ISRAEL: PERES'S FOREIGN POLICY AGENDA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000302470001-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: January 18, 2011
• Sequence Number: 1
• Publication Date: May 28, 1986
• Content Type: MEMO

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SUBJECT: ISRAEL: Peres's Foreign Policy Agenda
Distribution:
EXTERNAL:
1 - Jock Covey, NSC
1 - George S. Harris, State/INR
1 - April Glaspie, State
1 - Philip Wilcox, State
1 - LtCol Fred Hof, ISA/OSD
INTERNAL:
1 - DDI
1 - ADDI
1 - NIO/NESA
1 - C/PES
1 - PDB Staff
1 - NID Staff
6 - CPAS/IMD/CB
1 - D/NESA
1 - DD/NESA
1 - C/PPS
2 - NESA/PPS
1 - C/NESA/SO
1 - C/NESA/IA
1 - C/NESA/PG
1 - C/NESA/AI
2 - NESA/AI/I
DDI/NESA/AI/I/
27 May 86
DATE
Fib
DOC NO Nrs~ /41o" .)4029
OCR 3
P&PD
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T
Washington. D. C. 20505
DIRECTORATE OF INTELLIGENCE
28 May 1986
ISRAEL: Peres's Foreign Policy Agenda
Summary
During his last five months in office, Prime
Minister Peres probably will focus on three key foreign
policy issues: his proposal for a regional development
fund; quality of life issues in the occupied
territories, including greater Palestinian self-rule in
the Gaza Strip; and, concluding the arbitration
compromise with Egypt on the Taba border dispute.
Peres's program nonetheless faces formidable
political obstacles from outside Israel. Despite
initial mild encouragement for his regional development
plan from several'European leaders, others have been
skeptical and Arab countries will find it hard to join
a program initiated by Tel Aviv. Peres will also have
difficulty securing Egyptian, Jordanian, and
Palestinian cooperation in increasing self-rule in
When he took office in September 1984, Prime Minister Peres
set three objectives that he hoped to accomplish before handing
power over to Vice Premier Shamir. His immediate
priorities--which have been largely accomplished--were to draw
This memorandum was prepared byl the 25X1
Israel-Jordan-PLO Branch, Arab-Israeli Division, Office of Near
Eastern and South Asian Analysis. Information as of 28 May 1986 25X1
was used in its preparation. Questions and comments should be
addressed to Chief, Arab-Israeli Division
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down Israeli forces in Lebanon and to address Israel's serious
economic problems. He also hoped to achieve visible progress
toward peace negotiations with Jordan, but this goal has eluded
him.
Peres nonetheless appears determined in the time he has left
in office to focus on unilateral steps to improve the atmosphere
for eventual Israeli-Arab peace talks. We believe he will
concentrate on promoting his proposal for regional development,
giving West Bankers and particularly Gazans greater autonomy in
administrative matters and improving their living conditions, and
concluding the terms of reference--the compromis--for arbitration
of the Taba dispute with Egypt.
Regional Development Fund
The idea of a Middle East regional development fund dates
back to Israeli and Egyptian discussions following conclusion of
the 1978 Camp David accords. Peres also alluded to the idea
during the Knesset election campaign in July 1984. Some media
reports alleged at the time that he had discussed financing the
fund with Saudi businessman Adnan Khashoogi. The Prime Minister
publicly reintroduced the idea in March 1986, expressing concern
that the drastic fall in oil prices and the current recession in
the Middle East threaten to unleash growing radicalism and to
destablilize Israel's moderate Arab neighbors, Egypt and Jordan.
Peres wants the industrialized countries to recycle some of
the savings generated by the fall in oil prices into a fund for
regional development. The fund is envisioned to total $20 to $30
billion in aid over a ten-year period. One-third of the funds
would come from the industrialized countries of Western Europe,
the United States, and Japan. The rest of the money would be
raised from multilateral financial institutions, development
banks, businesses, and even individuals--through bond purchases.
Investments by the fund would be used to relieve the economic
consequences of the recession and enhance regional economic
cooperation; indirectly, fund activity would aid political
stability and lay the groundwork for an Arab-Israeli peace
settlement, according to Peres. He proposes that the fund focus
on regional development projects in Egypt, Jordan, the West Bank,
Gaza, and perhaps Lebanon and Syria. Although Israel was
originally mentioned as a potential recipient and partner in some
regional projects, Peres has stated that Israel would stand aside
if its participation would doom the idea. F 25X1
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Gaza First and Quality of Life
The collapse in February of the latest attempt at political
cooperation between Jordan's King Hussein and PLO Chairman Arafat
disappointed Peres and others in the Labor Party, who had hoped 25X6
the talks would lead to peace negotiations between Israel and a
delegation of Jordanians and non-PLO Palestinians. Since then
Peres and his advisers-
ave
considered several options for granting greater self-rule to
Palestinians living in the West Bank and Gaza Strip, even without
King Hussein's assent. We believe Peres is genuinely committed
to improving living conditions in the occupied territories, but
he also is eager to reduce the burden of the occupation on
Israel. He also may retain some hope that his scheme will spur
Hussein to enter peace negotiations, even without PLO support,
rather than be faced with an Israeli fait accompli.
The murder of Nablus Mayor al-Masri in early March wrecked
Peres's plans to take ambitious steps to increase Palestinian
autonomy in the West Bank and convinced him that Jordanian--and
Palestinian--cooperation would not be forthcoming. Peres and his
advisers subsequently began exploring the possibility of
instituting autonomy in the Gaza Strip in collaboration with
Egypt as a first step toward granting Palestinian self-rule in
all the occupied territories. In their view, the "Gaza first"
option would be politically possible because it would not fall
victim to competition between the PLO and Jordanians, which
doomed Peres's plans for the West Bank. Opposition from Israeli
settlers would also be less in Gaza than in the West Bank given
their fewer numbers and because Gaza does not carry the
ideological baggage associated with the West Bank.
The proponents of the "Gaza first" plan see it as offering
Palestinians some sense of movement toward a peace
settlement--which could influence decisions of West Bankers at
some later point. In the meantime, the plan would begin cutting
Israeli ties to Gaza, which Peres believes is desirable. During
the Labor Party's convention last month, Peres insisted on
excluding the Gaza Strip from those areas that would be retained
by Israel in any territorial compromise.
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Peres closely monitored Shawwa's visit to Cairo in early May
to gauge Egypt's interest in cooperating on the "Gaza first"
scheme. According to a source of the US Embassy in Tel Aviv,
Peres told Shawwa he favored full autonomy for Gazans, in which
Israel would retain responsibility only for "strategic security."
Israel would not involve itself in internal security but would
keep its Army bases in the area. Peres reportedly said he
favored forming a committee of Egyptian, Israeli, Jordanian, and
Palestinian representatives to oversee implementing the plan. F-
Peres already has taken steps to increase Gazan control of
local affairs. In late April, the Israeli civilian
administration in Gaza transferred 20 office directorships from
Israelis to Arab employees who had completed an administration
course at an Israeli university. The ceremony marking the
transition was attended by Defense Minister Rabin, who gave a
highly publicized speech outlining the government's intention to
"Arabize" the civil administration.
On the West Bank, Peres continues to work on improving living
conditions, and he still harbors hopes that more Arab mayors can
be appointed to replace Israeli incumbents.
Israel has taken other quality of
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life measures recently including: reducing fees for visitor
permits for West Bankers wishing to bring relatives across the
Jordan River bridges; reducing fees for trucks transporting
agricultural and industrial goods from Jordan into the West Bank;
and expressing a desire to cooperate more closely with the United
Nations Development Program and refugee projects. 25X1
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Taba and Relations with Egypt
The unresolved border dispute at Taba remains an obstacle to
Peres's efforts to improve relations with Egypt. Negotiations on
the arbitration compromis are continuing, but the two sides still
do not agree on the phrasing of the question to be submitted to
the arbitral panel.
Pitfalls Along the Way
We believe Peres will not be seriously constrained from
pursuing his agenda by domestic political opposition in Israel.
Shamir is likely to oppose more strongly Peres's plans to
unilaterally increase Palestinian self-rule because they conflict
with Likud's contention that autonomy should only be applied
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according to the Camp David accords, which call for prior
negotiations with Egypt, Jordan, and the Palestinians.
Nevertheless, he almost certainly will not risk a coalition
crisis over this--or any other issue--that could lead to the
breakup of the unity government.
Peres will face more formidable constraints as he seeks to
achieve other elements of his foreign policy action plan. His
proposal for regional development is likely to run afoul of donor
country reluctance to contribute funds unless assured that there
will be no significant opposition from the major Arab states--a
most unlikely prospect. Recipient countries will not want to be
associated with a plan even indirectly tying them into
cooperation with Israel. They also will not want to be involved
in development projects in the West Bank and Gaza that they would
see as strengthening Israel's control over the two territories.
Egypt and Jordan appear receptive to Peres's regional
development idea, but they are not enthusiastic about his plans
for greater Palestinian autonomy. Egyptian officials have 25X1
indicated their willingness to discuss "Gaza first," but only if
such a proposal comes from Gazans themselves--not Israel--and if
Jordan cooperate ]
Palestinians also will be reluctant to cooperate with Peres's
plans for greater self-rule. Some will oppose what they see as
an attempt to deny them self-determination. Others--taking a
lesson from the murder of Nablus Mayor al-Masri--will be
unwilling to become too closely associated withithe raelis
because of concern for their personal safety.
Outlook
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Prime Minister Peres also will persevere with the gradual
transfer of municipal authority to Gazans, and to a lesser extent
with West Bankers. Peres has the support of Rabin, who as
Defense Minister is responsible for administering Israel's
policies in the occupied territories. They have wide authority
to make changes in Israel's administration of the territories
without getting the approval of the national unity Cabinet.
Peres probably also believes Rabin can continue this program
after the rotation because he will remain Defense Minister.
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