
requesting U.S. support to purchase four backscatter X-Ray
machines to scan vehicles entering the Sinai for weapons and
explosives (note Aboul Ghait may not be of this
EGIS-originated request). Egypt also continues to cooperate
with Israel, especially via intelligence sharing, to prevent
militants from Hamas and other extremist organizations from
crossing the Gaza border, and on thwarting militant activity
in Egypt. Egyptian efforts are all justified under President
Mubarak’s pledge that Egypt with “protect its borders.”

¶7. (S/NF) Egypt will not take any action that could be
perceived as collaboration in Israel’s siege of Gaza, and
they have been hyper-sensitive to any suggestion that
foreigners are assisting them or overseeing their efforts to
counter smuggling. Aboul Gheit publicly distanced Egypt from
our January MOU with Israel to combat arms smuggling into
Gaza, although he knew about it in advance and consulted with
Secretary Rice and me about its contents. The Egyptians do
not want to be stuck holding the Gaza bag, and must be able
to point the finger of blame at Israel for the plight of the
Palestinians. At the same time, Egypt has withstood scathing
and widespread criticism in the Arab world for refusing to
open the Rafah border crossing to supply Gaza. Even during
the height of the December fighting, the Egyptians only sent
medicine and medical supplies through the Rafah border; all
other humanitarian goods went through the Israeli crossing at
Kerem Shalom. They likewise insist that Rafah will only
reopen to handle Gazan travellers when the Gazan side is
under PA control with EU observers according to the 2005 AMA.

¶8. (S/NF) Ultimately, Egypt believes that the only realistic
and viable solution to erode Hamas’ power and stop arms
smuggling is the return of the Palestinian Authority to Gaza
and the opening of Gaza’s border to legitimate trade. While
in the short term we can best assist the Egyptians with
technical know-how and training, long term counter smuggling
success will depend on reducing the financial incentives to
smuggling by providing the Sinai Bedouin with legitimate
economic opportunities and by regularly opening the Gaza
borders to trade, thereby reducing economic incentives to
smuggle.

———————————-
The March 2 Gaza Donors Conference
———————————-

¶9. (S/NF) President Mubarak told Senator Mitchell that he

CAIRO 00000231 003 OF 004

wanted to personally invite you to the March 2 Gaza Donors
Conference in Cairo. Aboul Gheit will press hard for you to
accept this invitation. He is keen to keep up the momentum
on Gaza reconstruction and for Egypt to be seen as taking the
lead in helping the Palestinians. It is very important to
him that this conference be at the ministerial level, and he
will be disappointed if you are unable to accept.

————-
Iraq and Iran
————-

¶10. (S/NF) President Mubarak enjoys recounting for visiting
members of Congress how he warned former President Bush
against invading Iraq, ending with, “I told you so!” and a
wag of his finger. In addition, there are Egyptian
misgivings about Nuri Al-Maliki and Shia majority rule in
Iraq. Egypt therefore will need additional prodding to
continue to take steps to help rehabilitate Iraq into the
greater Arab world. You should ask Aboul Gheit when he plans
to fully open the Egyptian embassy in Baghdad and exchange
accredited ambassadors with Iraq (the first Egyptian
ambassador to post-Saddam Iraq was assassinated). As for
Iran, Mubarak has a visceral hatred for the Islamic Republic,
referring repeatedly to Iranians as “liars,” and denouncing
them for seeking to destabilize Egypt and the region. He
sees the Syrians and Qataris as sycophants to Tehran and
liars themselves. There is no doubt that Egypt sees Iran and
its greatest long-term threat, both as it develops a nuclear
capability and as it seeks to export its “Shia revolution.”
Nonetheless, Mubarak told Mitchell pointedly that he did not
oppose the U.S. speaking to the Iranians, as long as we did
not “believe a single word they say.” Aboul Gheit will be
keen to hear your description of U.S. intentions towards
Iran. In his conversation with Senator Mitchell, Aboul Gheit
carefully noting he was speaking personally, expressed more
interest into bringing the Syrians into negotiations again;
President Mubarak was not enthusiastic about dealing with the
Syrians at this time.

————————
U.S. Assistance to Egypt
————————

¶11. (S/NF) The greatest Egyptian outrage a year ago —
Congressional conditioning of $100 million of U.S. assistance
to Egypt — may now be moot, according to our latest
understanding of the state of play with the FY2009
appropriations language. Beyond the issue of conditioning,
the Egyptians resent the U.S. unilateral decision to cut ESF
in half, from $415 million in FY-08 to $200 million in FY-09,
a level which the Egyptians find embarrassing, not because
they need the money (they say), but because it shows our
diminished view of the value of our relationship. In my
view, it is important to the U.S. to continue an ESF program
aimed at health, education, and poverty eradication to
demonstrate concern for the Egyptian people as opposed to a
strictly military assistance program. Egypt has also been
unhappy with the use of these funds to support democracy in
Egypt. It would be useful if you could urge that Egypt
accept the FY 2009 levels so that we can proceed to program
funds to benefit Egypt, while promising to engage in a
serious review of the conflicts that exist and a desire to
resolve them as soon as possible.

¶12. (S/NF) Concerning military assistance, the Egyptian
political and military leadership feel that they have been
“short changed” by our holding to an FMF level of $1.3
billion, (the same level for 30 years despite inflation), and
which they contrast with increases to our military assistance
to Israel. Finally, Egypt seeks a higher profile in
international financial circles (Finance Minister Youssef
Boutros Ghali was recently named Chairman of the IMF’s
policy-setting committee, the IMFC, the first from a
developing country), and Aboul Gheit is likely to ask for
your support to include Egypt in expanded G8 and G20 fora.

———————————
Ayman Nour and Saad Eddin Ibrahim
———————————

¶13. (S/NF) Egypt’s political leadership considers our public
chastisement of their treatment of jailed former opposition
Al Ghad party leader Ayman Nour as interfering with internal
affairs and infringement on national sovereignty. Mubarak
takes this issue personally, and it makes him seethe when we
raise it, particularly in public. Aboul Gheit’s view is that
we have made Ayman Nour a freedom martyr, and a damaging (and

CAIRO 00000231 004 OF 004

distorting) prism through which we view our relationship with
Egypt. Much the same can be said about Saad Eddin Ibrahim,
the outspoken political science professor and democracy
activist who is in self-imposed exile in the U.S. because of
spurious law suits brought against him for allegedly defaming
Egypt. In a negative development in late January, Egypt,s
Attorney General-equivalent took action to advance the only
criminal case pending against Ibrahim. You should press
Aboul Gheit hard on Nour and Ibrahim, and also urge the GOE
to stop arresting other less prominent political activists.
Nour’s health is bad and he has served more than half his
sentence; he deserves a humanitarian pardon. You may wish to
lay down a marker for a future discussion on democratization
and human rights concerns. You might note that although you
and the President want to improve the relationship, Egypt
could take some steps to remove these very volatile issues
from the agenda.

————
Farouq Hosny
————

¶13. (S/NF) Egypt has mounted a full-scale international
campaign to support the candidacy of Culture Minister Farouq
Hosny for Director General of UNESCO. The Arab League and
the African Union have already publicly stated their
commitment to Hosny, and the Egyptians believe they also have
the support of several Europeans, notably the French. Aboul
Gheit will also seek US support — or, at least, not to
actively oppose — the candidacy of Farouq Hosny as the next
Director General of UNESCO. The U.S. informed him last year
that we could not support the candidacy and urged Egypt to
put forward another name. Abould Gheit will argue Hosny’s
merits for facing down the Islamic extremists who want to
narrow the space in Egypt for artistic expression. U.S.
objections have been to statements Hosny has made that
“Israel had no culture. . .it stole cultural ideas from
others and claimed them as its own” and other objectionable
remarks. If we plan to derail the Hosny candidacy, we must
provide a credible alternate, preferably an Arab and/or
Muslim.
SCOBEY

09STATE14577 2009-02-18 00:12 2010-11-28 18:06 SECRET Secretary of State

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S E C R E T STATE 014577

SIPDIS
SECRET/NOFORN

E.O. 12958: DECL: 02/17/2019
TAGS: PARM PREL RS BA KU AE EG JO IS IR
SUBJECT: ACTION REQUEST: RUSSIA S-300 MISSILE TO IRAN

REF: MOSCOW 357

Classified By: NEA Acting A/S Jeffrey Feltman: Reasons 1.4 (b,d)

¶1. (SBU) This is an action request for Posts in Abu Dhabi,
Amman, Cairo, Kuwait City, Manama, and Riyadh. Please see
para 7.

Summary and Background
——————————————

¶2. (C) Posts are requested to raise with appropriate
government officials our concerns about Russian plans to
transfer the S-300 long-range air-defense system to Iran.
Washington would like these governments to immediately and
directly raise this issue with their Russian counterparts
arguing that such a transfer could significantly enhance
Iran’s air defense capability; increase regional instability;
and reward Iran at a time when Iran is undermining security
with its nuclear pursuits and support for terrorism.

¶3. (S//NF) Over the past few years, the Russian Government
has told the USG that, while it has a contract to supply the
S-300 air-defense system to Iran, the transfer would not be
completed until Iran complied with its international nuclear
obligations. USG suspicions were piqued during a February 12
meeting when Russian Foreign Minister Lavrov brushed off U/S
Burns concerns over such a transfer, but did not reiterate
Russia,s year-long position that the S-300 transfer depends
on Iranian behavior. The Iranian Defense Minister is
currently in Moscow for talks with Russia on the delivery of
the S-300. Initial press reports quote Rosoboronexport
officials as saying there has been no progress in the talks
to expedite delivery of the system. Russian news media also
speculates that Russia will not deliver the S-300 to Iran for
fear of upsetting discussions with the new US administration.
Despite the denials in the press, we are concerned by the
technical preparations for delivery of the S-300, which are
complete or nearing completion. It appears that there is a
need for action now to prevent a senior-level political
decision to allow the delivery to go foward.

¶4. (C) Though Russia states that the S-300 is “defensive” in
nature, the mobile system could be used to support offensive
operations. S-300s located on Iranian territory would have
the range to engage targets well beyond Iran,s borders into
Persian Gulf and Iraqi airspace, threatening U.S. and
regional partners.

¶5. (SBU) UNSCR 1747, passed on March 24, 2007, urged all
states to exercise “vigilance and restraint in the supply,
sale or transfer” of a broad range of conventional weapons as
defined for the purpose of the United Nations Register on
Conventional Arms to Iran. While the S-300 does not
technically meet the definition within the UN Register for
any of the categories of items listed in paragraph 6 of UNSCR
1747, transfers of this type of system to Iran seriously
undercut the primary objective of UNSCR 1747 to further press
Iran to comply with the UNSCR 1737 requirement to suspend its
proliferation sensitive nuclear activities and cooperate
fully with the IAEA.

¶6. (C) We have selected action addressee posts to engage the
GOR because we maintain strong bilateral relationships and
share common security interests, but also because we believe
these governments have potential leverage with Russia. In
particular, Abu Dhabi, Kuwait, Egypt, and Saudi Arabia have
increased their political-military cooperation with Russia.
These countries can legitimately make the point to Moscow
that they cannot have a close political-military partnership
with Russia, while Russia strengthens the hand of Iran,
arguably the greatest threat to each of these nation’s
security.

Suggested Talking Points
—————————————–

¶7. (SBU) Posts are requested to approach appropriate host
government officials regarding the possible transfer of the
S-300 air-defense system from Russia to Iran. Post should
draw from the following talking points.

–In the spirit of our bilateral cooperation, we request your
government,s support in urging Russia to not transfer a
highly sophisticated air defense system to Iran.

–In 2005 Russia signed a contract to sell the modern
long-range S-300 air defense missile system to Iran.

— In 2006, after it was exposed that Iran was not in
compliance with its international nuclear obligations, Russia
assured us, it would not complete the transfer until Iran
changed course.

–Despite these assurances, we are concerned that Russia is
in a position to deliver the S-300 to Iran as soon as a
political decision is taken.

–Moreover, when we raised our concerns in recent
senior-level conversations with Russian officials, we were
not reassured by the Russian response.

–We request that you use your influence with Russia to
sharpen their decision against a transfer at this time.

–Though Russia has categorized the S-300 as defensive in
nature, it is a mobile system that can easily used to support
offensive operations.

–The most modern variant of the S-300, high-performance
surface-to-air missile system would greatly improve Iran,s
ability to defend large regions of its airspace up to 200 km
beyond its borders.

–With Iran in non-compliance of its international nuclear
obligations and continued meddling in regional affairs, this
is not the time for Russia to engage in arms sales with
Tehran.

— We are also concerned about the implications of the
transfer of an air defense system to Iran. Such transfers
would undercut the broad objective of UNSCR 1747 to increase
pressure on Iran to suspend its proliferation sensitive
nuclear activities and cooperate fully with the IAEA by
denying arms transfers to Iran.

–(If appropriate) We believe you have particular leverage
given your expanded military cooperation with Russia. You
can legitimately argue that Moscow cannot be true partners in
the political-military realm while simultaneously
strengthening Iran, which is arguably the greatest threat to
your nation,s security.

End Talking Points
CLINTON

09TELAVIV457 2009-02-26 12:12 2010-11-28 18:06 CONFIDENTIAL Embassy Tel Aviv

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SIPDIS

E.O. 12958: DECL: 02/26/2019
TAGS: PREL PGOV KPAL IS IR SY
SUBJECT: CODEL CARDIN DISCUSSES IRAN, SYRIA, PALESTINIANS,
AND ISRAEL ELECTION WITH BENJAMIN NETANYAHU

Classified By: DCM Luis G. Moreno, Reason 1.4 (b) (d)

¶1. (C) SUMMARY During their trip to Israel, CODEL Cardin
discussed Iran, Syria, Israel-Palestinian negotiations, and
the Israeli elections with Likud Party leader and candidate
for Prime Minister Benjamin Netanyahu. Netanyahu described a
nuclear Iran as the greatest threat facing Israel, and urged
strong economic sanctions backed by a viable military option
to confront a problem that he said threatened the region and
could prove a “tipping point” in world history. Describing
his approach to “economic peace” with the Palestinians,
Netanyahu suggested he would cut through bureaucratic
obstacles to Palestinian economic development to build a
“pyramid” from the “bottom up” that would strengthen the
Palestinian Authority, and offer the Palestinians a viable
alternative to radicalism. Netanyahu expressed support for
the concept of land swaps, and emphasized that he did not
want to govern the West Bank and Gaza but rather to stop
attacks from being launched from there. Netanyahu suggested
Syrian interest in peace negotiations with Israel were really
overtures to the United States, and described the Syrians as
firmly in the Iranian camp. Netanyahu expressed confidence
that President Peres would offer him rather than Kadima Party
leader Livni the opportunity of forming a coalition because
the bloc of center-right/right wing parties in the new
Knesset amounted to 65 seats. Netanyahu said his desire
would be to form a unity government with Kadima, but would
not agree to a rotating prime ministership. END SUMMARY

¶2. (SBU) As part of their February 14-17 visit to Israel,
CODEL Cardin met with Likud Party leader and candidate for
Prime Minister Benjamin Netanyahu on February 16 in
Jerusalem. Netanyahu was at the center of intense political
speculation about the formation of a governing coalition
following the extremely close Israeli national election of
February 10, which did not produce a clear winner. The CODEL
met with Netanyahu following meetings the previous day with
President Peres, and prior to meetings later in the day with
Prime Minister Olmert and Palestinian Authority Prime
Minister Fayyad.

—-
IRAN
—-

¶3. (C) Netanyahu quickly launched into his oft-stated
position that Iran is the greatest threat facing Israel.
Noting that “Persia” already had two bases on the
Mediterranean (referring to Hizballah and Hamas), Netanyahu
complained that Iran’s “tentacles” were choking Israel, and
that a new one grew back whenever one was cut off. Netanyahu
charged that Iran was developing nuclear weapons with the
express purpose of wiping out Israel, and described
preventing Iran from developing a nuclear capability as
Israel’s highest policy priority. Netanyahu described five
threats that he saw emanating from Iranian nuclear
development: a direct threat to Israel; a direct threat to
other regional states; increased terrorist power under an
Iranian nuclear umbrella; a Middle East nuclear arms race;
and a destabilized Middle East, with Arab regimes
“terrified” of Iran in his view. Netanyahu, commenting that
he normally avoided political jargon, pointed to one phrase
that he said applied to this issue – “a tipping point.”
According to Netanyahu, if Iran develops a nuclear weapon
capability it will “topple the peace process” and “change the
history of the world.”

¶4. (C) When asked what advice he offered to the United
States, Netanyahu reported that he had spoken to
then-candidate Obama and said the method was less important
than the goal, and asked rhetorically whether the President
would allow Iran to “cross the nuclear threshold … on his
watch.” Netanyahu suggested there were many ways to pressure
Iran, which he saw as economically weak at the moment due to
plunging oil prices at the same time that the U.S. President
had strong international backing, a situation Netanyahu
described as the opposite of the past few years. He said he
would look forward (as Prime Minister) to discussing with
President Obama concrete measures to be taken against Iran.
Netanyahu said these would not be a substitute for
Palestinian negotiations, but that any result from such
negotiations would be “washed away” by Iran’s attaining a
nuclear bomb.

¶5. (C) When asked how Iran could be isolated, Netanyahu
suggested a blockade as one possibility. The nuclear program
could be stopped if the U.S. led the international community
to “ratchet up” economic sanctions, but that these sanctions
would only work if Iran knew that the U.S. military option
remained viable. Netanyahu said he did not object to a U.S.
dialogue with Iran provided the talks were close ended,
perhaps two months, with fixed results, otherwise Iran would

TEL AVIV 00000457 002 OF 003

“take you to the cleaners.” He said he agreed with the
Europeans’ urging the U.S. to postpone any talks until past
the Iranian elections in June. Netanyahu said he did not
know for certain how close Iran was to developing a nuclear
weapons capability, but that “our experts” say Iran was
probably only one or two years away and that was why they
wanted open ended negotiations. He again urged “tough
negotiations” if military means were not used (and added
that Special Envoy Mitchell was both nice and tough.)
Netanyahu described the Iranian regime as crazy, retrograde,
and fanatical, with a Messianic desire to speed up a violent
“end of days.” That was not the whole country, however, in
his view, as he said that “75 percent of the Iranian people”
oppose the regime, but that it governed with terror and would
be hard to overthrow. There was no single view from
Iranians, therefore, but there was from the powers that
dominate. He reiterated that strong economic action could
stop their nuclear development or possibly even bring down
the regime – as could “the U.S. military process.”

—————–
PALESTINIAN TRACK
—————–

¶6. (C) Turning to peace with the Palestinians, Netanyahu
said the reason the process had not worked so far was that
while 70 percent of Israelis were willing to make
concessions, the same number were convinced that there was no
real Palestinian partner. Netanyahu warned that when Israel
left Lebanon is created a first Iranian base, that when it
left Gaza it created a second Iranian base, and if Israel
“promised” a third retreat from the West Bank it would see
the same results. There were three options, according to
Netanyahu – withdrawing to the 1967 borders (that would “get
terror, not peace”); doing nothing (“just as bad”); or
“rapidly building a pyramid from the ground up.” Netanyahu
suggested a rapid move to develop the West Bank economically,
including “unclogging” bureaucratic “bottlenecks.” He
promised to “take charge personally” (as Prime Minister) to
facilitate this bureaucratic reform, which would occur in
tandem with political negotiations and cooperation with
Jordan to build up Palestinian Authority security capacity.
Netanyahu noted that there were larger demonstrations
against the Gaza operation in Madrid and London than in the
West Bank. He said this was because the West Bankers
recognized that Hamas represents the prospect of “violent,
crazy” people in charge of their society; they should be
offered real alternatives in order to have the strength to
resist the radicals.

¶7. (C) Netanyahu said his “new approach” would also
include not continuing to fund a “bloated” Palestinian
bureaucracy. It would be aimed at direct development.
Netanyahu, noting that he had previously “turned around” the
Israeli economy (as Finance Minister), gave one example of a
problem he would fix as an electric powerline in the West
Bank that was held up by conflicting and competing agencies.
He said this powerline was needed and would create jobs, but
was held up not because the Palestinians were targeted, but
because that was how the Israeli bureaucracy worked for
everyone, including Israelis. When asked whether these
reforms could include room to modify security arrangements,
Netanyahu agreed that some of what the GOI calls security is
in fact bureaucracy. Pointing to what he described as strong
but unpublicized trade between Haifa port and Iraq via
Jordan, he suggested assembly points could be set up in the
West Bank for some goods, which would create thousands of
jobs. This would not be a substitute for a political
settlement, according to Netanyahu, but economic prosperity
would make peace possible, as occurred in Northern Ireland.

—–
SYRIA
—–

¶8. (C) Netanyahu said he was actually more optimistic about
dealing with the Palestinians than with Syria, because he was
confident that the Palestinian Authority wants Iran and its
proxies out. He said he was less sanguine about Syria, which
he complained straddles the fence all the time. The Syrians
might “talk about” a new (U.S.) relationship, but he did not
see them disconnecting from Iran. Netanyahu suggested that
Israel “giving up” the Golan would just result in assurances
that Syria would later “tear up.” Describing King Hussein as
heroic, and noting that the King came from his “death bed” in
1998 to get then-Prime Minister Netanyahu and
then-Palestinian Authority Chairman Arafat to reach an
agreement at the Wye River talks, Netanyahu said that when
Saddam Hussein took Kuwait, even King Hussein “snuggled up”
to the Iraqi leader out of necessity. Such is the reality in
the Middle East.

TEL AVIV 00000457 003 OF 003

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COALITION FORMATION
——————-

¶9. (C) Despite finishing one Knesset seat behind Kadima and
its candidate Tzipi Livni in the February 10 Israeli national
elections, Netanyahu expressed complete confidence that
President Peres would offer him the opportunity to form a
government because the bloc of center-right/right wing
parties in the new Knesset has 65 seats compared to Livni’s
potential bloc of 45 seats for center-left/left wing parties
plus 11 seats for Arab parties. Netanyahu said his desire
would be to form a unity government with Kadima, but would
not agree to a rotating prime ministership with Ms. Livni.
He explained that the one time Israel had a rotation came as
a result of an exact tie between the two political
coalitions, but this time the right wing bloc was much
larger.

¶10. (C) When asked about Avigdor Lieberman’s Yisrael
Beiteinu party, Netanyahu reminded the CODEL that Kadima had
in fact included Lieberman in their government in its earlier
stages. Netanyahu stressed repeatedly that he preferred a
unity government, and said the large security and economic
problems facing Israel called for the strength that a unity
government would offer. Livni “collapsed” left- wing votes
(from Labor and other parties) to score a one vote margin for
Kadima over Likud in the elections, but took no votes away
from the right, according to Netanyahu. When asked what he
might offer to Kadima, Netanyahu suggested Kadima would get a
few key ministerial portfolios, but did not elaborate. He
said that he while he was convinced a rotating Prime
Ministership would not happen, he was confident a unity
government could. Netanyahu said the government would not
include the Arab parties.

¶11. (C) Netanyahu promised that as Prime Minister his
government would not “go back” to unilateral withdrawals, and
would have a clear focus. On the economy, he said Israel was
not a huge economy such as the United States or China, and
that he would be able to turn things around quickly, as “a
small share of a declining market” was big for Israel. Asked
about settlements, Netanyahu noted that he had not
established any new settlements when he was Prime Minister.
Half of the West Bank, the area east of the ridge line and
the Jordan Valley, is virtually unpopulated and only contains
a few settlements. In the other half, Israeli and
Palestinian populations are intertwined. Once the
Palestinian Authority develops into a real partner it will be
possible to negotiate an agreement over territory,
settlements and “refined” Palestinian sovereignty without an
army or control over air space and borders. Netanyahu said
it would be too hard to negotiate agreements over Jerusalem
and refugees until the other issues are resolved. Claiming
that many Palestinians accept this point, Netanyahu said he
was not talking about a delaying tactic but rather a
temporary freeze, adding that he hoped PA Prime Minister
Fayyad would still be around since Fayyad also thinks along
economic lines.

¶12. (SBU) As an example of economic development, Netanyahu
spoke about expanding faith tourism. He said that it “defied
imagination” that the well-known site on the Jordan River
where John the Baptist baptized Jesus was “paralyzed” by a
GOI/PA jurisdiction dispute. With Jericho only a mile away,
Netanyahu offered to give an “easy”, secure “envelope” for
transporting tourists from the Galilee to this part of the
West Bank. That would lead to “co-production” that would
provide large revenue streams of tourist dollars to the
Palestinians, from a population that was already coming to
Israel. He asked why Israelis would be less disposed to
make concessions to a viable Palestinian government and
society. Netanyahu agreed that West Bank checkpoints take
too long, and offered to look into express lanes, increased
staffing, and other possible solutions – as Prime Minister.

¶13. (U) CODEL Cardin has cleared this cable.

********************************************* ********************
Visit Embassy Tel Aviv’s Classified Website:
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CUNNINGHAM

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