UN REITERATES PLEA FOR U.S. HELP TO RELEASE

C O N F I D E N T I A L USUN NEW YORK 001083

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/28/2011
TAGS: OFDP UN WE JA
SUBJECT: UN REITERATES PLEA FOR U.S. HELP TO RELEASE
BLOCKED FUNDS

REF: A. GRESSER/WILCOX EMAIL--11/20/07

B. LIGHT/WILCOX EMAIL--04/05/07

C. USUN 2211 (2006)

D. STATE 7911 (2006)

E. USUN 255 (2006)

Classified By: Minister Counsellor Carolyn L. Willson, for
reasons 1.4(b) and (d).


1. BEGIN SUMMARY: (C) On November 21, UN lawyers pressed
USUN legal officers to respond to the UN's 2005 request for
the United States to secure the release of funds the Japanese
government donated to the UN in 2005 for humanitarian
projects in the West Bank and Gaza Strip (refs). The Bank of
New York has held the funds in a non-interest bearing account
since July 2005, pursuant to a judgment entered against the
Palestinian Authority and the PLO, and the UN lawyers said
the Japanese government is pressuring the UN to ensure that
the funds are recovered. USUN advised the UN that the
Department continues to explore possible solutions, noted
that the Department is working with the Palestinians to
encourage the Palestinians to resolve litigation that has led
U.S. banks to freeze Palestinian funds, and suggested that
the UN contact the Palestinians' lawyers. UN lawyers pressed
USUN for a speedy resolution of this ongoing irritant. END
SUMMARY.


2. (C) On November 21, UN Office of Legal Affairs and UN
Development Program (UNDP) lawyers sought an update on U.S.
efforts relating to the UN's request for assistance in
releasing $1,842,543.50 in humanitarian assistance funds.
The Bank of New York has blocked the funds since 2005
pursuant to a U.S. judgment against the Palestinian Authority
and the PLO. The UN lawyers thanked the United States for
the extensive briefing the USUN and Department lawyers
provided last April (ref B) and hoped the United States had
achieved progress in resolving the matter. The UN lawyers
also commented the Japanese government routinely presses the
UN about the status of the funds and thought the Japanese had
raised the issue bilaterally with the United States. They
reiterated the UN's contention that the frozen funds belong
to the UN and are inviolable, meaning that the Headquarters
Agreement obligates the United States to intervene either
with the Bank of New York or with the appropriate U.S. court
to release them. The Bank of New York seized the funds in
July 2005, after the UNDP, through its bank in Israel, tried
to transfer the funds electronically to the Palestinian
Economic Council for Development and Reconstruction (PECDAR).



3. (C) USUN responded by stressing that the United States
continues to explore ways to try to assist the UN, while
noting that the complexity of the issue has precluded
reaching a simple and quick solution. USUN asked the UN if
it has given any more thought to bringing its own suit
against the Bank of New York, noting the difficulty for the
United States to initiate action. USUN also stressed that
while the UN has made its perspective clear, the United
States does not necessarily agree that the funds remain UN
property and thus are immune from seizure.


4. (C) USUN also noted that the Bank of New York has frozen
other funds belonging to the Palestinian National Authority
pursuant to U.S. litigation and said the United States has
been exploring with the Palestinians ways to resolve that
litigation. USUN suggested that the UN contact the
Palestinians' lawyers at Miller & Chevalier.


5. (C) The UN lawyers responded that, as a matter of
principle, the UN does not bring actions in national courts
except in extraordinary and limited circumstances that do not
apply in this case. They added that, because the UN remains
responsible to the Japanese government to ensure that the
funds are used for the humanitarian purposes for which Japan
donated them, the funds remain UN property even after they
have left the UN's possession. Just as the UN retains title
to all goods it provides through its assistance programs, the
UN retains "effective" ownership of funds it transfers, they
said. Taking a different view could jeopardize the UN's
ability to conduct operations worldwide, they contended.
Therefore, they concluded that the UN's case is not
comparable to the Palestinian cases and consulting with the
Palestinians' lawyers might not be a relevant step for the UN
pursue.

Khalilzad