EU HAS SOME QUESTIONS ON UPCOMING AHLC

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 003211

SIPDIS

DEPT FOR NEA/IPA, EUR/ERA

E.O. 12958: DECL: 07/28/2009
TAGS: EAID PREL IS KWBG EUN USEU BRUSSELS
SUBJECT: EU HAS SOME QUESTIONS ON UPCOMING AHLC

REF: STATE 162864

Classified By: USEU POLOFF LEE LITZENBERGER; REASONS 1.4 (B,D)


1. (C) Summary. The European Commission, which has the
lead on AHLC issues, supports US goals for having the AHLC
focus on Gaza withdrawal, but is skeptical of the proposed
September date. The EC questions whether Israel will have an
agreed, concrete withdrawal plan (or, possibly even a
government) that can make commitments to donors in September.
Brussels is also concerned that the Israeli delegation
included appropriate officials, such as National Security
Advisor Eiland, and that Israel come prepared to take action
to release arrears and improve internal movement and
cross-border trade. The EC is working with the World Bank in
Jordan to finalize the necessary technical reports by the end
of August, and also noted that the PA has a draft mid-term
reconstruction plan. Finally, Commission offiicals provided
an update on the EC's planned 65 million euro contribution to
the UN West Bank/Gaza Trust Fund. End Summary.

Is September Realistic?
--------------

2. (C) On July 28, Poloff and Development Counselor
presented reftel demarche to Christian Berger, the
Commission's official for West Bank/Gaza issues, and Nina
Obermaier, Programming Officer for WB/Gaza and MEPP. Berger
responded that the EC supports the goals laid out by the U.S.
demarche, but is skeptical that the AHLC would actually be
held in September. With the Israeli Knesset in recess until
late October, he asked, will there be an approved withdrawal
plan? Will there be a GOI in place that can make commitments
to donors about the withdrawal? The key, he said, would be
having an Israeli delegation with a mandate and a withdrawal
plan in hand for the meeting. He added that the Quartet
principals' meeting would also be critical to set the stage
for a successful AHLC. He noted that the EC would want the
next AHLC agenda to include issues related to the West Bank,
in addition to Gaza. He liked the idea of holding a Task
Force meeting in August, but again questioned whether there
would be sufficient preparation to hold the AHLC by September.

What -- and who -- will Israel bring to the table?
--------------

3. (C) Berger was also concerned that Israeli
representation at the last AHLC (FM Shalom) was not
sufficient to address the issues donors would raise. The
same issues discussed then -- Israeli arrears and
cross-border trade/internal movement -- are once again on the
agenda; Israel had meanwhile done little to address either.
Berger said he would hope at a minimum that Israeli National
Security Advisor Giora Eiland would be at the AHLC, if indeed
it would focus on Gaza withdrawal.

EU will ask Questions
--------------

4. (C) Berger said the EU will ask the US and other donors
what, concretely, we and they are prepared to do to support
PA takeover in Gaza following withdrawal. Berger saw the
issue of cross-border trade and internal movement as critical
to a successful transfer in Gaza, and wondered what kind of
guarantees the donors would seek on this from Israel. He
asked how the U.S. planned to work with Israel on this and
other issues related to unfulfilled Israeli commitments from
the last AHLC.

Econ Plan: EU to help WB
--------------

5. (C) On the Economic Action Plan, Obermaier said that the
World Bank had contacted the Commission for assistance in
finalizing the necessary technical reports in August. The
Commission's staff in Jerusalem will work with the WB on
this; she said the expectation is that the short, succint
10-page reports will be completed by the end of August. She
also reported that the PA has a draft of a proposed mid-term
reconstruction plan.

Update on Contributions to the Reform Trust Fund
--------------

6. (C) USEU Development Counselor asked for an update on EU
efforts to secure other donor interest in joining them in
funding the World Bank's new Reform Trust Fund. Obermaier
explained that several donors have now made commitments to
the Trust Fund including the Australians who have paid in US
$1 million, the Norwegians who have paid in a first tranche
of planned US $12 million, the UK which has paid in a first
tranche of planned US $12 million, Canada which is expected
to disburse a first tranche of its planned US $7 million
commitment any day now, the Japanese who are also expected to
pay in a first tranche of their planned US $10 million
commitment any day now and a very serious expression of
interest from the French. Given the other donor intentions
to match EC funds, the EC has decided to use this vehicle for
65 million euros of its assistance to the PA. The 65 million
euros will be disbursed in three tranches: 40% (26 million
euros) within the coming days; 30% when the WB certifies
compliance with the fund's conditions (which is expected
soon),and the remaining 30% by the end of the calendar year.

SAMMIS