AGREEMENT REACHED TO RESUME TRANSFER OF REVENUES

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 001346

SIPDIS

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS;
TREASURY FOR SZUBIN/LOEFFLER/NUGENT/HIRSON

E.O. 12958: DECL: 06/28/2017
TAGS: ECON EFIN PREL PGOV KFTN KWBG IS
SUBJECT: AGREEMENT REACHED TO RESUME TRANSFER OF REVENUES
BY ISRAEL TO THE PA

REF: JERUSALEM 1321

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


1. (C) Summary: The GOI agreed June 27 to resume the
transfer of frozen clearance revenues, starting with a
transfer of NIS 500 million on/about July 1, according to PA
Prime Minister and Finance Minister Salam Fayyad. Regular
monthly clearance revenue transfers will resume as well,
along with installment payments of the remaining frozen
funds. Technical meetings between both sides next week will
focus on transfer mechanisms and amounts owed after
deductions. The Israelis also agreed to resume shipments of
cash into Gaza so that banks there can disburse salaries,
according to Fayyad and a senior PA Ministry of Finance
official. End summary.

Revenue Transfers Resume
--------------


2. (C) Prime Minister Salam Fayyad told the Consul General
late June 27 that, in a meeting earlier that evening, Israeli
officials from the Prime Minister's Office and the Ministry
of Finance informed him that a sum of NIS 500 million (USD
117 million) in frozen clearance revenues will be transferred
to the PA on/about July 1. Fayyad said that several hundred
million shekels owed for the previous month (June) will be
provided thereafter, as the first of the now-revived regular
monthly clearance revenue transfers. The remaining
outstanding sum of frozen clearance revenues will be
transferred in four or five installments along with the
normal monthly transfers. The exact numbers will be worked
out in technical level discussions.


3. (C) Fayyad said that the Israelis also agreed to pay
interest on the frozen funds and accepted his request that
they consider adjustments in the payment schedule if the
Palestinians run into financial problems. He reported that
the Israelis set no conditions or auditing requirements.
Fayyad indicated his general satisfaction with the outcome
and said the PA will now be able to pay it's full monthly
wage bill for June more or less on time.


4. (C) PA Ministry of Finance Director General of Customs
Hatem Yousef told Econoff mid-day June 28 that he had just
provided the Israelis with the PA's single treasury account
number to facilitate the NIS 500 million transfer. He said
this account, number 100084, is located at the Arab Bank's
Al-Masyoon Branch in Ramallah. Yousef, who said he
participated with Fayyad in the June 27 meeting with the
Israelis, reported that technical meetings involving both
sides will begin early next week, during which agreement is
expected on the transfer mechanisms and amounts due.
Installment transfers, starting with NIS 250 million, should
begin soon, and the amount of each transfer will increase
once agreement is reached on how much the PA is due,
according to Yousef. He said that the Israelis estimated the
net amount of frozen clearance revenues at NIS 1.6 billion,
but he said he believes this figure to be too low, even when
considering estimated deductions for water, electricity and
other agreed payments.

Other Frozen Funds
--------------


5. (C) Yousef said that Israeli Ministry of Finance
officials agreed June 27 to investigate PA claims that
Israeli courts previously authorized the release of NIS 860
million of an estimated NIS 1.15 billion frozen separately as
a result of legal challenges to the PA. Yousef said the PA's
legal advisor is in possession of legal documents provided by
the Israeli courts indicating this amount had been unblocked.


Cash for Gaza Banks
--------------


6. (C) Fayyad also told the Consul General that the Israelis
agreed to resume shipments of cash into Gaza so the banks
there can disburse salaries and other payments (reftel).
Yousef told Econoff June 28 that Gaza banks have outstanding
orders for cash transfers amounting to NIS 150 million and
USD 6 million. Bank of Palestine and Cairo Amman Bank
officials told Econoff June 28 that the IDF continues to deny
the Israeli cash transport company the necessary permits to


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