From: <a href="http://www.aftenposten.no/spesial/wikileaksdokumenter/article3972838.ece">Aftenposten</a><br>
Date: 26.7.2007: 

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S E C R E T 
SECTION 01 OF 02 TEL AVIV 002281 
SIPDIS 
SIPDIS 
WHITE
HOUSE FOR APHSCT TOWNSEND; TREASURY FOR U/S LEVEY; NSC FOR ABRAMS. 
E.O. 12958:
DECL: 07/16/2017
TAGS: PTER, PREL, KNNP, KWBG, EFIN, IR, IS 
SUBJECT: APHSCT TOWNSEND RECEIVES ACTION PLAN ON PALESTINIANS FROM 
ISRAELI NSC 
REF: TEL AVIV 1966 
Classified By: Charge daffaires Gene A. Cretz for reasons 1.4 (B/D).

1. (S)
SUMMARY: Frances Fragos Townsend, Assistant to the President
for Homeland Security and Counterterrorism (APHSCT) met with
Israeli National Security Council (NSC) officials on July 12.
Danny Arditi, Head of the NSC Counterterrorism Bureau,
presented a plan to facilitate increased financial support for
the Palestinian government of Prime Minister Salam Fayyad,
while mitigating the risks of new funding for terrorists and
the Hamas "government" in Gaza. The core of the proposal was
the establishment of an active Palestinian Financial
Intelligence Unit (FIU) with supervision from the United
States or the European Union. NSC Chairman Ilan Mizrahi
offered Townsend a broader analysis of regional threats,
focusing on the specter of Iranian influence and what he
viewed as the growing confidence of al-Qaeda-related groups.
NSC officials additionally presented an action plan for
disrupting Hizballahs terrorist operations through an
aggressive legal strategy against the organizations
international criminal network. END SUMMARY.

---------------------------------------------
Terrorist Finance Controls Key to Gaza Policy
---------------------------------------------

2. (S)
Brigadier General Danny Arditi, a counterterrorism advisor to
Prime Minister Ehud Olmert, presented Townsend with a plan for
increased cooperation with the Fayyad government, facilitated
by improved monitoring of the Palestinian financial system.
Arditi said that the objective was to damage the Hamas
government in Gaza financially without creating a humanitarian
crisis, and to buy time for Fatah to rebuild support. In
Arditis view, the current closure of Gaza border crossings is
not sustainable, with several thousand Palestinians currently
waiting to enter Gaza through the Rafah crossing. Arditi said
that sooner or later the GOI would have to deal with Hamas. At
the same time, said Arditi, Israel and the Fayyad government
are in agreement that they cannot allow free movement into and
out of Gaza without a mechanism for controlling the flow of
money and goods to terrorists and the Hamas government. (NOTE:
Arditi added that Israel and Fayyad are both willing to open
the Kerem Shalom crossing through Israeli territory. Hamas has
repeatedly rejected such a solution, preferring to hold out
for reopening Rafah for people and Karni for goods. END NOTE.)

3. (S)
Arditis proposal called for the creation of an external
oversight system, with assistance from the United States
and/or the European Union. The proposed system would include
the creation of a strong Palestinian FIU based in the West
Bank, and "the adoption of Financial Action Task Force (FATF)
rules by the Palestinian banking system." Without such
oversight, Arditi expressed concern that Israeli banks would
cut off their correspondent relationship with the Palestinians
(reftel). Arditi said that Mossad Director Meir Dagan also
advocates a new Palestinian "social security system" as an
alternative to the Hamas Daawa system of charitable
institutions, but Arditi remained skeptical on this point.
Arditi asked Townsend who would be the right partner in the
USG for the FIU plan, and inquired as to whether it would be
well-received in Washington. Townsend recommended Under
Secretary for the Treasury Stuart Levey as a natural
counterpart, and suggested that the Israelis approach Deputy
National Security Advisor Elliott Abrams on the question of
support.

4. (S)
Arditis presentation represented an attempt by the Government
of Israel (GOI) to find a way forward in dealing with
Hamas-controlled Gaza, but NSC officials admitted that the GOI
does not yet have a coherent policy. The Gaza/West Bank split
appears simple on the surface, said an aide to Arditi, but
carries many inherent contradictions. "This is not the first
time we have tried to help Fatah," he noted. NSC officials
told Townsend that the Israeli Cabinet remains concerned about
Hamas influence in the West Bank, and many are skeptical about
the ability of Abbas and Fayyad to "turn back the wheel."

---------------------------- 
NSC Head Sees "Axis of Fear" 
---------------------------- 

TEL AVIV 00002281 002 OF 002

5. (S)
Chairman Ilan Mizrahi stressed that process, not events,
affects the spread of terror in the Middle East. He pointed to
three major factors in the region that create the conditions
for terrorism: the weakness of Arab and Muslim communities and
states that fail to join the advances of the modern world; the
erosion of the secular state and the rise of ethnic politics,
particularly in Iraq, the Palestinian territories, and
Lebanon; and the rise of political Islam. Mizrahi also noted
that the clash between Sunni and Shia Islam tends to bring out
the extremists on both sides. He pointed out that both sides
support terror groups that further their interests, including
the Gulf States and Saudi Arabia, despite the fact that some
characterize them as "moderate Arab states" or "good guys."
Mizrahi said that many Arab states would be better
characterized as an "axis of fear," because they share a fear
of Iranian influence.

6. (S)
There are few forces restraining radical Islam, said Mizrahi,
particularly now that the United States and Israel are viewed
as weakened powers. Supporters of radical Islam believe that
their cause is ascendant, he continued, given what they
perceive as successes in Iraq, Afghanistan, Somalia, North
Africa, Iraq, and Lebanon -- as well as growing militancy
among Muslim communities in Europe and the Far East. Iran
supports terrorism throughout the region, said Mizrahi, who
asserted that Iran is currently sheltering two senior al-Qaeda
operatives. Townsend agreed with Mizrahi that al-Qaeda-type
groups were positioned for new strikes against the West,
particularly originating in North Africa where al-Qaeda has
gained from mergers with local organizations. Townsend said
that terrorists were particularly determined to hit major oil
facilities, and could potentially pursue a combination of big
and small attacks over a period of time sweeping from Europe
to the Middle East.

------------------------
Linking Crime and Terror 
------------------------ 

7. (S)
NSC officials made a presentation on current GOI efforts to
pursue links between terrorism and criminal activity,
including Hizballahs involvement in drug trafficking and money
laundering. They thought criminal investigations could be used
to disrupt Hizballahs operations, especially its financial
resources. One NSC official working on the plan said that he
was working with the New York District Attorney to prosecute
criminal cases in that state. Mizrahi also contended that the
professional level of criminality in North Africa, coupled
with emigration to Europe, posed a real threat when combined
with terror elements. Townsend added that given the visa
waiver program with many European countries, this posed an
additional threat to the United States. NSC officials queried
Townsend on U.S. commitment to combating Hizballah, and
received assurances that the organization remains a "tier 1
priority."

---------------------------------------- 
COMMENT: GOI LOOKS TO U.S. FOR DIRECTION 
----------------------------------------

8. (S)
It is not clear to what extent the NSC proposal for a
Palestinian FIU and international oversight is official GOI
policy. Israeli officials themselves admit that a clear policy
has yet to crystallize fully, especially with regard to
Palestinian institutions in Gaza. There appear to be several
camps within the GOI on the issue of financial links with
Gaza, with some advocating for a complete banking quarantine.
This current proposal originated in the Israel Money
Laundering and Terror Financing Prohibition Authority of the
Ministry of Justice (reftel), and represents a more measured
approach. Arditi and others are looking for a balance between
humanitarian concern for the Palestinian population and
effective tracking of possible terrorist activity. Arditi and
the NSC are likely seeking U.S. support to strengthen their
position in internal GOI discussions.

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