ARAB ASSISTANCE TO THE PALESTINIAN AUTHORITY:

UNCLAS CAIRO 006510

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: PREL PGOV EAID ECON ETRD EFIN KPAL EG IS
SUBJECT: ARAB ASSISTANCE TO THE PALESTINIAN AUTHORITY:
EGYPT AND THE ARAB LEAGUE

REF: STATE 146261 (NOTAL)

Sensitive but unclassified. Please protect accordingly.


1. (SBU) Reftel requests financial information on Egyptian
and other Arab contributions to the Palestinian Authority in
order to assist the work of Special Envoy James Wolfenson.
MFA officials responded to post's request with the following
information, noting that the financial data had just been
compiled at the request of the Foreign Minister.


2. (SBU) According to the Egyptian MFA and confirmed by Arab
League contacts, Arab assistance to the Palestinian Authority
falls within the following categories. First, the Arab
League administers two separate funds for the Palestinian
Authority, one known as the "Al Aqsa Fund," and the second
called the "Intifada Fund." The original capitalization
target for the funds, which reportedly Arab states "do not
differentiate between," was a total of one billion USD. The
funds were set up shortly after the November, 2000 Arab
Summit in Sharm El Sheikh but with only base capital of $700
million USD. Furthermore, during the Beirut Arab Summit of
2002, leaders formally agreed to increase the funds'
capitalization by an additional $150 million USD. As of
September, 2005, according to the Egyptian MFA, Egypt owed
$168.3 million USD for the funds. The money, however, would
be very difficult to secure from the GOE Ministry of Finance,
according to our MFA contacts, due to Egypt's lack of
financial resources.


3. (SBU) The second main category of Arab funding to the
Palestinians involves direct budgetary support to the
Palestinian Authority. According to the MFA, leaders of the
22 Arab League member states agreed during their March, 2002
Beirut Summit to contribute a total of $330 USD million every
six months ($660 million per annum) for direct budgetary
support to the PA. That pledge was repeated during the
following three Arab summits, leading to a total $1,980
million USD (e.g., 3 times $660 USD million) being pledged.
Of this figure, our MFA contacts tell us that only $608
million USD has actually been contributed by Arab states
leaving a shortfall of $1,372 million USD outstanding.


4. (SBU) According to the MFA, financial contributions from
the Arab states have increased considerably over the past six
months. Citing World Bank and PA Finance Ministry
statistics, our MFA contacts tell us that $146 million USD
has been paid for direct PA budgetary support, with Algeria
($77 million USD),Kuwait ($40 million USD),and Saudi Arabia
($15.4 million USD) being the primary sources. Saudi Arabia
was the only state that had fulfilled its commitments,
whereas Syria, Lebanon, Iraq, Libya, Somalia, Djibouti,
Mauritania, and Comoros had consistently failed to make its
payments. The few states where external pressure was likely
to succeed in extracting commited funds for the PA, we were
told, were Kuwait, Qatar, Bahrain, and Libya.


5. (SBU) Egypt regularly provides the Palestinian Authority
with humanitarian assistance including medical supplies, food
stuffs, ambulances, and other items, primarily through the
Egyptian Red Crescent Society. Typically, this assistance
(denominated in Egyptian currency) is channeled to an
Egyptian bank account and drawn upon directly by the
Palestinian Authority for the purchase of Egyptian supplies.
We have also seen media reports that Egypt provided the PA
with approximately $1.7 million USD for building hospitals in
remote areas of the occupied territories. In addition to the
much publicised provision by Egypt of security-related
training and assistance (both within Egypt and Gaza),the
Egyptian government has also reportedly encouraged local
businessmen to invest in commercial projects to help with the
reconstruction and development of Gaza and the West Bank. We
have heard reports that Egypt recently opened a
representative office in Ramallah by which to pursue its
interests in the West Bank. The only official representation
that Egypt currently maintains in the territories is its
Embassy in Gaza.


6. (U) Minimize considered.


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JONES