PA MINISTRY: LET HAMAS FAIL BY THEMSELVES

C O N F I D E N T I A L JERUSALEM 000800

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR WILLIAMS/WATERS/LOGERFO;
NSC FOR ABRAMS/MUSTAFA; TREASURY FOR NUGENT/ADKINS

E.O. 12958: DECL: 02/15/2015
TAGS: PGOV ECON EAID PREL KWBG
SUBJECT: PA MINISTRY: LET HAMAS FAIL BY THEMSELVES


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


1. (C) Summary: In a recent meeting with the Consul General,
Palestinian Authority (PA) Minister of Housing and Public
Works Shtayyeh urged donors not to stop assistance to the
Palestinians. Shtayyeh asserted that Hamas would not be able
to govern and would be in office only temporarily. He
advised that PA President Abbas plans to expand the
President's office by appointing at least 200 people to
manage various sectors. Dual-hatted as head of Palestinian
Economic Council For Development and Reconstruction (PECDAR),
Shtayyeh recommended donors use PECDAR, an independent
agency, as an alternative for channeling assistance to the
Palestinian people. End Summary.


2. (C) The Consul General met with PA Housing & Public Works
Minister Muhammad Shtayyeh on February 16. (Bio Note: In
addition to his soon-to-conclude ministerial duties and his
on-going role as the head of PECDAR, Shtayyeh managed
President Abbas' January 2005 campaign for the Presidency.
End bio note.)

Why Hamas won
--------------


3. (C) Shtayyeh called the Palestinian post-election mood
one of regret. He said, "The people had wanted to slap Fatah
on the face for its mistakes and lack of concrete
accomplishments in the last forty years; instead, the
Palestinian people have broken the bone." Shtayyeh blamed
Fatah, the GOI, and the international community for the Hamas
victory. He said that Fatah had lacked professionalism and
there was evidence of corruption. Palestinians, he said, had
also voted against a lack of cohesive leadership by Fatah,
claiming that PA President Abbas had not delivered results on
the ground. Shtayyeh also claimed that each incursion and
targeted assassination by the Israeli government had fed into
Hamas' platform which, compounded with the GOI's
unilateralism, had undermined Abbas.


4. (C) The international community had also played a role in
Hamas' rise to power, Shtayyeh said. The World Bank and the
European Community had advocated a tecnical approach to
Palestinian reform efforts by ocusing on benchmarks. In the
December Ad Hoc Liaison Conference in London, while the U.S.
had been supportive of the Palestinian position, the World
Bank had issued a report 30 days prior to the conference
without any consultations with the PA, criticizing the
inability of the PA to rein in salaries and develop fiscally
sound policies.

Next steps for Hamas
--------------


5. (C) Shtayyeh predicted that Islamic parties' involvement
in the political process could potentially lead to political
fragmentation within the West Bank and Gaza Strip. Shtayyeh
highlighted that Gaza-based Hamas PLC members will have to
participate in PLC sessions via video-conferencing, since
they will not be able to get Israeli permits to travel to
Ramallah. Shtayyeh conjectured that this could lead to an
"Islamic Republic of Gaza," which would sever all ties with
the President's office.


6. (C) The Consul General agreed with Shtayyeh that Hamas
faced a difficult situation, particularly since the GOI would
not transfer tax revenues to a Hamas-led government. He
pointed out the difficulty that the Fatah-led government had
had with getting assistance from the international donor
community; a Hamas-led government would certainly face more
of the same. Shtayyeh said he hoped that Hamas would face
the reality that along with governing, it would have to
deliver public services to the Palestinian people. He added
that he did not think Hamas could meet its reported claim
that it has access to USD 100 million a month.

Cutting assistance to the Palestinians
--------------


7. (C) Shtayyeh warned of the consequences if the USG cut
assistance to the Palestinians. A more refined and subtle
approach of keeping quiet would send a powerful signal at a
time when the Islamic movement was in search of legitimacy
and could potentially capitalize on Palestinian anger.
Shtayyeh also warned that the GOI should refrain from making
similar statements that could fuel a mood of revenge.

8. (C) Shtayyeh also cautioned that the PA would experience
an immediate financial collapse, if the international donor
community decided to stop assistance for the budget.
Shtayyeh ruminated as to whether this would mean total
disintegration or whether it would cause a revolt in the
streets. Street protests might serve as a wake-up call for
the Palestinian electorate and could result in a call for new
elections, he said. It was crucial to keep the PA
functioning as an entity, he said, in spite of the
Palestinians who had voted against the current government.

Ramping up the President's office
--------------


9. (C) Shtayyeh said Abbas planned to expand the President's
office by setting up several different departments to oversee
particular sectors. Shtayyeh emphasized that these people
would not advise the President, but would head a larger
entity, such as a legal or economic department. The
President would need an unofficial budget to support this
type of expansion and to help prevent the situation from
plunging into deeper chaos. He noted that UNDP, with funding
from Japan, was building additional office space for about
200 to 250 people who were now working in the vicinity of the
President's office.

PECDAR as a vehicle for delivering assistance
--------------


10. (C) Shtayyeh suggested to the Consul General that PECDAR
would be a viable alternative for delivering assistance
programs to the Palestinians. He said PECDAR was presently
conducting training sessions with governors with the hope of
creating a parallel track to provide public services to the
Palestinians. Shtayyeh urged the Consul General to consider
that this was a temporary government and that there were
alternatives to channel USG assistance to the Palestinian
people.


11. (C) PECDAR was a capable institution, transparent and
capable of handling donor money, Shtayyeh asserted. (Note:
Shtayyeh is the head of PECDAR, a PLO body established in
October 1993, to manage and oversee the reconstruction and
development process in the West Bank and Gaza. PECDAR was
originally intended to be a transitional body until the
ministries and agencies of the PA were developed. End Note.)
The World Bank and Britain had directed money to PECDAR
without going through the Ministry of Finance, demonstrating
that PECDAR could choose the degree of interaction that it
had with the PA. Once the particular project was tendered,
it was offered up to the private sector for bidding.
Shtayyeh pointed to the example of two hospitals in Ramallah
built with money from the governments of Kuwait and Bahrain
and independently administered. He added that PECDAR had a
project management office in every city and could work with
only the governors, if donors so choose.

Getting control over the security forces
--------------


12. (C) Shtayyeh said he hoped the President would agree to
hold on to the security forces and not consider splitting
them with a Hamas-led government. If Abbas chose not to
command and control the security services, the entire
structure could disintegrate or Hamas would try to insert its
own people. One option, Shtayyeh said, was to expand the
Presidential Guard to 9,000. (Note: The current size of the
presidential guards is less than 1,000. End Note.) Shtayyeh
stressed that Abbas would have to find salaries at the end of
the month to pay this new corps of presidential guards. In
any case, the EU donors would likely pull all funding for any
programs to support the police, Shtayyeh noted.
WALLES