TEMPORARY INTERNATIONAL MECHANISM DISBURSES

C O N F I D E N T I A L JERUSALEM 003563

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR WILLIAMS/MAHER/WAECHTER;
NSC FOR ABRAMS/DORAN; TREASURY FOR
SZUBIN/LOEFFLER/NUGENT/ADKINS; BRUSSELS FOR LERNER; PLEASE
PASS TO USAID FOR KUNDER/MCCLOUD/BORODIN

E.O. 12958: DECL: 08/11/2016
TAGS: EFIN EAID KTFN KWBG
SUBJECT: TEMPORARY INTERNATIONAL MECHANISM DISBURSES
PAYMENTS TO HEALTH SECTOR WORKERS; WORLD BANK FINALIZES
ESSP WITH DONORS

REF: A. JERUSALEM 3238

B. JERUSALEM 3082

C. JERUSALEM 2853

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

Summary
--------------


1. (C) The European Commission, through the Temporary
International Mechanism (TIM),completed disbursement, over
the last 10 days, of the first tranche of allowances to PA
health sector workers. The allowances were disbursed through
commercial banks and did not go to any PA Health Ministry
employees in a "political" position, according to Johannes
Duynhouwer, the head of the TIM implementation unit. Health
sector workers were identified through a list that the PA
Office of the Presidency received from the PA Finance
Ministry. The TIM implementation unit is still discussing
needs-based allowances with the PA Office of the President.
Under Window I of the TIM, the World Bank signed agreements
with three donors (European Commission, United Kingdom, and
Austria) for USD 19.5 million total in funding for the
Emergency Services Support Program (ESSP),though the Bank
still has to sign the formal agreement with the PA Office of
the President. Under Window II of the TIM, the European
Commission has funded a million liters of diesel fuel for
public hospitals in Gaza and water and sanitation system
generators. Next week, it plans to increase its fuel
distribution program in order to provide fuel to generators
at public healthcare clinics and NGO hospitals and for sewage
suction trucks. End summary.

Health sector allowances
--------------


2. (C) Johannes Duynhouwer, the head of the unit
implementing the Temporary International Mechanism (TIM),
told EconChief August 11 that between 7,000 and 8,000 health
sector workers had received an allowance under the TIM over
the last ten days. Each allowance is based on a minimum
payment of NIS 1400 plus 50 percent of an employee's monthly
salary level above NIS 1400. Duynhouwer defined the
eligibility criteria as the following: anyone employed in the
PA health sector, since before March 31, 2006, in a position
essential for the proper functioning of the health sector.
(Note: The TIM is not targeting non-PA health sector
employees since they have received salaries regularly, unlike
PA employees. End note.) Essentially, he admitted that the
set of criteria included all PA Health Ministry employees
except the Minister, Deputy Minister, and their assistants or
anyone in a "political" position. Duynhouwer confirmed that
the Office of the President was providing the TIM office with
the requisite salary and bank account details for each PA
Health Ministry employee and that it was getting this
information from the PA Finance Ministry.


3. (C) Health sector workers receive the allowances in their
bank accounts, once their eligibility has been confirmed by
the TIM's auditors, Duynhouwer said. The TIM is disbursing
the allowances through HSBC London to four local commercial
banks with SWIFT capability: Bank of Palestine, Cairo-Amman
Bank, Bank of Jordan, and Arab Bank. For those health sector
employees that do not have accounts at one of these four
banks, Duynhouwer clarified that Cairo-Amman Bank then
transfers each allowance to the appropriate local bank.

Needs-based allowances
--------------


4. (C) Duynhouwer confirmed that the TIM implementation unit
is still consulting with the Office of the President on
needs-based allowances. He indicated that they plan to
target the Ministry of Social Affairs' social hardship case
list and are also looking at the "new poor" -- which he
described as public sector employees who have recently
experienced a sharp decrease in income. He said they would
use the same process as they used to determine eligible
health sector employees: the Office of the President will
provide them a list, based on the PA payroll, of those public
sector employees below a certain monthly salary level, likely
to be NIS 1800-2000. When EconChief shared with Duynhouwer
that the USG has told President Abbas that needs-based


allowances should not be targeted based on PA employment,
Duynhouwer admitted that that is essentially what the TIM
unit is doing. He explained that there is no other way to
reach out to this beneficiary pool given the mechanism's
short implementation period. (Note: Duynhouwer noted that
the TIM is due to be reviewed by the Quartet before the end
of September. End note.) EconChief also inquired if
Duynhouwer had had any conversations with the Office of the
President concerning rolling transfers from Arab states into
Window III of the TIM. He said that they had not discussed
the possibility.

ESSP implementation
--------------


5. (C) World Bank Deputy Country Director Faris Hadad-Zervos
told EconChief August 11 that three donors had signed
agreements for the World Bank's Emergency Services Support
Program (ESSP): the European Commission (USD 12.5 million in
funding),the United Kingdom (USD 5 M),and Austria (USD 1.5
M). Hadad-Zervos said that the European Commission had
originally said it wanted to earmark its contribution for the
health sector but had recanted and not expressly specified an
earmark in the agreement. Hadad-Zervos said the agreement
with the United Kingdom does formally earmark that donation
for the health sector. The Austrian contribution is not
earmarked. Hadad-Zervos said that the Bank was negotiating
additional agreements, for contributions totaling USD 22
million, with Sweden. Germany, Norway, Finland, and Ireland.
Hadad-Zervos said that the Bank essentially had enough
funding to cover the ESSP for six months. He acknowledged
that the Bank is still waiting to sign the program agreement
with the PA President's Office, though all of the
implementation details had been finalized.


6. (SBU) World Bank Country Director David Craig estimated
August 8 that the ESSP would start paying the utility bills
of the PA Ministries of Health, Education, and Social Affairs
by the end of August. For other non-wage expenditures that
require formal procurement, such as pharmaceuticals, he
estimated that the ESSP would not start disbursing funds for
several months.

Fuel distribution
--------------


7. (C) Duynhouwer confirmed that Window II of the TIM, the
Interim Emergency Relief Contribution (IERC),is proceeding
well with the TIM having purchased one million liters of
diesel fuel, to date, for public hospital generators and
generators operated by the Coastal Municipalities Water
Utility (CMWU) for the water and sanitation system in Gaza.
Duynhouwer said the IERC is expanding next week to include
fuel delivery to public healthcare clinic and NGO hospital
generators in Gaza, as well to the CMWU for its sewage
suction trucks.

Comment
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8. (C) As noted in reftels, the TIM, as currently being
implemented by the European Union and the World Bank, goes
beyond the Quartet agreement in several respects. In
particular, the World Bank ESSP (Window I) has expanded
beyond the health sector into other areas and the EU's
payment of allowances (in the health sector and in plans for
Window III) has essentially become payment of partial
salaries in all but name. We have raised these concerns
locally and recommend that Washington policymakers raise them
as well with World Bank management and the European Union.
End comment.
WALLES