PALESTINIAN FUNDING MECHANISM: EGYPT AND ARAB

C O N F I D E N T I A L CAIRO 003349

SIPDIS

E.O. 12958: DECL: 06/01/2016
TAGS: PREL PGOV PHUM EFIN ECON EAID KPAL EG IS
SUBJECT: PALESTINIAN FUNDING MECHANISM: EGYPT AND ARAB
LEAGUE ANXIOUS TO SEE FUNDS MOVING

REF: A. STATE 86455 (NOTAL)

B. CAIRO 3139

Classified by ECPO Counselor John Desrocher for reasons 1.4
(b) and (d).


1. (C) On May 30, drawing from ref A talking points, post
described USG thinking on creation of a temporary funding
mechanism for assistance to the Palestinian people to MFA
Palestinian Affairs Director Randa Labib and Arab League
Cabinet Chief of Staff Hesham Youssef May 31. Both parties
were particularly interested in the U.S. approach, and were
anxious to know Washington's specific thinking on funding the
salaries of Palestinian Authority personnel. Labib noted
that Egypt's Foreign Minister had sent his personal advisor
on the peace process to Brussels to participate in the talks
on the subject.


2. (C) Arab League Chief of Staff Hisham Youssef, who was at
the latest round of discussions in Brussels over the funding
mechanism issue, told POLOFF that the Arab League was anxious
to see the issue resolved as quickly as possible, as he said
the social situation - particularly in Gaza - was becoming
increasing desparate. Youssef asserted that the League would
not provide its financial assistance to the Palestinians
through the mechanism created by the Quartet members ("i.e.,
the World Bank, or via banks"),but rather directly,
transparently, and in conformity to international "rules"
encompassing such transfers. Citing Arab public opinion, the
League, he said, "by hook or by crook," would assist the
Palestinian people and could not stand by as the Palestinians
are reduced to "beggars."


3. (C) Complicating the issue for the League, Youssef said,
was a U.S. lawsuit recently filed on the Washington, D.C.
offices of the Arab League, in conjunction with a
class-action lawsuit on behalf of the families of U.S.
citizens killed in Israel in 1996 by terror attacks carried
out by Palestinians. The lawsuit seeks compensation from the
PLO and the Palestinian Authority in the amount of USD 116
million dollars, and seeks to dip into recent financial
donations made by Arab states to the Arab League on behalf of
the Palestinian Authority - reported in local media to total
USD 70 million. (Note: According to Egyptian sources (ref
B),the amount of funds donated by Arab states for the
Palestinian Authority currently totals USD 133 million. End
note.
JONES