December 2008


S E C R E T TEL AVIV 002713




Classified By: CDA Luis G. Moreno for reasons 1.4(b) and (d)

1.(S) Econoff called Udi Levi, Counterterrorism Finance Bureau Director at the National Security Council (NSC) and a senior intelligence officer on December 2 to press for release of NIS 250 million to the Gaza banking system, as requested by the Palestinian Monetary Authority. Levi said continued rocket and mortar attacks from Gaza, stalemate in negotions on release of Hamas-held Israeli Defense Force soldier Gilad Shalit, and new information on Hamas access to the Palestinian Authority salary payments funded by the requested transfer all made it unlikely that the GOI would honor the request.

2.(S) Levi did say that the GOI is considering a policy to permit about NIS 40 million in new liquidity to enter the Gaza Strip banks on a monthly basis. The exact amount is still under discussion, said Levi, but the Israeli security services have agreed that monthly transfers of some amount of shekels to Gaza are necessary to avoid collapse of the banking system there.

3.(S) However, Levi noted GOI intelligence has indications that Gaza banks are being forced by Hamas to underreport their true reserve holdings, so it is difficult for the GOI to assess the current state of the banking system in Gaza. He said that the banks have had no choice but to follow Hamas instructions and conduct business as if they were operating on insufficient reserves. He posited that the present pre-Eid crisis might be an attempt by Hamas to further consolidate its power in Gaza though he was vague on how the crisis would forward the Hamas agenda. Regarding the PA,s payroll, Levi told econoff that it included Hamas members and many other questionable individuals that the GOI did not believe to be working as civil servants for the Fatah-controlled PA. He offered to share all GOI information on the topic in a meeting with relevant USG officials at their earliest convenience. We will take him up on that offer and report septel.

4.(S) Comment: USG interlocutors at all levels have been urging the GOI to provide the needed December salary payments and greater certainty to Gaza,s banking sector going forward. Most recently, Charge raised the NIS 250 million request with COGAT/MOD PolMil Director Amos Gilad evening of December 3. Gilad,s response was, “Theyre not getting a dime”. However, we do not expect that to be the last word from the GOI on the subject.

5.(S) Comment continued: Going forward, the GOI may set the monthly transfer floor somewhat higher than the 40 million shekels mentioned by Levi, but it is unlikely to eliminate uncertainty completely by setting the floor at the roughly NIS 250 million average level requested by the PA over the past few months. Therefore, we expect this issue to remain an agenda item in the Joint Economic Committee for the foreseeable future, and anticipate continued pressure for USG intervention in the monthly transfer process. Of greater concern is Levis claim to have new evidence that the PAs current Gaza salaries list is tainted by Hamas sympathizers. We will work with the GOI to verify that claim and to make sure the PA has sufficient information to re-vet the list, if necessary.

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08TELAVIV2745 2008-12-08 15:03 2010-12-19 21:09 SECRET Embassy Tel Aviv

DE RUEHTV #2745/01 3431541
O 081541Z DEC 08

S E C R E T SECTION 01 OF 02 TEL AVIV 002745


E.O. 12958: DECL: 12/08/2018


Classified By: Acting DCM Marc Sievers, Reason 1.4 (b) (d)

¶1. (S) Summary. In his December 3 meeting with Israel
Defense Intelligence Director Yadlin, Representative Robert
Wexler (D-Florida) referred to his previous meeting with
Likud Party leader Netanyahu (reftel) and asked for Yadlin’s
assessment of the possibility of Israel and the Palestinian
moving forward on the basis of an “economic peace.” Yadlin
said Israel’s relations with the Palestinians need time; the
next Israeli Prime Minister and perhaps the next PA President
will need the time to build trust. Trying to move directly
to a solution will result in violence as in 2000. Yadlin
said the Palestinians have established two entities. Abbas
and Fayyad rule the West Bank with Israel’s support, while
Hamas has established a terrorist entity in Gaza. Yadlin
stressed that Israel is on the right track in the West Bank,
while he advocates taking a “much tougher” approach to Gaza.
Yadlin said Israel can find Hamas officials where they live
and work in Gaza. If the firing of rockets and mortars from
Gaza continues, the IDF will “use this card,” i.e. resume
targetted assassinations, in order to “change the paradigm.”
End Summary.

¶2. (S) Representative Robert Wexler, accompanied by staffer
Jonathan Katz, control officer and PolCouns called on Israel
Defense Intelligence (IDI) Director Major General Amos Yadlin
in the Kirya December 3. Noting that he had just come from a
meeting with Likud Party leader Bibi Netanyahu, Congressman
Wexler noted the Netanyahu is talking about an economic plan
for developing the West Bank, while Prime Minister Fayyad
says the Israeli-Palestinian dispute is not economic in
nature. Proceeding from the assumption that Netanyahu is
likely to form the next Israeli government, Wexler asked
whether Yadlin thought it would be possible to marry
Netanyahu’s economic plan with Fayyad’s pragmatic approach of
getting “deliverables” and reducing the IDF’s role.

¶3. (S) Yadlin replied that the Palestinians are only
Israel’s number four threat in the IDI’s assessment,
following Iran, Syria, and Hizballah. Although the
Palestinians are not the IDI’s top concern, Yadlin said he
would answer the question by noting that it will take time to
marry Netanyahu’s approach to Fayyad’s. If the parties
attempt to move straight to resolving the conflict, the
attempt will collapse and result in violence as in the start
of the Second Intifada after the 2000 Camp David summit. The
key question is how can the Palestinian Authority control
terrorism. Yadlin said the USSC General Dayton is doing “a
very good job” of training the PA Security Forces, but Yadlin
quoted Dayton as saying that the PASF will need three to five
years to build its counter-terrorist capabilities, including
a functioning justice system.

¶4. (S) Yadlin said the IDF is out of the Jenin area unless
it receives reports of a “ticking bomb.” The PA, however, is
ignoring Gaza and Fayyad insists on paying salaries in Gaza,
which helps Hamas. Yadlin said this is a “big mistake.”
Yadlin noted that the Palestinians have created two entities.
President Abbas and Fayyad condemn terrorism and stress that
Palestinian national goals can be achieved through
negotiations. They rule in the West Bank with Israel’s
assistance. In Gaza, a terrorist organization is in power
and Hamas preaches that Palestinian aspirations can be
achieved through terrorism. This division provides Israel
with a “historic opportunity” to prove that Hamas’ approach
will fail.

¶5. (S) Yadlin insisted that Israel must not withdraw from
the West Bank too soon or it would pave the way for a new
wave of suicide bombings inside Israel. Israel’s good
security situation is a direct result of the IDF and Shin
Bet’s sustained effort to destroy terrorism in the West Bank.
This efforts continues every night of the year. It will
take time to build trust between the next Israeli prime
minister and perhaps the next PA president as well. Yadlin
said he is satisfied that Israel is now on the right track in
the West Bank. The IDF has figured out how to remove
obstacles that affect the Palestinian economy while leaving
in place the means to ensure Israel’s security. In Gaza,
however, Israel needs to be “much tougher.”

¶6. (S) Congressman Wexler asked why Fayyad wants to send
money to Gaza. Yadlin said Fayyad fears that if he does not,
Hamas will bring in money from Iran, but Yadlin added that
this concern was misplaced. Hamas’ control of Gaza provides
an opportunity. Since the terrorists are now the government,
Israel knows which terrorist is sitting in what office and
where their homes are. They have come out of hiding and into

TEL AVIV 00002745 002 OF 002

the open, so the IDF can identify and find them. Yadlin
warned that if the shelling of Israeli communities from Gaza
continues, Israel can “use this card” against Hamas. It will
“change the paradigm,” he concluded.

¶7. (S) Comment. While Yadlin did not use the phrase
“targeted assassinations,” it was clear from the context that
he is advocating this approach to countering the threat from
Hamas. It was also clear that he strongly opposes those in
the GOI who advocate maintaining a base of currency flow into
Gaza. End comment.

¶8. (U) CODEL Wexler did not have the opportunity to clear
this cable.

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08TELAVIV2760 2008-12-10 08:08 2010-11-28 18:06 SECRET Embassy Tel Aviv

DE RUEHTV #2760/01 3450810
P 100810Z DEC 08

S E C R E T SECTION 01 OF 04 TEL AVIV 002760



E.O. 12958: DECL: 12/10/2018

Classified By: A/DCM Marc Sievers for reasons 1.4 (b) and (d)


1.(S) In a visit to Israel on 16-17 November, Treasury Under
Secretary for Terrorism and Financial Intelligence, Stuart A.
Levey, reassured GOI officials that no momentum would be lost
in USG efforts to combat terrorist financing or to pressure
Iran during the transition to a new US administration in
January. In meetings with Foreign Minister Tzipi Livni,
Mossad Director Meir Dagan, National Security Council
Chairman Dani Arditi, and others, U/S Levey emphasized recent
U.S. designations against the Union of Good, the Islamic
Republic of Iran Shipping Lines (IRISL), and the recent
revocation of Iran’s “U-Turn” license. In response to GOI
officials’ pressure to have the U.S. designate the Central
Bank of Iran (CBI), Levey underscored the importance of
international, multilateral concurrence for such an effort to
be a success.

2.(S) Israeli officials were keen to outline an “escalation”
in CBI programs that they believed pose a danger to the
international financial system. Several key Israeli officials
identified Reza Raei, Vice Governor of the CBI, as a key
figure in masterminding new ways to help the Iranian
commercial and banking sectors circumvent sanctions. Levey
promised to continue pushing the Gulf states on adopting
stronger regulation until the last day of his appointment.

3.(S) Mossad Chief Meir Dagan informed Levey that sanctions
were beginning to have a negative effect on Iran’s regime.
NSC Chairman Arditi also told him that the PA was performing
well in its renewed fight against terror finance in the West

——————————————— —–
——————————————— —–

4.(S) National Security Council (NCS) Chairman, Dani Arditi,
in a November 16 meeting with U/S Stuart Levey, asked whether
Levey thought his efforts would continue into the next U.S.
administration. Even though he said he planned to resign as
required in January, Levey told Arditi that he believed the
Obama team would be committed to continuing the ambitious
program against terrorism finance that he has shepherded over
the last several years. Saying counter- terrorism finance was
not a partisan issue in the U.S., Levey subsequently
confirmed these sentiments to Foreign Minister (FM) Tzipi
Livni and Mossad Director Meir Dagan in separate meetings
that occurred on the following day, November 17.


5.(S) On November 16, Levey outlined for Ministry of Foreign
Affairs Deputy Director General for Strategic Affairs Alon
Bar, and Senior Deputy Director General Yossi Gal positive
developments in the Iran effort. He told them that Treasury
had been very successful in curtailing business with Iran by
most “major players”. Levey said that expanding the
non-proliferation strategy into insurance, and putting
pressure on Iran’s oil refining capacity and Liquid Natural
Gas (LNG) industry were next steps being pursued. He also
reported that the recent IRISL designation has been unusually

CBI’s Reza Raei Masterminds New Methods

6.(S) During their November 16 meeting, Arditi told Levey
that the Israeli intelligence community has continued to see
an escalation in CBI efforts to help designated Iranian
commercial banks circumvent international and U.S. sanctions.
The NSC Chairman presented several recent examples of CBI
behavior that he characterized as unusual for a central bank.
Arditi identified Reza Raei, Vice Governor of the CBI for
Foreign Exchange Affairs, as the mastermind of these new

TEL AVIV 00002760 002 OF 004


7.(S) Meir Dagan subsequently told Levey that the CBI had
engineered a way for the UN-designated Iranian bank Sepah to
conduct foreign business transactions through use of the
Iranian Postal Bank. Bank Melli, a USG-designated bank, had
also purchased shares in investment funds as a way to escape
the effects of the sanctions, according to Dagan. Using these
methods, Melli and Sepah have been able to fabricate a method
of providing correspondent-like banking services to
designated Iranian banks that find it increasingly difficult
to deal in foreign currency. Arditi named the “Persia Equity
Fund” as one such financial instrument being used by Melli.
Levey commented that any such investment fund or financial
instrument could be listed as a derivative designation of
Melli if enough evidence could be shown linking the two
organizations. Levey told Meir Dagan that he was in favor of
pursuing a designation of Raei if GOI allegations were

No International Support for Designation of the CBI
——————————————— ——

8.(S) Arditi and subsequently, Dagan, asked Levey whether the
USG was considering a designation of the CBI. Although
Treasury had looked into the possibility, said Levey, a
designation of the CBI would be ineffective without a
multilateral effort. International support for such an effort
simply did not yet exist, Levey explained. He told Dagan that
we need to build support by sharing info about the CBI’s
illicit conduct, similar to the support we built for cutting
off the U-turn license. Levey said that it would be better to
focus on limiting other central and commercial banks’
business with the CBI. Noting that the banking industry
relies heavily on reputation, Levey told Arditi that the
right strategy is to continue exposing the illicit activities
of Iranian banks and banking officials.

European Banks’ Business with Iran

9.(S) MFA interlocutors revisited the progress of European
banks in non-proliferation efforts. In a November 16 meeting
with Yossi Gal, Senior Deputy Director General, and Alon Bar,
Deputy Director General for Strategic Affairs, Gal raised
concerns that Italy and Germany were falling short in their
commitment to enforce sanctions within their banking sectors.
Gal told Levey that the MFA was planning a visit to Italy in
December, but was unsure whether its attempt to persuade the
politicians would filter down to action within the
bureaucracy. Gal expressed the same concern about the banking
sector in Germany, saying that resistance from the
bureaucracy and the private sector often undermined attempts
by political figures to improve German regulation. Bar and
Gal encouraged Levey to join the GOI in pressing the
governments and banking sectors of Germany and Italy to do

Cautious Optimism on Gulf States

10.(S) On the status of UAE efforts to stem Iranian finance,
Levey told Gal and Bar that he was optimistic about the
country’s efforts. Among other examples, he mentioned that
the UAE had decreased the number of visas it was issuing to
Iranian nationals and that Emirati ministers were receptive
to his requests for increased banking regulation.

11.(S) FM Livni told Levey that Israel continues to encourage
the Gulf states to more publicly outline their actions
against Iranian finance within their banking sectors despite
the countries’ reasons for keeping such actions secretive.
She asked Levey to join in this effort. Levey affirmed that
the USG was encouraging sanctions in all sectors and posited
that the Iranians were beginning to feel the pressure. Livni
asked if the declining price of oil was becoming leverage in
the efforts to thwart Iranian financial efforts. Levey said
that it was and that the Iranian private sector was becoming
more vocal in its criticisms of the government.

12.(S) Levey outlined for his GOI interlocutors recent

TEL AVIV 00002760 003 OF 004

efforts by Treasury to broaden its sanctioning of Iran to the
shipping, insurance, and reinsurance industries. He cited the
designation of IRISL as a positive first step and mentioned
that Treasury had found willing partners in Europe and the UK
to further efforts in this area.

Effect of Sanctions on Iran

13.(S) Dagan told Levey that the economic problems Iran is
experiencing as a result of sanctions are encouraging debate
within the regime. He said that in order to preserve the
revolution, some key figures have begun to consider the need
for change. The pressure is on, Dagan said, but he could not
estimate when Iran would hit the brink. He noted that the
lower cost of oil at the moment would likely prompt Iran to
increase its production, thereby encouraging more business
through the CBI. With oil prices low everywhere, however,
Dagan and Levey agreed that Iran was a less attractive place
for investment. Levey told Dagan that the present low oil
prices provide a critical opportunity to convince other
members of the international community to apply more

14.(S) Livni asked Levey if there was a risk of Iran
regaining a foothold in certain markets as a result of the
world financial crisis. Levey said that the market turmoil
has worked to the USG’s advantage: the crisis has made
financial institutions even more risk-averse, thereby
lessening Iran’s attractiveness even further. Additionally,
while Iran’s banks are isolated, its economy is not.

U.S. Engagement with Iran

15.(S) FM Livni asked Levey during their November 17 meeting
why the USG was considering a rapprochement with Iran through
a U.S. Interests section in Tehran. She questioned whether
the tactic would have a net positive outcome when measured
against the negative perceptions such a move would be bound
to create. Levey told Livni that this was a question better
posed to the State Department, but that her concern was the
central issue being debated by policy makers in Washington.
In Levey’s previous meeting with MFA officials Bar and Gal,
he said that engagement with Iran would not work without
leverage, indicating that sanctions would need to be in place
no matter what the USG decides to do.

——————————————— ————-
——————————————— ————-

16.(S) Levey told Arditi that Treasury’s recent designation
of the “Union of Good” was proof of the USG’s commitment to
continue to work against Hamas and Palestinian terrorists.
Levey said, however, that while the USG supported efforts at
thwarting terrorism in the territories, the USG wished to
keep humanitarian goods flowing to the needy within the

17.(S) Arditi told Levey that Palestinian Authority (PA)
efforts at stemming terrorism within the territories were
going quite well. He said the PA’s positive efforts
“surprised” his staff and that he “never thought” the PA
would do so well. Levey said that Treasury coordinated with
Prime Minister Fayyad on the Union of Good designation and
was pleased to hear that PA efforts were held in high regard
by the GOI.

18.(S) When Levey inquired about efforts to prevent
correspondent banking relations in Gaza from being severed,
Arditi said that the Postal Bank “was on the agenda”. Arditi
lamented that the services provided by the Postal Bank would
not be as good because of its small size and limited
capacity. He expressed his hope that the central bank
governor would be able to delay the commercial banks’
decision to end their relationship with the Palestinians
until a permanent solution was ensured.

19.(S) This cable has been cleared by Under Secretary Stuart

TEL AVIV 00002760 004 OF 004


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The below cables are published at Counterpunch, not yet on the Wikileaks site.

First, let’s recall that despite Hamas’ efforts to renew the truce and relieve Gaza from the illegal siege and collective punishment which Israel inflicted on the people of Gaza for 2 years, and despite there having been virtually no rockets fired by militants during the June – November 5 2008 truce, and none at all by Hamas, Israel broke the truce on November 5. Barak had planned the Operation Cast Lead massacre even before entering into the truce. The massacre was also calibrated against the February 09 Israeli elections. From the cables below, the US kept a close eye on the impact of the massacre on the elections contenders’ standings.

As we know now from the mouths of Silvan Shalom and Nutanyahoo himself, Israel doesn’t want democracies around it as they tend to express the will of the people, to wit, disgust and indignation at zionist atrocities, land theft and genocide. Hamas was democratically elected yet with fascist aplomb, Israel designates both the Hamas political and military wings as ‘terrorist’. Israel and the US collaborate with the PA, who collude against their own people to suppress Palestinian resistance to Israeli war crimes and crimes against humanity.

I’ve highlighted what I think are the important parts in the cables below.


TEL AVIV 002864

SIPDIS E.O. 12958:

DECL: 12/22/2018



Classified By: Ambassador James B. Cunningham, Reason 1.4 (b) (d) 1. (S)

Summary. Since Hamas announced the end of the “tahdiya” truce agreement December 19, pressure has been building in Israel for the IDF to respond more aggressively to daily barrages of rockets and mortars from Gaza. The Israeli cabinet meeting December 21 was largely devoted to a lively debate about the appropriate military response in Gaza. While Defense Minister Barak, supported by PM Olmert, has so far managed to resist the pressure for an immediate, large-scale operation, the IDF has prepared a range of contingencies, and we assume these options are now under active consideration. The contingencies range from resumption of targeted assassinations of Hamas leaders to a full-scale invasion and reoccupation of Gaza. In the current environment, even such limited operations as air strikes on Hamas or PIJ rocket launching teams could set off such an intensive barrage of rockets that the IDF could be drawn into a ground operation to stop the shelling. Foreign Minister Livni, who is one of the primary advocates of an immediate, large-scale military response to the rocket fire, has instructed the MFA to prepare a diplomatic campaign to explain and justify likely Israeli military action.

2. (S) We recommend that the Department also begin to prepare press guidance, talking points and Security Council reaction in the event that Israel acts in the near future. Our suggestions as to the content appear in para 6 below. We further recommend contingency planning for humanitarian relief that will likely be needed in the aftermath of an Israeli military operation. End Summary.

Pressure Building in Israel ————————— 3.

(C) Pressure inside Israel is building for a much tougher response to rocket and missile attacks from Gaza. While it appears that the GOI has yet to take a specific decision, the Hamas announcement of the end of the “tahdiya” truce and the daily rocket and mortar firing — over thirty rockets and mortars were fired from Gaza at Israeli communities over the weekend — is adding to the pressure for an Israeli military response. At the December 21 cabinet session, PM Olmert and Defense Minister Barak had to fend off demands from much of the rest of the government, but especially Foreign Minister Livni, Transportation Minister Mofaz and Deputy PM Ramon, for an immediate, strong military response to the rocket fire. Livni and Ramon have called for overthrowing Hamas rule in Gaza, which would probably entail occupying the entire Strip. Opposition Likud Party leader Bibi Netanyahu visited Sderot yesterday and blasted the government’s failure to take stronger military action in response to the shelling. Based on public statements by Barak and IDF Chief of General Staff Ashkenazi, it is clear that Barak and the military want to take action at a time of their choosing and not forewarn Hamas exactly what they have in mind. Nonetheless, the pressure on the GOI to “do something” is growing. Political posturing is part of the mix, as all of the players except Olmert — who has resigned and will not seek reelection — are focused on building public support in advance of the February 10 general elections.

IDF’s Range of Military Options ——————————- 4.

(S) The IDF has prepared a range of operational plans over the past year. These range from renewed targeted assassinations of Hamas leaders to limited brigade or several brigade-size ground incursions (such as the IDF conducted last March) up to a full scale combined air-land-sea invasion of Gaza. An interim operation often discussed before the tahdiya was signed in June was the IDF’s seizure of the southern and northern ends of the Gaza Strip in order to stop the smuggling and make rocket launching more difficult. The precise mix of options is a political decision which the GOI probably has not yet taken and Barak is stressing the importance of limiting public discussion in order to preserve operational surprise. There is also the possibility, much discussed in the media here, that given the build-up in Hamas’ rocket stockpiles and the extension of their range, even such limited Israeli military operations as air strikes on rocket squads could lead Hamas and the other organizations to launch massive barrages of rockets, which could in turn force the IDF to go in on the ground to stop it. In this environment, there is no guarantee that what starts out as a limited operation will remain that way.

5. (C) Livni has instructed the MFA’s senior staff to prepare a diplomatic strategy to explain a large-scale Israeli military operation in Gaza. While international criticism of Israeli action is predictable, we anticipate that the tenor of the Arab and international response will be TEL AVIV 00002864 002 OF 002 determined by a number of unknown factors, including the scale and duration of the operation and the extent of the damage to the civilian populations on both sides. There is also the question of an Israeli exit strategy: if the GOI decides to reoccupy large parts of Gaza, as soon as the smoke clears the Israelis probably will be looking for a third party to whom they can transfer responsibility.

Action Recommendation: Consider U.S. Response Now ——————————————— —– 6.

(C) We strongly recommend that the Department consider now the U.S. response to the above-mentioned range of Israeli military operations, including press guidance, talking points and even Security Council action, bearing in mind that we are likely to have little to no advance warning and that even a relatively restrained operation could rapidly grow into something much bigger. Our recommendation is that the USG start with putting the blame on Hamas for the illegitimacy of its rule in Gaza, its policy of firing or allowing other factions to fire rockets and mortars at Israeli civilian targets, and its decision to end the “tahdiya” calming period; and support for Israel’s right to defend itself, while also emphasizing our concern for the welfare of innocent Palestinian civilians and U.S. readiness to provide emergency humanitarian relief. On this last point, USAID points out that large-scale U.S. and international humanitarian assistance will be urgently needed in Gaza if the IDF ends up carrying out a broad-scale military operation.

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

Not sure where this next bit is from – is it an appendage to the above or from elsewhere?

23.12 from Jerusalem

Al Quds quotes a recent World Bank report that concludes trade in the West Bank cannot improve under the current Israeli restrictions and checkpoint regime. The report focused on the Allenby border crossing between the West Bank and Jordan where Palestinian exports must pass through several Israeli obstacles. It demands the lifting of existing Israeli limitations on the travel of Palestinian citizens and goods. The report also considers Gaza to be on the verge of economic collapse due to the Israeli siege.

Next cable:



TEL AVIV 002906


DECL: 12/28/2018




Classified By: A/DCM Marc Sievers for reasons 1.4 (B/D).

1. (C) Summary:

The IDF continued its deployment of ground forces around the Gaza periphery on December 29, with elements of at least three armored and two infantry brigades taking up positions opposite Gaza City and Beit Hanoun. Air strikes against strategic and tactical targets continued throughout the day, as did rocket and mortar fire from the Gaza Strip. One Israeli civilian was killed when a rocket landed in Ashkelon on the morning of December 29. According to IDF contacts, 63 truckloads of humanitarian supplies entered Gaza via Kerem Shalom during the day on December 29, with further deliveries scheduled for December 30. Israeli political leaders, including FM Livni and MoD Barak, caution that military operations could continue for weeks, and that the goal is to change the strategic environment and destroy Hamas’ offensive rocket capabilities. Separately, Bank Hapoalim and Bank Discount announced that they will cease providing correspondent banking services to Gaza at midnight on December 31. End summary.

Military Operations ——————- 2.

(SBU) The Israeli Air Force (IAF) is continuing its strategic campaign against Hamas leadership, personnel and infrastructure throughout Gaza. In addition to targets associated with the manufacture, storage and deployment of Kassam rockets, the IAF has also attacked the Hamas Interior Ministry, Islamic University (which contains labs that the GOI says are active in weapons and explosives research for Hamas), and a Hamas guest house used for official visitors. The IDF Spokesperson announced that the office of Hamas PM Ismail Haniyeh was attacked overnight (note: speaking on Israeli radio December 29, Deputy Defense Minister Vilnai denied that Haniyeh was personally targeted in the airstrike), as were “dozens of other Hamas-related targets.” Israeli Naval forces also attacked Hamas vessels and coastal structures overnight, according to the Spokesperson’s office. In his radio interview, Deputy Defense Minister Vilnai also said the IDF has high morale, and in contrast to the Second Lebanon War, all levels of the military know their task and what is expected of them. Vilnai said the operations will last a long time, “perhaps much longer than people expect.” Asked to comment on a possible ground campaign, he declined to answer, saying he did not intend to broadcast to Hamas Israel’s military intentions.

3. (S/NF) At 16:00 on December 28, the IDF bombed the Phiadelphi corridor along the Gaza-Egypt border, destroying 39-40 smuggling tunnels. No Egyptian border guards were harmed. IDF contacts have repeatedly told DATT that the targeting of the tunnels was coordinated with Egypt, and that they had passed the coordinates of the attack points to the Egyptians to enable them to ensure the safety of their border forces.

4. (SBU) As of 15:00 local December 29, 50 rockets have been fired into Israel today from Gaza, according to press reports. One Israeli was killed and 14-16 wounded when a Grad-type rocket struck a construction site in Ashkelon during the morning. Two Israelis have been killed since the start of operation “Cast Lead” on December 27. On December 28, two 122 mm Katyusha rockets struck areas in or near the city of Ashdod, in what appears to be the first attack by rockets with a range in excess of 30 km.

5. (S/NF) The IDF is continuing its deployment of ground forces around the Gaza periphery, although no ground operations had been initiated as of 18:00. This morning the IDF closed most areas bordering the Gaza Strip to allow for the positioning of armor and infantry units. On December 28, DAO officers observed the movement of M-109 artillery and support/ammunition vehicles into the vicinity of Gaza. Heavy trucks laden with concrete shelters, water storage tanks and other logistical equipment intended to support ground operations were also observed deploying around the Gaza border. DAO also observed the movement of Merkava 3 tanks from the 188 Armor Brigade, which is normally deployed on the Lebanese border, into the vicinity of Gaza.

6. (S/NF) During a subsequent observation mission this morning, DAO officers observed a further significant increase in the IDF ground forces presence around Gaza. Elements of three armor brigades, including artillery batteries and Merkava 3 and 4 tanks, and two infantry brigades were deployed opposite Gaza City and Beit Hanoun.

TEL AVIV 00002906 002 OF 003 Political Developments ———————– 7.

(U) During a special Knesset session to discuss the military operations this morning, DefMin Barak called the operation an “all-out war against Hamas” and said it would be “widened and deepened as is necessary.” He said the security services had spent “months” preparing for the operation, and would carry it out until Hamas is not longer capable of launching rockets at Israeli towns. While somewhat less hawkish, FM Livni’s remarks to the Knesset made clear that Israel expects the international community to blame Hamas, not Israel, for the current hostilities and the plight of Palestinian civilians in Gaza.

8. (C) During a briefing in Sderot for the diplomatic corps on December 28, Livni and MoD Pol-Mil Director Amos Gilad stressed that Israel needs the support of the international community for an extended military operation designed not to overthrow the Hamas regime in Gaza, but to change the strategic environment by force. Israel will not tolerate continued rocket attacks on its citizens and the operation will continue for weeks. Livni said if the international community forces Israel to stop too soon, Israel will have to do it all over in the near future. She expressed understanding of President Abbas, dilemma and pressure on him to condemn Israeli actions, but she noted that even he had blamed Hamas while in Cairo, and she asked why the rest of the international community was finding it hard to do the same. “This is the minimum we expect of you,” she told the assembled diplomats. Livni also said the Gaza operation was in the longer run interests of peace with the Palestinians since Israel could not sign a peace agreement with a Palestinian Authority that did not have control over Gaza.

9. (C) Gilad said he attached high priority to cooperating with UNRWA, WFP, and Arab and Muslim states to ensure a steady flow of humanitarian relief. He said the objective is to force an end to the rocket fire and Israel will continue until that goal is reached. He reiterated comments by other political leaders that ground operations are an option to be used if necessary. Gilad emphasized that the targets have been only Hamas offices, military installations and rocket workshops and stockpiles. He said Israel is using sophisticated means to avoid civilian casualties but some are unavoidable. Asked if Israel was concerned about Hizballah opening a second front from the north, Gilad said the IDF is on high alert in the north and is “ready for all eventualities.” Gilad dismissed the possibility that the fighting in Gaza could touch off a third Intifada in the West Bank, saying that “all of our intelligence assessments are that the PA is in full control in the West Bank and has no interest in allowing a third Intifada.

Humanitarian Assistance ———————– 10. (SBU)

The MFA and the IDF,s Coordinator for Government Activities in the Territories (COGAT) say they are prepared, to the extent possible given ongoing military operations, to facilitate the passage of all international humanitarian assistance destined for Gaza. According to COGAT, 23 trucks crossed into Gaza via the Kerem Shalom crossing on December 28, with 50 trucks scheduled for delivery December 29. As of 17:00 on December 29, 63 trucks had crossed into Gaza, according to an IDF contact at Kerem Shalom. The crossing was scheduled to remain open until 16:30 but closed late in order to get through an urgently needed donation of 600-1000 units of blood from Jordan. The IDF contact confirmed delivery of five ambulances from the PA, but said the Turkish ambulances, which were supposedly off-loaded in Ashdod, had not been found as of closing time.

11. (SBU) According to the IDF source, the 63 trucks included: — World Food Program: 15 trucks (450 metric tons, including 20 metric tons funded by USAID) of wheat flour; — UNWRA: 4 trucks of medical supplies and 10 trucks of food (rice, milk powder, sugar); — ICRC: 3 trucks of medical supplies and 5 ambulances transferred from the West Bank; — Jordan: 1 truck of 1000 liters blood products, 12 truck of food and medical supplies; — Egypt: 4 trucks of food; — Doctors Without Borders: 1 truck of medical supplies; — CARE: 1 truck of medical supplies;

12. (SBU) The IDF expects 50-60 trucks at Kerem Shalom again tomorrow, including five trucks of medical supplies for the ICRC.

TEL AVIV 00002906 003 OF 003

13. (SBU) Nahal Oz and Karni: As of 11:00, the MFA reported that plans to open the Nahal Oz terminal for cooking gas transfer was cancelled due to the ongoing military operations near the terminal. COGAT is planning to try again December 30. Plans to transfer 40 trucks of grain through the Karni conveyor terminal were also cancelled, with COGAT examining the possibility of rerouting the grain to Kerem Shalom.

14. (SBU) Erez: COGAT source confirmed several emergency crossings at Erez, including a number of UN staff entering Gaza and urgent medical cases exiting Gaza. As of 17:00, Erez was being held open waiting for the arrival of an ambulance to transport an injured individual to the West Bank for medical treatment. The Consular Section is coordinating with COGAT and Consulate General Jerusalem on any potential evacuations of Amcits through Erez, but COGAT knew of none seeking exit on December 29.

15. (SBU) Medical Supplies: The MFA argued today that inefficiencies on the part of the Palestinian Authority,s (PA) Ministry of Health (MOH), not the GOI, are responsible for the delay of medical supplies into Gaza. According to the MFA, the PA took responsibility for the provision of healthcare products to Gaza as of August. Since that time, it has become the responsibility of the PA MOH to gather, package, and transfer medical supplies to UNRWA for delivery to recipients in Gaza. Due to delays in preparing supplies, the PA MOH has not been able to deliver enough goods to UNRWA to keep pace with demand, the MFA said. The MFA emphasized that the GOI stood ready to approve for entrance any medical supplies that donors or the PA were prepared to send to Gaza. COGAT confirmed that the PA had advised of 30 truckloads of medical supplies slated to arrive at Kerem Shalom on December 29. However, only five had arrived before the crossing closed, and COGAT was told by PA officials that no more would be coming.

16. (SBU) MFA contacts said they were now working with the World Health Organization (WHO) to improve the supply of medical goods destined for Gaza. The MFA understands that the WHO has requested additional donations of supplies from its members and continues to coordinate its actions with the PA MOH. The MFA believes the WHO had underestimated the number of injured that would result from the current action and is now ramping up operations to meet demand as quickly as possible. The Israeli Ministry of Health has offered to send emergency medical supplies as well, and is coordinating with the MFA and COGAT to determine whether its assistance is required.

Other —– 17. (C) Gaza Cash: Bank Hapoalim and Bank Discount, the only two Israeli banks that maintain correspondent relationships with Palestinian banks, report that they plan to permanently discontinue provision of services to Gaza branches as of midnight on December 31st. Banking contacts have informed emboffs that Stanley Fischer, Governor of the Bank of Israel, has not requested that the banks extend their deadlines as he did in November. Without such a call from Fischer by close-of-business today, emboffs believe that Bank Hapoalim and Bank Discount will likely follow through on their plan as announced. Embassy contacts at the banks and in Fischer,s office have agreed to keep emboffs appraised of any changes.

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Next cable:

30/12/08 from Jerusalem




DECL: 12/30/2018



Classified By: Consul General Jake Walles, for reasons 1.4 (b) and (d)

1. (S) PA security chiefs met with top IDF and COGAT officers late December 29 at Bet El (outside Ramallah) to discuss the West Bank security situation in light of Israeli operations in the Gaza Strip. PA security chiefs told ConGenOffs that the PA urged the IDF to avoid Palestinian demonstrations and to refrain from using live ammunition, which killed three Palestinian demonstrators in recent days. According to PA commanders, the two sides agreed to expedite coordination and exchange information on disturbances and agreed both sides have an interest in avoiding violent clashes. Separately, PM Salam Fayyad confirmed to the Consul General that Israeli MoD officials have expressed their understanding of the need to avoid confrontations in the West Bank. End summary.

2. (S) According to PA National Security Forces (NSF) commander MG Thiab Mustafa Ali (Abu al-Fatah), PA Joint Security Committees (JSC) commander BG Qays Makhzumi and other senior security contacts, PA commanders met with IDF West Bank Division Commander BG Noam Tibon, West Bank COGAT Director BG Yoav (Poly) Mordechai and IDF staff principals late December 29 at Bet El DCL (District Coordination Liaison) office outside Ramallah. In addition to MG Ali and Makhzumi, PA police chief MG Hazim Attallah, Preventive Security (PSO) director MG Ziad Hab al-Rih, acting General Intelligence (Mukhabarat) chief Muhammad Thib Mansur, and Military Intelligence (Istikhbarat) chief BG Majid al-Farraj attended the meeting. Security commanders told ConGenOffs that they discussed the overall security situation the West Bank in light of Israeli operations in the Gaza Strip, and better methods of dealing with protests.

PA Commanders Urge IDF to Avoid Use of Live Ammunition —————————- 3.

(C) PA commanders complained about IDF use of live ammunition, responsible for three Palestinian fatalities in December 27-28 protests. MG Ali said IDF commanders told them live ammunition is the last resort when dealing with Palestinian demonstrators, and IDF rules of engagement only authorize it when the lives of IDF soldiers or Israeli citizens are at immediate risk. PA security chiefs said IDF BG Tibon reported that the Nil’in village shooting (in which two Palestinian were killed by IDF fire) was quickly investigated by the IDF, and that an IDF officer has already been referred to a disciplinary board for improper use of live ammunition during the incident. According to MG Ali, both BGs Tibon and Mordechai said they re-issued instructions to all forces operating in the West Bank to abide strictly by rules of engagement and refrain from using live rounds against unarmed demonstrators.

4. (C) MG Ali added that IDF commanders said that in the Silwad incidents the Palestinian was about to throw a firebomb, thus endangering soldiers’ lives, and that according to IDF rules of engagement Palestinians with firebombs are a threat to life and can be engaged with live ammunition. He added that both IDF commanders agreed, however, that in most cases, even demonstrators with firebombs should not be engaged, and troops should find non-lethal means of controlling the situation.

Both Sides Agree to Increase Coordination —————————————– 5.

(S) According to PA security chiefs, the second part of the meeting was dedicated to a review the West Bank security situation. PA commanders said they told IDF officers that President Abbas and PM Fayyad both directed them to avoid situations that could develop into confrontations with the IDF. The security chiefs said Abbas and Fayyad passed a message to all Palestinian factions, at a PLO Executive Committee meeting on December 29, that only peaceful marches away from flashpoints would be permitted. PA commanders noted they have no control on over B/C areas such as Qalandiya and Nil’in, and would need IDF approval to move PA forces to those areas to prevent clashes between protesters and the IDF. PA commanders said both sides agreed that Hebron is a problem, and cooperation on a case-by-case basis is critical. PA commanders said their IDF counterparts agreed to expedite coordination and movement requests and exchange information on possible disturbances, as both sides have an interest in preventing West Bank violence. They said both sides also agreed not to leak substantive discussions about the meeting to the press, given the sensitivity of JERUSALEM 00002314 002 OF 002 PA-GOI security coordination in a time of Palestinian outrage over events in Gaza.

Fayyad Confirms MoD Contacts —————————- 6.

(S) In a separate conversation with the Consul General, PM Fayyad said he had received messages from the Israeli MoD on December 29 indicating that the Israeli security leadership understands the need for the IDF to deploy in the West Bank in a way that will minimize confrontations with Palestinian civilians. Fayyad said he was encouraged by the messages, but would watch carefully to see how these instructions are implemented by IDF commanders on the ground. WALLES

Next cable:

30/12/08 Tel Aviv


TEL AVIV 002922


DECL: 12/30/2018




Classified By: A/DCM Marc Sievers, reasons 1.4 (b),(d) 1.

(S) Summary: The IDF continued to reinforce and increase ground forces around the Gaza periphery, including robust logistical support and elements from brigades not typically deployed in the Gaza sector. No ground operations have been initiated; the senior GOI leadership is discussing a range of options. Air strikes during the early morning hours of December 30 destroyed a number of Hamas strategic and tactical targets, including a government complex in Gaza City. Rockets and mortars from Gaza continued to strike Israel, reaching as far north as Yavne and as far east as Rahat; one Israeli woman in Ashdod and an IDF soldier near Nahal Oz were killed in rocket strikes during the evening of December 29. According to the IDF, 93 truckloads of humanitarian supplies entered Gaza via the Kerem Shalom crossing during the day on December 30. During a strategic assessment meeting on December 29, PM Olmert challenged GOI officials to avoid talk of a ceasefire, and directed IDF forces to continue their operations with an undefined duration. An Israeli Navy vessel rammed a boat from the Free Gaza movement carrying humanitarian assistance to Gaza from Cyprus, forcing it to turn back. The Free Gaza boat sustained damage but was able to travel north to the Lebanese port of Tyre. The Embassy disseminated a warden message to avoid the 30km area from Gaza due to on-going IDF operations and rocket attacks. End summary.

Military Operations ——————- 2.

(SBU) Israeli air and naval forces attacked dozens of Hamas targets throughout the Gaza Strip overnight and during the morning hours of December 30. According to the IDF Spokesperson, targets included three buildings in the Hamas government complex — including the Hamas ministries of interior and foreign affairs and PM’s offices — in the Tel Al-Hawa neighborhood, Hamas training camps and outposts, stations held by Hamas naval forces, a vehicle transporting a stockpile of Grad missiles, rocket launchers, a weaponry manufacturing facility, and sites used as headquarters by terror cells. Israeli media reported that two top Hamas weapons engineers were killed in the December 29 strike on research labs at the Islamic University.

3. (S/NF) The IDF continues its deployment of ground forces around the Gaza periphery, although no ground operations had been initiated as of 1800 local. Poor weather conditions may have been a contributing factor, although late-breaking press reports also indicate that “senior defense officials” may recommend a 48-hour truce to evaluate Hamas’ reaction prior to launching any ground offensive. Israel Defense Intelligence (IDI) sources told DAO officers that ground operations could begin at any time; a deciding factor would be weather conditions facilitating the ability to provide close air support and medical evacuation. During the evening of December 29, rain and lowered ceilings dominated weather conditions; overcast skies were prevalent over Gaza during much of the day on December 30. The tempo of air operations decreased greatly during the afternoon of December 30.

4. (S) The IDF continues to reinforce and increase its logistical footprint around Gaza. DAO officers observed more robust logistical support for units in assembly areas at Erez Crossing and at the artillery position located south of Kibbutz Nir’am. Unit flags, tents, and port-a-johns have been erected at these locations. Overnight, reinforcements from units previously unobserved in the Gaza sector arrived, including elements of the Givati Brigade, the Golani Brigade’s 12th Battalion, and the Kfir Brigade’s Heruv Battalion. DAO reports that the preponderance of IDF units are located around the northern half of Gaza; the deployment of High Mobility Multipurpose Wheeled Vehicles (HMMWVs) with mounted mock turrets may represent decoy attempts to portray a larger presence in the south.

5. (S) DATT reports that during a briefing to military attaches and UN military representatives on December 29, IDF Strategic Division Commander Brigadier General Yossi Heyman noted the 122mm rocket attacks on the port of Ashdod demonstrated that Hamas is capable of launching rockets of up to 35km — putting more than 500,000 Israelis in the range of rockets emanating from Gaza. BG Heyman said the IDF was “prepared for a long operation,” and stressed that the IDF was doing its best to minimize civilian casualties. Reserve Brigadier General Baruch Spiegel informally mentioned to embassy officers December 30 that the IDF is ready to carry out a detailed plan for ground operations with multiple TEL AVIV 00002922 002 OF 003 stages and a range of levels of intensity, but is waiting for orders from the political level — presumably the inner war cabinet of PM Olmert, Defense Minister Barak, Foreign Minister Livni, and Chief of Staff Lieutenant General Ashkenazi. Spiegel said he thought the decision whether to launch a ground operation would be made in the next 48 hours. He commented that the IDF is not in a hurry and can continue to build up ground forces without pressure to act. Spiegel and his colleague at the Economic Cooperation Foundation Boaz Karni told us that the GOI’s goal of a “sustainable ceasefire” was being complicated by the fact that senior Hamas officials in Gaza have all gone underground and are not able to communicate with potential mediators.

6. (SBU) As of 1715 local December 30, approximately 20 rockets have been fired throughout the day from Gaza, according to press reports. Most of these rockets landed in or near Sderot, injuring two Israelis and damaging several properties. One rocket struck as far east as the vicinity of Rahat; another Qassam rocket scored a direct hit on a kibbutz dining hall in the Sha’ar Hanegev Regional Council. According to the Israeli MFA, approximately 90 rockets were fired from Gaza at Israel on December 29. Three Israelis were killed by rocket and mortar fire on December 29, including a construction worker in Ashkelon (Grad-type rocket), a soldier in the Nahal Oz area (Qassam/mortar attack), and a woman in Ashdod (Grad-type rocket). Four Israelis have been killed since the start of operation “Cast Lead” on December 27. During the evening of December 29, several rockets hit in or near Okafim in the east and Yavne in the north, demonstrating increasing range. Israeli schools in a 30km radius from Gaza remained closed on December 30.

Political Developments ———————- 7.

(SBU) According to media reports, during a December 29 evening situation assessment meeting with FM Livni, Defense Minister Barak, Chief of Staff Lieutenant General Ashkenazi, Shin Bet Director Diskin, and Mossad Director Dagan, PM Olmert reportedly instructed meeting attendees not to talk about a cease-fire with Hamas. He ordered the IDF to continue its actions with an undefined end to the operation. Olmert stressed that Israel will act against Hamas “with an iron fist,” but would treat the population in Gaza “with silk gloves” by ensuring the provision of humanitarian aid, food, and other needs.

8. (SBU) Israeli Minister of National Infrastructure Binyamin Ben-Eliezer (Labor Party) said to the press that Israel would not cease the operation in Gaza until Hamas stopped firing rockets at Israel. He said the operation will continue until a “new reality” is created in which communities on the Gaza periphery can “lead their lives quietly.” Minister for Industry, Trade and Labor Eli Yishai (Shas Party) commented that the Israeli elections scheduled for February 10 should not be postponed due to the situation in Gaza.

9. (C) The MFA is closely following Egyptian-Turkish discussions of possible ceasefire terms, which they believe are backed by the USG. Israeli press reports, meanwhile, speculate on a joint French-British proposal to force a cease-fire on Israel and Hamas. According to the press, the proposal will be presented at an emergency session of the EU’s foreign ministers’ meeting on December 30. The Israeli press quotes Foreign Ministry sources as saying the “British are promoting a very bad proposal for Israel.” The same sources indicate the “international hourglass” would allow Israel to continue its operation in Gaza at most until January 5. Israeli press reports indicate that “senior defense officials” may recommend a short-term cessation of hostilities to evaluate Hamas’ reaction, although the cabinet’s views on any such suggestion were unclear as of 1800 local.

Humanitarian Assistance ———————– 10.

(SBU) The MFA and the IDF’s Coordinator for Government Activities in the Territories (COGAT) reiterated the GOI policy that any international aid will be permitted into Gaza. According to COGAT information relayed via the MFA, the Kerem Shalom crossing was open on December 30, but closed at 1500 local. One hundred and ten trucks carrying medical equipment and food were expected, but only 93 actually crossed into Gaza due to time constraints and lack of preparedness on the part of some trucks, according to COGAT.

11. (SBU) According to USAID, 14 UN World Food Program (WFP) TEL AVIV 00002922 003 OF 003 trucks with 400 metric tons of wheat flour and 21 metric tons of biscuits entered Gaza on December 30 through the Kerem Shalom crossing. USAID reports that all USAID-funded food commodities for non-refugee beneficiaries are already in Gaza; delivery will begin as soon as the security situation permits.

12. (SBU) The Nahal Oz crossing was closed after a mortar attack on the crossing on December 29; COGAT via the MFA reported that the security situation on December 30 prevented the opening of the terminal. The MFA also noted the GOI was aware that the Gaza power station needs diesel fuel, and is working on an alternative point of entry as the Nahal Oz crossing was closed. COGAT also reported that the Karni crossing remained closed December 30 due to on-going military operations in the area; it is not clear whether the security situation will allow for the crossing to be opened on December 31. According to the MFA, COGAT suggested to UNRWA that wheat originally destined to enter through Karni be repacked in sacks to allow for a transfer at the Kerem Shalom crossing. (Comment: We doubt this offers a realistic solution, given the very large volume of bulk wheat needed by UNRWA and the additional pressure it would place on the Keren Shalom crossing.)

13. (SBU) The MFA continued to argue on December 30 that inefficiencies on the part of the Palestinian Authority’s (PA) Ministry of Health (MOH) — and not the GOI — are responsible for the delay of medical supplies into Gaza. According to the MFA, several NGOs have complained about the PA MOH’s inefficiency.

14. (SBU) The MFA reports that the GOI has approved the following new humanitarian assistance shipments: — One aircraft from Norway with WHO medical supplies (expected in next few days) — One aircraft from Geneva with Red Cross medical supplies (expected in next few days) — Two aircraft from Russia with humanitarian goods (expected to arrive on or around January 2) 15. (SBU) USAID sources report that 45 to 50 truckloads of medical supplies, basic food items, and blankets donated by Qatar and Libya are waiting on the Egyptian side of the Rafah crossing and are expected to enter Gaza on December 30. Four electrical generators for the Gaza Ministry of Health facilities are also at the Egyptian side of the Rafah crossing waiting to enter Gaza.

15. (SBU) According to press reports, Olmert, Livni and Barak agreed December 29 to allow Qatar to airlift humanitarian aid to Gaza in coming days. Several aircraft from Qatar will land in Israel; food and medicine will subsequently be trucked to Gaza. 16. (SBU) The MFA expects the GOI to approve the full list of foreign citizens wishing to be evacuated from Gaza, including any American citizens. The GOI is now working with Jordan to permit the expeditious entry of these potential evacuees into Jordan via the Allenby Bridge with departure through Amman airport. The MFA expects the GOI to allow the evacuation within the “coming days.”

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Next cable:

31/12/08 Tel Aviv

S E C R E T TEL AVIV 002930 NOFORN E.O. 12958:

DECL: 12/31/2018



Classified By: Classified by Acting Deputy Chief of Mission Marc Siever s, reason 1.4 (b) and (d) 1. (S)

SUMMARY: While IDF troops remained on hold but still poised for a ground attack, rocket fire continues into Israel from Gaza, including increased attacks beyond 30km, and the first hit in the city of Be’er Sheva. Israeli airstrikes are ongoing, although at a slowed tempo, with attacks reported along the Philadelphi corridor, in northern Gaza, and on government buildings including the Hamas “Prime Minister’s Offices.” Meanwhile, according to press reports, the “security kitchen cabinet” of PM Olmert, DM Barak and FM Livni decided to reject the French proposal for a 48-hour humanitarian cease-fire, calling it unrealistic because it was not permanent, placed limited demands on Hamas, and was unnecessary as no humanitarian crisis has developed in Gaza. According to COGAT, over 100 truckloads of humanitarian aid are scheduled to enter Gaza on December 31 through the Kerem Shalom crossing, while the Karni and Nahal Oz crossings remain closed due to ongoing mortar fire in the area. The Erez crossing remains open but restricted. With Karni and Nahal Oz closed, COGAT says it is working with UNRWA on logistically feasible options for bringing bulk grain and fuel through Kerem Shalom. Finally, the Bank of Israel has also given its approval for Bank Hapoalim and Discount Bank to end their correspondent relationship with Gaza banks as of January 1.

Military Operations ——————- 2. (S) DAO sources report that the IAF conducted 35 strikes overnight, withIsraeli Naval forces also striking targets withinGaza. This includes attacks against a reported Hamas training camp in northern Gaza, a second strie along the Philadelphi corridor against smuggling tunnels, and the bombing of additional government buildings including the office building of Hamas “Prime Minister” Ismayil Haniyah. No casualties were reported in these actions, although there are reports of civilian casualties in other strikes, including one that targeted a house in the Jabalya refugee camp.

3. (S) At 1430 local, DAO observers reported an increase in IDF ground forces (over levels observed December 30) along the Gaza border, including elements of at least four infantry and three armor brigades. Unlike during previous observation missions, IDF forces outside the northern Gaza Strip were observed wearing full combat gear and deployed in a combat-ready stance. Additional roads, including highway 4 north of the Erez crossing, were closed, and a large staging area — with lights, generators, field tents, water tanks and other structures — had been completed adjacent to the northeast corner of the Gaza Strip.

4. (S//NF) Rocket fire into Israel continues as several more towns suffered their first hit, including at least 5 impacts in Be’er Sheva, the principal city in the Negev. Be’er Sheva is Israel’s sixth largest city, after Ashdod (which is also under attack), with a population of 200,000. The first rocket strike into Be’er Sheva was a 122mm Grad that the IDF told the DAO they believe the Grad was made in China but are analyzing it further before confirming.

5. (U) While no one was injured in the initial Be’er Sheva attack, it hit an empty kindergarten and the news photos of the burned dolls and destroyed children’s toys elicited a strong response from authorities and the public. The IDF has expanded its orders to close the schools to additional “third ring” cities, including Be’er Sheva, and asked residents to stay in or near shelters and avoid public gatherings. At least five more rockets have hit Be’er Sheva on December 31, and attacks are reported on other towns including Ashkelon and Yavneh. Early estimates are over 40 Qassam, Katyusha and Grad rockets fired as of 1430 local on December 31.

Humanitarian Assistance ———————– 6.

(U) COGAT told Emboffs that Kerem Shalom and Erez remain open, while Nahal Oz and Karni are still closed due to continued attacks in the vicinity of the crossings. COGAT says as of mid-day over 80 trucks have passed through Kerem Shalom, with a target of over 100 trucks before the crossing closes at 1500. As of 1430, COGAT was not able to provide the number of people that have crossed through Erez, though at least four crossing permits have been issued.

7. (SBU) COGAT officials also said that they have yet to receive a response from UNRWA on the feasibility of transferring the bulk grain at the Karni crossing into 1-ton plastic sacks and moving them through Kerem Shalom. COGAT says it is also still investigating ways that it can move cooking gas and diesel fuel through Kerem Shalom that meet public safety standards. COGAT officials also told EconCouns that two planeloads of aid are expected today and tomorrow from Greece, Norway and the WHO. However, the COGAT official warned that, due to capacity issues, it will take a week and a half to move these goods through Kerem Shalom.

Political Developments ———————- 8. (C)

Prime Minister Olmert, Minister of Defense Barak and Foreign Miniter Livni met last night and rejected the possibility of a 48-hour humanitarian ceasefire as suggested by French Foreign Minister Bernard Kouchner. A Foreign Ministry spokesperson called the proposal unrealistic because it was a unilateral Israeli ceasefire with no mechanism to ensure Hamas ceases rocket fire, smuggling, and other terrorist activity. Barak was reportedly in favor of the ceasefire to calm the international community, while Olmert and Livni took a harder line according to press reports. Nimrod Barkan, head of the MFA Political Research Department, told A/DCM on December 31 that Barak’s primary interest in the 48-hour ceasefire was due to the poor weather expected over the next two days.

9. (U) The full security cabinet met on December 31 to receive a security briefing and discuss a ground operation. Barak has already requested that another 2,500 reservists be activated. During the meeting, Shin Bet chief Yuval Diskin reportedly said that the operations against Hamas infrastructure had been more effective than anticipated and that no humanitarian crisis exists in Gaza.

10. (U) In the press, pundits are divided over whether Israel should accept a ceasefire or continue to a more-costly ground operation. Speculation is also growing over the political motivations of the Gaza operation. Opposition leader and PM candidate Benjamin Netanyahu has so far expressed complete support for the government, while the first polls released since the operation began show gains for both Labor and Kadima, with Kadima now even with Likud at 29 seats apiece.

11. (SBU) Israeli Arabs: Protests against the Gaza operation continue in Israeli-Arab and mixed Jewish-Arab towns and cities. While most of these demonstrations have ended peacefully, others have resulted in clashes with police or Jewish counter-protesters. Minor clashes between Arab and Jewish students at Haifa University have occurred each day since December 29. The far-left and predominantly Arab Hadash Party is organizing what it hopes will be a very large demonstration in Tel Aviv on the evening of January 3. At the same time, small groups of Israeli-Arab youths continue to throw stones at cars and block roads throughout the north, with incidents reported in Uhm al-Fahm, Nazareth, Akko and dozens of smaller towns. Media reports on December 31 indicate that police have arrested over 300 Israeli Arabs, a large portion of them minors, for causing violent disturbances and disrupting traffic. POL and DAO officers have seen very large numbers of Israeli police and border police deployed in visible locations throughout the north since the start of military operations on December 27.

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