1. (S/NF) Reftel's proposed designation, under E.O. 13224,
of the Al-Aqsa Foundation branch in Yemen involves important
U.S. interests in the global war on terrorism and potentially
as well US-Yemeni cooperation in that war. From vantage of
Embassy Sanaa, our highest priorities at the moment are: (a)
building a strong bilateral USG-ROYG counter-terrorism
structure to deal with remaining Al-Qa'ida HVTs in Yemen
(ORCA has a specific proposal now pending with the PSO); (b)
following up on the arrest of Al-Moayad and turning off
illicit Al-Aqsa Foundation activities; and (c) maintaining a
stable working relationship with the Yemeni government
through the Iraq conflict. Following up on the arrest of
Al-Moayad and turning off Al-Aqsa Foundation illicit
activities in support of terrorism must be and can be done in
a way that is compatible with our other immediate priorities.



2. (S/NF) Embassy Sanaa believes that if there were an
immediate designation of Al-Aqsa Foundation in Yemen, the
Yemeni government (and public) would have a strongly negative
reaction. A public uproar would immediately ensue,
highlighted by pro-Palestinian demonstrations orchestrated by
the opposition Islaah party, senior leaders of which,
including Al-Moayad, founded the local Al-Aqsa Foundation in
the early 1990's. Islaah would attempt to make political hay
alleging American anti-Islamic and anti-Palestinian policies,
and the government and the president's GPC party would be
thrown on the defensive over the "holy issue of Jerusalem"
during the last month of campaigning before Yemen's
parliamentary elections April 27. None of that would be in
U.S. interests.



3. (S/NF) Our understanding is that the ROYG has kept an
arm's length from Al-Aqsa Foundation activities. It is a
legally registered NGO put up and maintained by Islaah.
Designation of the Al-Aqsa Foundation may, eventually, and on
a broader basis, be a sound step to take in our efforts
against global terrorism. Immediate designation, in Yemen
alone, would not be.



4. (S/NF) The now public affidavit in support of the arrest
of Sheikh Mohammed Ali Hasan Al-Moayad provides considerable
wealth of detail to corroborate his material support and
resources to foreign terrorist organizations Al-Qaeda and
Hamas. We need to prepare the ground so that the reaction by
key ROYG officials to this information is one of
understanding, recognition, and appreciation. For this
purpose, Ambassador will shortly draw to the Foreign
Minister's attention key facts about Sheikh Al-Moayad's
activities inimical to U.S. and Yemeni government interests,
drawn from the publicly released affidavit. Embassy Sanaa
will not repeat not alert ROYG officials regarding possible
USG steps to designate Al Aqsa Foundation. However, it is
essential that we initiate discreet private contacts with
senior Yemeni officials about the public evidence against
Al-Moayad so that they do not misunderstand USG actions
against Al-Moayad and draw conclusions inimical to our
interests. It would be counter-productive for our efforts in
this regard to also have to be fighting a public battle with
the ROYG on Al-Aqsa designation.



5. (S/NF) (S/NF) Rather than immediate designation of the
Al-Aqsa Foundation branch in Yemen, Embassy Sanaa proposes
that relevant USG agencies -- diplomatic, law enforcement,
and intelligence -- assemble more information in order to
target more broadly Al-Aqsa Foundation offices not just in
Yemen, but elsewhere in the Middle East, Europe, and wherever
they are located.
HULL