1. (C) Summary. The GOI released a total of NIS 188 million
in funds to the PA in early March. This is made up of NIS
138 million from the regular monthly revenue transfer plus
NIS 50 million in previously attached revenues. The regular
transfer of NIS 138 million is significantly below the normal
monthly amount. Finance Ministry contacts explain this was a
result of a decision by the PA to appeal a court case in
Israel, which could only move forward with the PA's agreement
to attach NIS 122 million in revenues. This amount was
deducted from the NIS 260 million in PA revenues collected by
the GOI in February, yielding the net transfer amount of NIS
138 million. End Summary.



2. (C) GOI Finance Ministry staffer Rani Loebenstein
provided Mission March 3 background on the large reduction in
the monthly revenue transfer of March 1 to the PA. He said
that a number of months ago the PA had decided to appeal a
court case in Israel which originally involved the attachment
of NIS 7 million in PA revenues. Over time, the amount of
damages alleged by the plaintiff had ballooned to NIS 122
million. As the case moved through the Israeli court system,
it finally reached the Supreme Court. According to
Loebenstein, Supreme Court Chief Justice Barak agreed for the
appeal to move forward only if the full, current amount of
alleged damages was attached by the court. PA Finance
Minister Fayyad, according to Loebenstein, agreed to this on
February 21. (Note: Minister Fayyad told ConGen Economic
Chief March 7 that, in order for the ruling to be appealed
before the Supreme Court, the PA had to agree in late
February to attach the full, updated amount of damages. Had
the PA not agreed to this attachment, it would have had to
pay the full amount in order for the case to move forward.
End Note)



3. (C) Loebenstein claimed that Fayyad had not informed the
Finance Ministry of the new attachment, almost leading
Loebenstein to transfer the entire monthly revenue collection
of NIS 260 million. Loebenstein expressed a degree of anger
over having almost been put into the position of having acted
against a decision of the Supreme Court. He noted that he
had built a relationship of trust with Fayyad over a number
of years and could not understand why Fayyad had not been
straightforward in this case.



4. (C) Loebenstein said he was particularly embarrassed by
this turn of events because he had just pressed the judicial
branch hard for the immediate release of an additional NIS 50
million in attached revenues related to a case involving the
Menorah insurance company. As he put it, "How do you think
it makes me look arguing on the one hand that the PA urgently
needs its NIS 50 million on the one hand while the PA is
agreeing to attach a far greater amount on the other hand."
Loebenstein noted that the Finance Ministry transferred the
NIS 50 million to the PA on March 3.


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