Identifier
Created
Classification
Origin
06JERUSALEM1339
2006-04-03 14:06:00
CONFIDENTIAL
Consulate Jerusalem
Cable title:  

LUTHERAN WORLD FEDERATION REQUESTS USG

Tags:  PREL PGOV PHUM KWBG KPAL IS 
pdf how-to read a cable
VZCZCXYZ0004
OO RUEHWEB

DE RUEHJM #1339/01 0931406
ZNY CCCCC ZZH
O 031406Z APR 06
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1323
INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 6427
RUEHTV/AMEMBASSY TEL AVIV PRIORITY 1208
RHEHNSC/WHITE HOUSE NSC PRIORITY
C O N F I D E N T I A L JERUSALEM 001339 

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE, NSC FOR ABRAMS/DORAN/MUSTAFA

E.O. 12958: DECL: 04/03/2016
TAGS: PREL PGOV PHUM KWBG KPAL IS
SUBJECT: LUTHERAN WORLD FEDERATION REQUESTS USG
INTERVENTION ON JERUSALEM TAX ISSUE

REF: 05 TEL AVIV 5703

Classified By: Consul General Jake Walles, per reasons 1.4 (b) and (d).

This is a joint Embassy/ConGen cable.

C O N F I D E N T I A L JERUSALEM 001339

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE, NSC FOR ABRAMS/DORAN/MUSTAFA

E.O. 12958: DECL: 04/03/2016
TAGS: PREL PGOV PHUM KWBG KPAL IS
SUBJECT: LUTHERAN WORLD FEDERATION REQUESTS USG
INTERVENTION ON JERUSALEM TAX ISSUE

REF: 05 TEL AVIV 5703

Classified By: Consul General Jake Walles, per reasons 1.4 (b) and (d).

This is a joint Embassy/ConGen cable.


1. (C) Summary. The Lutheran World Federation (LWF),
owner and operator of Augusta Victoria Hospital in East
Jerusalem, is facing a May 22 final hearing in the Israeli
High Court on the hospital's tax liability to the Government
of Israel (GOI) -- specifically an employer tax based on a
1967 agreement between GOI and the LWF. LWF representatives
fear that they will lose the court case and find themselves
subject to a multi-million dollar tax bill, which would force
them to close a hospital serving 22,000 Palestinians per
year. The LWF is seeking additional time to negotiate a
settlement with the GOI that would reduce or eliminate the
liability, and has asked the USG to approach the GOI on its
behalf. Israel's MFA has indicated to the Embassy that it is
seeking a way to settle the matter out of court. Visiting
NEA A/S Welch raised the matter with FM Livni on March 30;
Livni said the GOI was working on finding a creative
solution. End summary.

LWF Requests
USG Intervention
--------------


2. (SBU) During a March 28 meeting with ConGen DPO, LWF
representative Reverend Mark Brown and Bishop Munib Younan,
the head of the Evangelical Lutheran Church in Jordan and the
Holy Land, acknowledged that the LWF owes between USD 3-5
million in back taxes to the GOI, depending on the date at
which the Israeli court fixes liability. Brown and Younan
said that the LWF does not have the financial capacity to
repay the taxes, and would be forced to close Augusta
Victoria Hospital if forced to pay. The hospital, located in
East Jerusalem on the Mount of Olives, provides specialty
medical (oncology and nephrology) care to 22,000 mostly West
Bank Palestinians each year. The hospital also employs 220
Palestinians living in Jerusalem.


3. (SBU) Brown and Younan indicated that they had no legal
justification to request a postponement of the May 22 hearing
before the Israeli High Court. They thought, however, that
the presiding judge would postpone the hearing if
negotiations between the LWF and GOI were ongoing. Absent a
postponement, Brown and Younan said the LWF will lose the
court case. Brown and Younan requested USG assistance in
persuading the GOI to enter into negotiations. (Note: The
German Government has reportedly agreed to weigh in on the
issue with Israeli FM Livni. End note.)

Possible Solutions
--------------


4. (SBU) Brown and Younan said that one possible solution
they had previously discussed with the MFA would be for the
LWF to accept tax liability and for the GOI to reimburse the
hospital and thereby allow it to remain functioning. While
the MFA has expressed interest in the proposal, the various
Israeli ministries (Health, Finance, Labor) expected to fund
the reimbursement of approximately USD 500,000 per year have
yet to agree, they said.


5. (C) The MFA director of the Division for Religious
Affairs, Zvi Tal, told Emboff March 27 that the MFA is trying
to facilitate an out-of-court settlement through an
inter-ministerial committee and is currently seeking the
support and intervention of the Prime Minister's Office
(PMO). Tal said that the MFA sent a letter to the PMO
suggesting that an out-of-court settlement be reached, but
has not yet received a response. In a September 14, 2005
meeting with Emboff, Tal said that the GOI wishes to resolve
the matter so that the hospital can continue its operations
(see reftel). Tal said that one solution is for the GOI to
provide state assistance to the LWF to offset its tax
expenses.


6. (C) Visiting A/S Welch raised the matter in his March 30
meeting with FM Livni, passing to the FM a copy of a letter
from LWF President Bishop Mark Hanson to the Secretary
seeking U.S. support, or for a meeting between LWF General
Secretary Reverend Dr. Ishmael Noko and FM Livni. FM Livni

SIPDIS
said the GOI is working on finding a creative solution to the
problem. Welch asked Livni to accommodate the meeting
request and to let the Embassy know when the GOI had
developed a solution.


WALLES