C O N F I D E N T I A L JERUSALEM 003082

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR WILLIAMS/WATERS/WAECHTER;
NSC FOR ABRAMS/DORAN/LOGERFO; TREASURY FOR NUGENT/ADKINS;
USEU FOR LERNER

E.O. 12958: DECL: 07/19/2016
TAGS: EAID EFIN ECON PREL PGOV KWBG
SUBJECT: EUROPEAN UNION TEAM ON IMPLEMENTATION OF TEMPORARY
INTERNATIONAL MECHANISM

REF: JERUSALEM 2853

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


1. (C) Summary: According to the head of the management unit
implementing the Temporary International Mechanism (TIM), the
European Union plans to support the World Bank's Emergency
Services Support Program (ESSP) under Window I starting in an
early August. Under Window II, the European Commission has
agreed to purchase diesel fuel for generators in the health
sector and water and sanitation systems. The Commission is
awaiting data from the PA President's Office in order to
start disbursing allowances to public health sector workers.
Also under Window III, the management unit is finalizing a
concept paper for needs-based allowances. The first
Consultative Group meeting of local representatives of
Quartet members will likely be held within the next two weeks
in Jerusalem. End Summary.

Window I: ESSP
--------------


2. (C) Johannes Duynhouwer, the head of the European Union
management unit implementing the Temporary International
Mechanism, told EconChief July 20 that the World Bank was
moving forward with the implementation of the Emergency
Services Support Program (ESSP), and Duynhouwer anticipated
an early August operational start. He noted that the
European Commission planned to provide 10 million Euros, the
United Kingdom 3 million Pounds Sterling, Belgium 2.5 million
Euros, and Greece 0.5 million Euros. Duynhouwer commented
that it remained to be seen whether the EC contribution would
be solely in the health sector or in all three sectors, as
the World Bank proposes (to include education and social
affairs, as well). (Note: As mentioned in reftel, the
Quartet-approved TIM document only refers to health sector
expenditures. End note.)

Window I

I -- IERC
--------------


3. (C) Duynhouwer confirmed that the European Commission had
agreed to fund diesel fuel for generators at public sector
hospitals and clinics and for the water and sanitation
systems in Gaza under the Interim Emergency Relief
Contribution (IERC). (Note: The IERC was originally
structure to finance 6 million Euros per month in industrial
diesel fuel for the Gaza Power Plant. Since the Gaza Power
Plant's four transformers were destroyed in an Israeli air
strike, the plant is not currently operational, hence the
need for generator power. End note.) Duynhouwer said the
Commission would spend 1.5 million Euros per month to
purchase 650,000 liters of diesel for public sector hospitals
and clinics and 850,000 liters of diesel for the Coastal
Municipalities Water Utility (CMWU) for Gazan water and
sanitation systems.


4. (C) Duynhouwer said that the Commission, through the
IERC, was considering payments to the Jerusalem District
Electric Company (JEDCO) and the Gaza Electricity
Distribution Company (GEDCO). JEDCO is seeking payment of
part of its bill to the Israel Electric Company (IEC).
(Note: JEDCO buys electricity from the IEC and distributes it
in East Jerusalem, Ramallah, Bethlehem, and Jericho. Given
the poor economic situation overall and the non-payment of PA
salaries, JEDCO only receives payment from about 40 percent
of subscribers in the West Bank. Since the PA is responsible
for the distribution of electricity in the rest of the West
Bank, the GOI pays the IEC for that electricity from frozen
PA clearance revenues. JEDCO, as a private sector company,
does not enjoy such an arrangement and owes the IEC NIS 300
million (about USD 67 million). End note.) In Gaza, the
Commission is looking at paying a portion of what GEDCO, a PA
agency, owes to the Gaza Power Generating Company (the
private sector company operating the Gaza Power Plant) as
part of its contract, which continues to require payment
regardless of whether the plant is operational.

Window III -- Allowances

--------------


5. (C) On allowances for health sector workers (which
Duynhouwer considers part of Window III), he said that the
Commission planned to disburse payments directly to
beneficiaries through HSBC in London and then through four
banks locally. Health sector workers were selected from
those that deliver health care services in public hospitals
and clinics, including pharmacies and laboratories, and
support staff, such as cleaners and internal auditors.
Duynhouwer said the Commission is waiting to receive the data
on these workers from the PA Office of the President.
According to Duynhouwer, the Commission wants to be more
generous than the Office of the President. He said the
payment would likely be around 50 percent of the monthly
salary.


6. (C) On needs-based allowances, Duynhouwer said that the
TIM unit is finalizing a concept paper that sets out the
parameters for such a scheme. He said it faced lots of
constraints and that there is not enough time to develop a
new scheme. He promised to share the concept paper with the
USG after clearing it with Brussels.

Consultative Group
--------------


7. (C) Duynhouwer said he still hoped to call a first
meeting of the Consultative Group within the next two weeks
in Jerusalem. He said the TIM unit would be sending out an
invitation to the local representatives of the Quartet
members.


WALLES