GOI STILL UNSURE ABOUT TRANSFER OF MONEY FOR

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 002056

SIPDIS

E.O. 12958: DECL: 05/26/2016
TAGS: ECON EFIN EAID KWBG KPAL ETRD IS ISRAELI PALESTINIAN AFFAIRS HUMANITARIAN AID
SUBJECT: GOI STILL UNSURE ABOUT TRANSFER OF MONEY FOR
MEDICAL AID

REF: TEL AVIV 2011

Classified By: Charge d'Affaires Gene A. Cretz for reasons 1.4 b and d.

This cable has been cleared by ConGen Jerusalem.

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Summary
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1. (C) The GOI has not yet decided how to effect the
transfer of NIS 50 million for humanitarian medical aid to
the Palestinians from the PA customs revenue it is holding.
Officials claim to fear that the transfer, done outside the
aegis of the Paris Protocol, would not be recognized as
legitimate by a future PA government, which could demand that
the GOI return the money. The GOI is seeking U.S. assurances
that the U.S. would support it in resisting such a demand.
In light of this problem, the GOI also wants to somehow
document that the revenue deduction came about as a result of
a Palestinian request, but has still not decided if it wants
Palestinian President Abbas to officially make such a
request. In a separate meeting, Abbas told ConGen
Jerusalem's Consul General that GOI expenditures on medicine
for Palestinians should be coordinated with his office.
Comment: This could offer an opening to the resolution of
the issue. End comment. End Summary.


2. (C) In a follow-up to the Charge's discussion with FM
Livni's Chief of Staff, Jakub Dayan (see reftel),Benny Ayal,
Senior Advisor to the Minister of Finance and Rani
Loebenstein, Senior Advisor to the Ministry of Finance DG
told Deputy Economic Counselor on May 26 that the GOI is
still unsure how to effect the transfer of NIS 50 million
(about USD 11 million) worth of medical aid to the
Palestinians. The plan is to deduct the money in stages from
the approximately NIS 750 million in Palestinian customs
revenue being held by Israel and give it to the World Health
Organization (WHO),which would use it to buy the supplies
and transfer them. So far, there have only been very
preliminary discussions with the WHO on the issue. The
problem, from the Israeli perspective, is that the Paris
Protocol covers the issue of Israel deducting money to pay
for electricity, water, and health care for Palestinians in
Israeli hospitals, but does not provide for deducting money
for this type of humanitarian assistance. Israeli officials
claim that they are therefore concerned about the possibility
that a future Palestinian government might demand return of
the money, since it would have been spent entirely at
Israel's discretion and not under any recognized protocol.


3. (C) Loebenstein said that the GOI's concerns about making
the deduction would be eased if it could depend on the U.S.
to back the action in any future dispute on the issue with
the Palestinians. In addition, the GOI would like to get
some sort of Palestinian request for the medical aid on the
record. However, he said emphatically that the issue of
whether or not to ask Palestinian President Abbas to make
such a request is extremely sensitive, and would require the
highest levels of the GOI to make fundamental decisions on
their views of the President and his usefulness as an
interlocutor for the GOI. So far, these decisions have not
yet been made, and Loebenstein strongly requested that the
U.S. not approach Abbas or any other Palestinians on the
issue until they are. (Note: Mahmud Abbas raised the issue
of transfer of money for the purchase of humanitarian medical
aid with ConGen Jerusalem's Consul General on May 23 and made
the point that GOI expenditures on medicine for Palestinians
should be coordinated with his office. Abbas' other concern
was that the GOI not spend the money on expensive Israeli
medicine, but rather purchase less expensive supplies on the
Palestinian economy. End note.)


4. (C) Loebenstein added that the GOI is also concerned that
deducting money from the customs revenues for this particular
humanitarian issue would set a precedent which would result
in further requests, some of which may be less reasonable.
The GOI is concerned that, having already gone beyond the
provisions of the Paris Protocol, it would find itself in a
more difficult position to resist additional requests.


5. (C) Loebenstein also voiced the general concern that if
the EU succeeds in figuring out a way to pay PA salaries, and
Israel starts using the customs revenues for general
humanitarian assistance, the economic pressure on the
Hamas-led PA government would ease considerably, if not end
completely. The GOI is also taking this into account in its
deliberations on the issue.

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