PALESTINIAN LEGISLATIVE ELECTIONS: DAY AFTER

C O N F I D E N T I A L JERUSALEM 000366

SIPDIS

SIPDIS

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

E.O. 12958: DECL: 01/26/2016
TAGS: PREL PGOV KWBG PBTS IS KPAL KDEM
SUBJECT: PALESTINIAN LEGISLATIVE ELECTIONS: DAY AFTER
ELECTION DAY SITREP # 1 AS OF 1:00 PM ON JANUARY 26, 2006


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


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Summary
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1. (C) Palestinian political figures awoke on January 26 to
the signs of a political earthquake, with Hamas now generally
expected to gain a majority in the new Palestinian
Legislative Council (PLC). Fatah candidates Sa'eb Erekat and
Mohammed Dahlan said the results were "a disaster" and spoke
of Fatah's incapacity to run an effective campaign. Abu
Mazen's chief of staff says the President is still coming to
grips with the results, and is unlikely to make any public
statements until the CEC issues preliminary final results at

1900. Meanwhile, the PA appears to be heading for a
financial crisis. EU Special Envoy Mark Otte noted that the
PA now faces several simultaneous crises: political,
financial, security, and a possible constitutional crisis.


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Palestinian Political Figures on Probable Hamas Majority
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2. (C) A series of senior Palestinian political figures
provided Consul General with views of the Palestinian
political class as they come to grips with what is likely to
be a Hamas majority in the PLC:

-- Central Elections Campaign (CEC) Chairman Hanna Nasser
called early in the morning to discuss preliminary results,
saying that Hamas would "definitely" get more seats in the
PLC than Fatah. He and his staff are in contact with the
various political factions as counting continues; the CEC
plans to announce preliminary final results at 1900 local.

-- Successfully re-elected Fatah member Sa'eb Erekat termed
the projected results "a disaster." He also thought that
Hamas would gain more than 70 seats.

-- Presidential Chief of Staff Rafiq Husseini said the
President's Office had the same information as everyone else:
Hamas was likely to get a majority. He cautioned that the
numbers were not final, and could still change. Husseini said
that Abu Mazen is "trying to understand" what happened, and
was now focused on the security implications of the results,
which could be significant. Abu Mazen would then turn to the
political ramifications, and would not likely make any public
statements until the CEC announcement at 1900.

-- Successful Fatah candidate Mohammed Dahlan confirmed that
Hamas would gain a majority. He opined that Hamas should
form a government and that Fatah should stay out. Dahlan
said "we have to reform this piece of s--t called Fatah." He
was very angry with Abu Mazen for allowing the chaos in Fatah
to continue in the runup to the campaign and for appointing
the "incompetent Nabil Sha'ath" as Fatah campaign manager.
Dahlan thought that "Abu Mazen should dismiss all the
leadership in Fatah" and start over. He thought that Hamas
would not actually be able to govern, but that he would
rather have "one year of chaos" than "going on like this."

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PA Could Collapse Financially Within 48 Hours
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3. (C) Deputy Finance Minister Al-Wazir called EconChief
at 11:15 am to report that the PA could collapse financially
within 48 hours. Palestinian and Jordanian bankers told him
that they are no longer willing to extend
credit to the PA, given the election results. Only cash will
be accepted. Al-Wazir said he spoke with Israeli
Acting Prime Minister Olmert's office about the scheduled
January 29 transfer of clearance revenue (estimated at NIS
320 gross, NIS 260 net after electricity, sewage, and medical
bills are deducted) to encourage that the transfer
continue as schedule. However, al-Wazir conceded that it was
unlikely that the GOI would do so.


4. (C) Without the clearance revenue and bridge loans from
the commercial banks, al-Wazir said he would not be able to
pay January salaries next week, even if the Saudi and Qatari
governments transfer what they had promised. He noted that
there are already rumors circulating that the PA cannot pay
salaries. He is very concerned about a PA payment of NIS 50
M to Israeli fuel provider Dor due today, January 26. The
Arab Bank manager told him the check would bounce, so he is

trying to postpone payment until he can gather enough cash to
put into the PA's Arab Bank account. Al-Wazir
estimated that there is only a one-day supply of fuel in the
West Bank and Gaza. If hoarding begins, the supply
could be exhausted within 12 hours.


5. (C) Al-Wazir confirmed that Prime Minister Quraya' had
resigned and called for Hamas to form the next
government. Al-Wazir said that the PA could only stay afloat
in the short-term if Saudi Arabia and Qatar
substantially increased their originally-planned transfers to
the PA. Al-Wazir said that Hamas has "bitten off more
than it could chew," since it will not be able to govern the
PA without external assistance. He said he hoped Hamas
would decline to form a cabinet and that a coalition cabinet
between Fatah and the independents would be formed
to govern the PA. However, in order to forestall an
immediate crisis, al-Wazir said that external assistance
from the Gulf states was urgently required in order to allow
a political compromise to be formulated.


6. (C) EU Middle East Envoy Mark Otte, in a meeting with
Consul General on January 26, corroborated al-Wazir's points,
and said he suggested that EU member countries would be able
to continue financial assistance to the PA given the
projected election results. He noted that the PA now faced
several impending, simultaneous crises:

-- A political crisis on dealing with the results and forming
the next government;
-- A financial crisis, due to impending drops in financial
assistance and transfers;
-- A security crisis as Fatah and al-Aqsa attempted to deal
with the election results;
-- A constitutional crisis if Abu Mazen really decided to
resign.


WALLES