EUROPEAN UNION TEAM ON IMPLEMENTATION OF TEMPORARY

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 II -- 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