Excerpt from document summary
(S/NF) The GOE claims to have increased its efforts against
HAMAS-related smuggling activity, and reports recent success in
interdicting and dismantling goods and financial smuggling
networks.

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INFO RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
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RHMFISS/JOINT STAFF WASHINGTON DC
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Content
S E C R E T CAIRO 000177

SIPDIS
NOFORN

E.O. 12958: DECL: 2020/02/09
TAGS: PREL, PARM, MASS, IS, KPAL, EG
SUBJECT: Sinai Update: Counter Smuggling and Floods

REF: SECDEF 122723; CAIRO IIR 6 899 0149 10; 2009 CAIRO 2394
2009 CAIRO 491

CLASSIFIED BY: Margaret Scobey, Ambassador, DOS, EXO; REASON: 1.4(B),
(D)

1. Key Points:

-- (S/NF) The GOE claims to have increased its efforts against
HAMAS-related smuggling activity, and reports recent success in
interdicting and dismantling goods and financial smuggling
networks.

-- (C) Recent heavy rains in northern Sinai caused an estimated $11
million worth of damage. Local residents have complained about the
GOE's slow response and say the Muslim Brotherhood and other
Islamic organizations have provided the most effective relief
services. Rains also temporarily halted construction of a
subterranean steel wall and reportedly caused damage to the vast
network of smuggling tunnels under the Egypt-Gaza border.

-- (S/NF) Security concerns have temporarily suspended installation
of the FMF-funded border tunnel activity detection system (BTADS),
which will delay the scheduled April 2010 completion date. MOD has
agreed in principle to accept follow-on support for the BTADS
project.

-- (SBU) USAID is still awaiting approval from the Ministry of
International Cooperation (MIC) to begin implementing $50 million
in FY2009 Supplemental funding aimed at creating economic
alternatives to smuggling in the Sinai peninsula.

-----------------

Focusing on HAMAS

-----------------

2. (S/NF) During a recent meeting with Secretary of Defense Gates,
the Director of the Egyptian General Intelligence Service (EGIS)
Omar Soliman said that Egypt was increasing efforts to combat
HAMAS-related smuggling activity, including bolstering security
along the Sudanese border (ref A). He also reported increased
effectiveness in tackling smuggling networks in Sudan, Somalia, and
Yemen. Egyptian officials have separately reported recent success
at interdicting and dismantling HAMAS-related goods and money
smuggling networks along the Egypt-Gaza border.

---------------------------------

Sinai Flood Damage Localized.....

---------------------------------

3. (C) Multiple contacts in northern Sinai told us that damage
from the floods is severe, but localized along and in the Wadi El
Arish riverbed. Osama Kassas, Head of the North Sinai
Businessmen's Association, which is helping with the rebuilding
process, stated that seven people died as a result of the floods
and damages are estimated to be around 60 million Egyptian pounds
(USD 11 million). He said the flood destroyed the open market, a
bus station and the Olympic village, which housed a branch of the
Ministry of Youth, because the GOE built them in the riverbed. In
addition, villages in central Sinai and residential areas of El
Arish city along the riverbed were severely damaged including the
two roads that crossed the riverbed connecting western and eastern
El Arish city. Our contacts in Sinai said 27 houses and 60
businesses were completely destroyed, and 90 houses were severely
damaged by water and mud. Kassas said approximately 1,200 people

were directly affected by the flood.

--------------------------------------------- ---

But Residents Frustrated with Assistance Efforts

--------------------------------------------- ---

4. (C) Kassas told us that Sinai residents were frustrated that
the Egyptian Government had taken two days to respond to the
flooding and were hostile toward PM Nazif during his visit to
inspect the damage. Kassas said the GoE repaired the two roads and
is beginning to provide assistance such as blankets, tents and
food. However, its efforts are "random and disorganized" with
assistance going to those with connections and not those who most
need it. He stated that most NGOs and private businesses in Sinai
either do not have the capacity to provide assistance or are
focused only on publicity. Kassas said the most effective relief
efforts are those connected with the Muslim Brotherhood and other
Islamic organizations. (Comment: The Muslim Brotherhood does not
have a strong organizational presence in northern Sinai. If they
are providing relief services, they would have likely deployed
people from outside the Sinai peninsula. End Comment).

5. (SBU) On January 31, First Lady Suzanne Mubarak traveled to
North Sinai to see the damage caused by the floods. She met with
the North Sinai Governor Mowafi, various ministers and local
leaders. She said that the GoE is working to resolve the crisis
caused by the floods and begin a "new phase for development" for
the region. Security forces required those people living in tents
due to flood damage to remove the tents and evacuate the area
during the visit. An 11-truck aid convoy from the Ministry of
Military Production arrived in El Arish with refrigerators, water
heaters, gas cylinders, televisions and domestic electric
appliances for flood victims.

----------------------

Flooding and Smuggling

----------------------

6. (S/NF) The January 14 - 19 flooding also temporarily halted
construction of a subterranean steel wall along the Egypt-Gaza
border. Construction re-started on January 29. The Egyptian
military also reported finding fewer tunnel openings since the
rains (ref B), but noted increased activity along the Palestinian
side of the border, which they attributed to repair work on
rain-damaged tunnels (Comment: Even small amounts of rain can cause
tunnels to collapse, so a significant amount of flooding would
likely cause serious damage. End Comment).

-------------------

USG-Funded Programs

-------------------

7. (S/NF) The FMF-funded BTADS project has been on-hold since
January 2 due to security concerns (ref C). We are currently
awaiting MOD-approval to conduct a security assessment of the Rafah
area before redeploying the Army Corps of Engineers (ACE). On
January 31, MOD denied OMC's most recent request citing undisclosed
"security concerns." During a January 11 meeting with Field
Marshal Tantawi, Ambassador and OMC Chief stressed the importance
of working together to ensure security concerns are quickly and
effectively addressed so installation can resume. During the same
meeting, Assistant Minister of Defense Major General Mohammed
al-Assar claimed that the project was still on track for a February
2010 completion. (Comment: Al-Assar is fully aware that delays

will extend completion well beyond April 2010. It is likely that
he has not informed Tantawi of the delay originally caused by the
Minister's own insistence on technical modifications for the
original BTADS equipment. End Comment). On January 21, MOD did
agree in principle to submit a request for follow-on support for
the BTADS project, which will be critical once the ACE completes
the installation and turns the system over entirely to the Egyptian
military.

8. (S/NF) EGIS is moving forward, albeit slower than originally
anticipated, on a Nonproliferation and Disarmament Fund (NDF)
financed project to deploy 15 x-ray scanners to inspect vehicular
traffic entering the Sinai for explosives and arms (ref D).
Representatives from EGIS and the Ministry of Interior are
currently in the United States for operator training. EGIS
anticipates that the necessary infrastructure preparations for the
first site, the Ahmed Hamdi tunnel, will be completed by late
March/early April.

-----------------

Sinai Development

-----------------

9. (SBU) Ambassador and AID Director met with Minister of
International Cooperation (MIC) Fayza Aboulnaga on February 3 to
discuss the $50 million in FY2009 ESF Supplemental funding aimed at
improving economic opportunities and employment in the North Sinai
governorate. Minister Aboulnaga continued to object to provisions
related to project monitoring and audit plans, even though AID has
repeatedly modified the draft assistance agreement in consideration
of the special security circumstances in North Sinai and the GOE's
desire to minimize the USG's profile in the governorate. AID is
making one last effort to meet MIC concerns, but will not
compromise on basic, legal requirements to conduct audits and
monitor USG-financed work. AID Director is also scheduled to meet
with the new North Sinai governor to solicit his support for the
program.
SCOBEY