January 2007

07TELAVIV64 2007-01-08 16:04 2010-11-28 18:06 SECRET Embassy Tel Aviv

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E.O. 12958: DECL: 01/05/2017

Classified By: Ambassador Richard H. Jones, Reason 1.4 (b) (d)

¶1. (S) Madam Secretary, internal tensions among GOI leaders
have intensified since your last visit and have reached the
point that there appears to be little coordination or even
dialogue among the key decision makers. Therefore, we will
need to be sensitive to perceptions that we are favoring one
faction over another. The divisions at the top here are part
of an increasingly gloomy public mood, with a new corruption
allegations making headlines virtually daily, and a growing
sense of political failure despite Israel’s strong economy
and a sustained success rate in thwarting suicide attacks.
Prime Minister Olmert’s approval ratings were only 23 percent
in the latest poll, and Israeli interlocutors across the
political spectrum are speaking openly of a crisis of public
confidence in the country’s leadership at a time when
Israelis feel an urgent need for strong leadership to face
the threats from Iran, Syria, Hamas and Hizballah.


¶2. (S) The year 2007 has started off badly for Israelis.
The good feeling generated by PM Olmert’s long-delayed
December 23 summit meeting with Abu Mazen quickly dissipated
under the weight of reports of a new settlement in the Jordan
Valley (now suspended by Peretz), continued Qassam rocket
attacks on Sderot and neighboring kibbutzim, foot-dragging on
both sides in implementing the transfer of tax revenues, lack
of progress on the release of Cpl. Gilad Shalit, and the
unpleasant atmospherics of the January 4 Olmert-Mubarak
summit, which was overshadowed by a botched IDF daylight raid
in the center of Ramallah in which four Palestinians were

¶3. (S) The Ramallah operation, which was authorized by the
IDF’s West Bank commander without informing the Minister of
Defense, served as a stark reminder of the lack of
coordination between Israel’s military and its civilian
leadership. When it comes to Israel’s strategy for dealing
with Palestinians, it increasingly seems that military is
military, civilian is civilian and never the twain shall
meet! Despite Olmert’s belated embrace of Abu Mazen as a
peace partner, there is growing concern that moderate Arab
willingness to maintain the embargo on Hamas may be eroding,
and that Fatah may fail to muster the popular support it will
need to depose Hamas, whether at the ballot box or in the
streets. Meanwhile, the upcoming release of the results of
the Winograd Commission’s investigation of the Lebanon war
hangs like a sword of Damocles over the heads of Olmert,
Defense Minister Peretz, and IDF Chief of General Staff
Halutz. Peretz and Halutz have both publicly stated that
they will resign if the Commission holds them responsible for
serious errors in the conduct of the war, but Olmert has
refrained from public comments. Olmert is also awaiting the
results of several separate investigations involving
corruption allegations, any one of which could further damage
him severely, if not force his resignation.

¶4. (S) While Israeli anxiety over a possible dramatic shift
of U.S. policy as a result of the Iraq Study Group’s report
has been allayed by statements by you and the President,
there continues to be deep uneasiness here that the
Baker-Hamilton recommendations reflect the shape of things to
come in U.S. policy. Israelis recognize that U.S. public
support for the Iraq war is eroding and are following with
interest the President’s upcoming articulation of the
revamped policy, but they are deeply concerned that
Israeli-Palestinian issues not become linked in American
minds to creating a more propitious regional environment for
whatever steps we decide to take to address the deteriorating
situation in Iraq.

¶5. (S) Iran’s nuclear program continues to cause great
anxiety in Israel. Given their history, Israelis across the
political spectrum take very seriously Ahmadinejad’s threats
to wipe Israel off the map. Olmert has been quite clear in
his public comments that Israel cannot tolerate a
nuclear-armed Iran, a position stated even more emphatically
by opposition leader Netanyahu, who compares today’s Iran to
Nazi Germany in 1938. Despite the worst-case assessments of
Israeli intelligence, however, there is a range of views
about what action Israel should take. The MFA and some of
the think tank Iran experts appear increasingly inclined to
state that military action must be a last resort and are
taking a new interests in other forms of pressure, including
but not limited to sanctions, that could force Iran to
abandon its military nuclear program. The IDF, however,
srikes us as more inclined than ever to look toward a
military strike, whether launched by Israel or by us, as the
only way to destroy or even delay Iran’s plans. Thoughtful

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Israeli analysts point out that even if a nuclear-armed Iran
did not immediately launch a strike on the Israeli heartland,
the very fact that Iran possesses nuclear weapons would
completely transform the Middle East strategic environment in
ways that would make Israel’s long-term survival as a
democratic Jewish state increasingly problematic. That
concern is most intensively reflected in open talk by those
who say they do not want their children and grandchildren
growing up in an Israel threatened by a nuclear-armed Iran.


¶6. (C) FM Tzipi Livni is frustrated by Olmert’s continued
refusal to coordinate closely, and — perhaps with an eye on
polls showing her popularity at over double the level of the
Prime Minister — suggested to a Ha’aretz interviewer in late
December that she would challenge Olmert for the prime
ministership if he continued not to give her his full
backing. In the same interview, Livni provided an outline of
her thinking, but not a detailed plan, on the way ahead with
the Arabs, including negotiating an interim agreement with
the Palestinians in which the separation barrier would serve
as the border, and refusing to engage with Syria unless Asad
takes steps to end support for terrorism and distances
himself from Iran. Livni’s policy adviser has confirmed to
us that she has engaged in her own discrete discussions with
Palestinians, but very much in an exploratory mode. Livni
told Senators Kerry and Dodd that she doubted that a final
status agreement could be reached with Abu Mazen, and
therefore the emphasis should be on reforming Fatah so that
it could beat Hamas at the polls. MFA officials tell us that
Livni is also focused on the need to keep Hamas isolated.
She and her senior staff have repeatedly expressed concern
that some EU member-states are wobbly on this point.
Meanwhile, Livni is keenly aware that unlike Olmert, she has
little to fear from the Winograd Commission report (nor is
she tainted by the corruption allegations that dog Olmert).
Her incipient bid to take Olmert’s place could become more
serious once the report’s preliminary conclusions are
released next month.


¶7. (S) Olmert and Livni agree that negotiations with Syria
would be a trap that Damascus would use to end the
international pressure on it and to gain a freer hand in
Lebanon. While they see public relations downsides to
dismissing Syrian peace overtures out of hand, they continue
to insist that no negotiations will be possible until Syria
reduces its support for terrorism and/or takes direct steps
to secure the release of Israeli prisoners held by Hamas and
Hizballah. Olmert and Livni are supported in that view by
Mossad chief Dagan, who takes a dim view of Syrian
intentions. A significant part of the security
establishment, however, appears to be reaching the conclusion
that it is in Israel’s interest to test Asad’s intentions —
possibly through the use of a back channel contact — and to
seek to wean him away from Tehran. They are joined in that
view by Defense Minister Peretz, much of the Labor Party and
the Israeli left, who argue that Israel cannot afford to
refuse to at least explore Asad’s offer to negotiate, often
comparing that stance to Golda Meir’s much-criticized
decision to spurn Sadat’s offer to negotiate, which then led
to the 1973 Yom Kippur War. Press reports January 5 stated
that the defense establishment had recommended to Olmert that
he open an exploratory channel to Damascus in two months, a
timeline reportedly linked to the completion of reviews of
U.S. policy toward Iraq and the Middle East, as well as to
clearer indications of Abu Mazen’s intentions and
capabilities vis a vis Hamas.


¶8. (C) According to leaks from a recent Labor Party
leadership meeting, Amir Peretz said that he feels completely
disconnected from Olmert. Ever since Peretz’ telephone
conversation with Abu Mazen which infuriated Olmert, the two
reportedly barely speak to each other. Television news
reports on January 4 trumpeted rumors that Olmert had decided
to remove Peretz as Defense Minister and replace him with
former Prime Minister Ehud Barak, who has already announced
plans to challenge Peretz for the Labor Party’s leadership in
late May primaries. Even though the Prime Minister’s Office
almost immediately denied the reports, there is little doubt
here that someone in the PMO was behind them. While much of
the Labor Party feels that Peretz has been a failure, both as
Defense Minister and as Party Secretary General, and Peretz’
popularity with the general public has hit rock bottom, Labor

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members widely condemned the media trial balloon, which they
saw as an unacceptable attempt by Olmert’s advisers to
intervene in their party’s leadership contest. In any event,
the incident is yet another indication of the intense degree
of personal rancor and dysfunction prevailing at the top of
the GOI.


¶9. (C) Notwithstanding the GOI’s internal discord, there is
some good news in our efforts to nudge the GOI toward
improvements in Palestinian quality of life issues. Despite
his political woes, Peretz has proven himself a serious
partner in our efforts to implement the Agreement on Movement
and Access (AMA) and more generally in a slow but steady push
by the MOD to force a reluctant IDF to accept steps to reduce
barriers to Palestinian movement and to revive the
Palestinian economy. Deputy Defense Minister Efraim Sneh,
who will likely accompany Peretz to your meeting, has emerged
as the point man for these efforts. Sneh shares Peretz’
conviction that Israel’s security stranglehold on the
Palestinians is “winning the battle but losing the war,” but
Sneh, who in a decades-long career served as a military
governor of the West Bank, commanded an elite combat unit,
and took part in the famed Entebbe raid, also has both an
intimate knowledge of the Palestinians and a combat
commander’s credibility with the IDF that Peretz sorely
lacks. Your meeting with Peretz provides an opportunity to
express appreciation for his and Sneh’s efforts and to
encourage them in their struggle to bring recalcitrant
elements in the IDF to heel. The more progress we can
achieve with them on AMA implementation now, the easier it
will be to achieve meaningful results with both parties in
the coming year.

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07DUBAI59 2007-01-28 08:08 2010-11-28 18:06 CONFIDENTIAL Consulate Dubai

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CLASSIFIED BY: Paul R Sutphin, Consul General, Dubai, UAE.
REASON: 1.4 (b), (d)

1.(C) Summary: In a January 23 meeting in Dubai with U/S Burns,
UAE Vice President, Prime Minister and Dubai Ruler Sheikh
Mohammed bin Rashid al Maktoum (MbR) expressed concern about the
potential negative impact on Dubai of possible future UN
sanctions against Iran; he urged the quiet US-UAE cooperation on
financial and export control restrictions against Iran, offering
to set up a “joint committee” to this end. He agreed that Iran
should not have nuclear weapons, but warned of the dire regional
consequences of military action. U/S Burns said the US would
protect its interests in the region and support Gulf governments
in resisting efforts by Iran to dominate the region. He
emphasized the importance of continued support for the Siniora
government in Lebanon, and the high priority the US put on a
renewed effort to move the Israelis and Palestinians toward
peace. U/S Burns raised the case of Amcit Vafa Valapour, which
has been under criminal investigation in Dubai for nearly 16
months without charges before a court(although under the local
system police charges have been filed); MbR asked his aides to
ensure the case moved forward as rapidly and transparently as
possible End Summary.

2.(C) On January 23, U/S for Political Affairs Nicholas Burns
met with MbR for one hour in MbR’s downtown office. Burns was
accompanied by NEA PDAS Jim Jeffrey, the Ambassador, the Consul
General, P Staff assistant Herro Mustafa and ConGen notetaker.
MbR was accompanied by his sons Sheikh Hamdan (who chairs the
Dubai Executive Council, the Emirate’s governing body) and
Sheikh Mayed; Minister for Cabinet Affairs (and Dubai Holdings
head) Mohammed Gergawi; federal Minister for Education Dr. Hanif
al Qasimi; Dubai General Security Service head Brigadier
Mohammed al Qemzi; Dubai World head Sultan bin Sulayem; and
Emirates Airlines chairman and Dubai Civil Aviation head Sheikh
Ahmed bin Sayed al Maktoum. U/S Burns expressed admiration for
the Dubai’s rapid development, hailing it as an open and
productive model that was now being emulated throughout the

3.(C) Lebanon: U/S Burns conveyed the gratitude of the Lebanese
government for financial and other assistance from the UAE. MbR
said the UAE understands that the Siniora government needs
regional support. U/S Burns urged continued assistance, noting
the US will soon offer the Siniora government $1 billion for
security and reconstruction efforts.

4.(C) Iran sanctions: U/S Burns highlighted the significance of
the June 2006 international offer to negotiate with Iran to
resolve the nuclear issue–the first official US offer to
negotiate with Tehran in 27 years. Tehran had rejected this
broadly-supported, reasonable proposal, which offered economic
incentives such as sanctions relief and the sale of civilian
airliners in addition to negotiations. U/S Burns said that the
UNSCR 1737’s limited sanctions were a first step to pressure
Iran to compromise, but that absent Iranian movement another,
more restrictive, sanctions resolution is likely in February.
The US was also taking bilateral action through Treasury
designations against Iranian banks that were funding terrorism.

5.(C) MbR expressed willingness to cooperate in financial
restrictions against Iran, but urged that the cooperation be
conducted quietly; he offered to set up a “joint committee” to
do so (he did not offer details); he later repeated this offer
with regard to military transfers (see para 8). He voiced
concern regarding the potential negative impact of economic
sanctions on Dubai, and against the “good Iranians” — including
Dubai’s estimated 350,000 Iranians residents. U/S Burns and
Ambassador Sison expressed readiness to engage with Dubai on
financial cooperation against Iran. (Note: the number of
resident Iranians was supplied by Al Qemzi, and is higher that
the 200-300 thousand usual cited by the Dubai officials.)

6.(C) Iran and Gulf Security: U/S Burns stated that the US will
protect its interests and support its allies, like the UAE, in
the face of Iranian attempts to dominate the Gulf. This is why
we have stationed a second carrier battle group there, and have
detained Iranian agents in Iraq who were providing arms and bomb
components used to kill US troops. MbR stated that the UAE does
not want Iran to have nuclear weapons, and urged continued
international pressure on Iran, but expressed deep concern about
the destabilizing consequences to the UAE and to region of a
military strike. He urged that the US find a way to stop or
disarm Iran without using military force. U/S Burns reiterated

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that the US wants a diplomatic solution, and is working with the
UN and its allies toward this end; strong UAE support was
important to this effort.

7.(C) MbR expressed hope for change inside Iran, which U/S Burns
echoed. Burns noted the US wants to support the influence of
moderate Iranians and encourage Iran to engage in negotiations.
Minister Gergawi mentioned rumors that Supreme leader Khamenei
is suffering from prostate cancer. Gergawi opined that the
merchant class in Iran has been pressuring Ahmadinejad over his
failing economic policy. He asserted that the growing sectarian
conflict in Iraq, as well as the hanging of Saddam Hussein
(which, he implied, was inspired by Iranian pressure), have now
undermined the possibility of a regional alliance between
extremist Sunnis and Shia. Regional Sunnis now blame Iran for
instability in Lebanon and Iraq. (Note: Gergawi’s family is of
Iranian origin, and he acts as one of MbR’s principal advisors
on Iran.)

8.(C) Security cooperation: U/S Burns called the Gulf
Cooperation Council a good forum for quiet security cooperation,
and reiterated that the US seeks a close, productive dialogue
with the UAE on Gulf security. The US opposes arms sales to
Iran and will urge its partners in the European Union, Russia
and the Middle East to cooperate on this front. MbR reiterated
his offer to set up a committee to cooperate on these issues.

9.(C) Israel/Palestinians: U/S Burns stressed that the US
believes progress between Israel and the Palestinians toward
peace is central to regional stability, and supports the
creation of a Palestinian state. This would be “the best
thing,” MbR replied; a peace deal would make radical groups like
HAMAS “everyone’s enemy”. Palestinian President Mahmoud Abbas
should be supported, particularly since HAMAS is funded by Iran.
MbR noted UAE assistance was again flowing to the Palestinians,
although it had been suspended for a time because of corruption
concerns. U/S Burns said the US is careful to ensure its
assistance is going to the Palestinian people, rather than the
HAMAS government, and is confident in the assistance mechanisms
now in place.

10.(C) Valapour case: U/S Burns raised the case of Amcit Vafa
Valapour, who has been under criminal investigation in Dubai for
nearly 16 months. U/S Burns said the US sought return of
Valapour’s passport, which has been held by the Dubai police.
He underscored that, while he was taking no substantive position
on the merits of the case, the US believes the case should move
forward with due process as quickly as possible. MbR was
unfamiliar with the case, and turned to Gergawi for background.
Gergawi outlined the Dubai government view of the case, saying
the bottom line is that Valapour and his non-USC partners had
profited from insider information in a deal on the Dubai Metro
project with a corrupt Dubai official. “We don’t tolerate
corruption,” Gergawi concluded. The Consul General noted that
he had recently met with the Dubai Attorney General (reftel) on
the case. The AG had agreed to meet with Valapour’s US and
Emirati representatives to help to resolve the issue. MbR asked
his aides to ensure the case moved forward as quickly and
transparently as possible, and promised Valapour would receive
fair treatment.

11.(C) Afghanistan: U/S Burns expressed appreciation for UAE
assistance in Afghanistan, and urged support for the Karzai
government. MbR asserted the UAE and US are partners against
drugs, money laundering, and terrorism and in Afghanistan. He
said the best weapon against the Taliban was economic
investment. U/S Burns outlined ongoing reconstruction efforts,
and noted the difficulty of creating economically viable
substitutes for drug crops. MbR said Karzai is reluctant to
tackle the drug issue because he fears decreased support in the

12.(C) Comment: MbR offered little new, other than his somewhat
vague offer to create a bilateral committee to address financial
and arms/technology flows to Iran. He is clearly concerned
regarding the prospect of more comprehensive UN economic
sanctions, given that Iran is Dubai’s largest trading partner,
an assertion often cited by Dubai officials (although good
Dubai/Iran trade numbers are hard to come by). We will follow
up to try to get a better read on the scope of MbR’s offer.