ABU MAZEN PAYING FLAT-RATE ALLOWANCES

C O N F I D E N T I A L JERUSALEM 003682

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR WILLIAMS/MAHER/WAECHTER;
OPS PLEASE PASS TO NSC FOR ABRAMS/DORAN/WATERS; TREASURY
FOR SZUBIN/LOEFFLER/NUGENT/ADKINS;

E.O. 12958: DECL: 08/18/2016
TAGS: EFIN EAID KWBG IS
SUBJECT: ABU MAZEN PAYING FLAT-RATE ALLOWANCES

REF: JERUSALEM 3563

Classified By: Acting Principal Officer Thomas M. Duffy, Reasons 1.4 (b
) and (d).


1. (C) Summary: The Office of the PA President will disburse
through commercial banks, starting August 19, a flat-rate
allowance of NIS 1500 to PA employees, PA pensioners, some
social hardship cases, and those on the unemployment rolls.
The PA Presidency plans to issue a press statement August 18
linking the flat-rate allowances to the back-to-school
period. Nevertheless, the PA government is trying also to
claim credit for the allowances. End summary.


2. (C) Presidential Economic Advisor Mohammed Mustafa told
EconChief August 17 that the Office of the PA President would
start disbursing, through commercial banks on August 19, a
flat-rate allowance of NIS 1500 (USD 344) to PA employees, PA
pensioners, some social hardship cases, and those on the
unemployment rolls. He clarified August 18 that roughly
150,000 individuals would receive the allowance but could not
offer the exact breakdown between PA employees and non-PA
employees. He said that this disbursement of allowances
would fully exhaust the transfers the Office of the President
has received from the Arab League and other Arab states.


3. (C) Mustafa said that, like the July 23 disbursement, PA
Ministers and PLC members would not be paid. He also said
that those health sector workers paid by the European Union
through the Temporary International Mechanism (see reftel)
would also not be paid. In response to reports in the
Palestinian dailies August 18 that prisoners and martyrs
families would be paid August 19, Mustafa said that the
President's office would not be paying these groups but that
the PA Finance Ministry may be using their own funds to pay
these groups.

Presidency has not yet
announced flat-rate allowance
--------------


4. (C) While the President's Office was still crafting a
public announcement for release late on August 18, Mustafa
said that the focus was on linking these flat-rate allowances
to the back-to-school period and to not reference salary
payments at all. He acknowledged that the PA government had
already made statements to the press that tried to take
credit for the disbursement. For example, Acting Finance and
Planning Minister Samir Abu Aisheh, in a comment printed in
al-Hayat al-Jadida August 18, commented that PA employees,
both civilian and security personnel, could go to their banks
to receive their allowances.

At least one bank already
paying out the allowance
--------------


5. (C) At least one commercial bank has already started
making disbursements. USAID Gaza-based staff reported August
18 that Bank of Palestine branches in Gaza began disbursing
at 17:00 local on August 17. (Comment: Routinely, the Bank
of Palestine strives to be the first bank to disburse
payments to PA employees. End comment.) There were
reportedly long lines of customers at Bank of Palestine ATMs
since that bank runs its generators at night to operate its
ATMs, unlike many of the other major banks. Reportedly, Arab
Bank will not disburse the allowances until August 19.

Comment
--------------


6. (C) Over the last ten days, we have pressed PLO Chief
Negotiator Sa'eb Erekat, Presidency Chief of Staff Rafiq
Husseini, and Presidency Economic Advisor Mohammed Mustafa
that any disbursement of partial salaries by President Abbas
(Abu Mazen) could have serious political consequences
vis-a-vis the USG for Abu Mazen if he was seen as being the
PA's Finance Minister. The fact that the Office of the
President moved away from payments based on a percentage of
monthly salary for PA employees (which was the method used
for the July 23 disbursement) to a flat-rate allowance tied
to a specific need (i.e., back-to-school) is likely the most
that they are technically capable of doing, given the short
time frame and enormous pressure that comes from having
financial resources when the PA government does not have
access to those same resources. Erekat, Husseini, and
Mustafa have each stated that they are recommending that Abu
Mazen refuse any future donations. We have urged them to
funnel any such donations to international organizations and
NGOs or through the Temporary International Mechanism. End
comment.
DUFFY