UPDATE ON PA ZAKAT COMMITTEE REFORMS

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 001049

SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
GOLDBERGER/SHAMPAINE; NSC FOR ABRAMS/PASCUAL;
TREASURY FOR SZUBIN/GRANT/ROSE/NUGENT/DAVIS

E.O. 12958: DECL: 06/20/18
TAGS: ECON EFIN KFTN PGOV KWBG IS PTER
SUBJECT: UPDATE ON PA ZAKAT COMMITTEE REFORMS

REF: A. TEL AVIV 740

B. JERUSALEM 690

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


1. (C) Summary. Palestinian Authority (PA) actions to
control the collection and distribution of alms (zakat) have
significantly reduced Hamas' exploitation of zakat committees
as a source of income in the West Bank, according to the
Deputy Minister of Awqaf and Religious Affairs (Awqaf). At
Prime Minister Fayyad's direction, the PA dissolved or
restructured 92 zakat committees and established mechanisms
to regulate zakat-related activities. End summary.


2. (C) Awqaf Deputy Minister Salah Zuheika told ConGenOffs
June 4 that PA regulations governing zakat committees were
largely ignored until Salam Fayyad became Prime Minister in
June 2007. Prior to the January 2006 elections, Hamas used
zakat committees to accumulate and spend significant funds.
The situation became worse after the elections, when the
Hamas-appointed Minister of Awqaf Yusuf Razqa instructed the
zakat committees to ignore directives from his professional
staff.

Fayyad Takes Charge
--------------


3. (C) Under PM Fayyad, PA efforts to control zakat-related
activities took on greater urgency, according to Zuheika. At
Fayyad's direction, newly-appointed Minister of Awqaf Jamal
Bawatna in September 2007 established a 9-member Higher Zakat
Committee to "control all the activities" of the zakat
committees, and an 11-member council now manages the "Zakat
Central Fund" to which the zakat committees direct their
obligatory contributions.


4. (C) Zuheika said that all 92 zakat committees under Awqaf
authority were dissolved in November 2007 and replaced by 9
district committees. District committee members were
selected from names nominated by governors' offices, chambers
of commerce, and municipalities. (Note: Fayyad has told us
that all names were vetted by PA security services. End
note.) Bank accounts of the dissolved committees were closed
after funds were transferred to the new accounts of the
district committees.


5. (C) Zuheika said that the Awqaf worked with the Ministry
of Finance and the Palestine Monetary Authority to uncover a
number of accounts held by zakat committees. In one case, a
bank in Jordan alerted the Awqaf to an account there after a
former zakat committee member attempted to withdraw funds.
Zuheika said banks in Jordan and in the West Bank have become
more diligent in demanding PA-issued documentation prior to
opening or granting access to zakat and other charity
accounts.

Still Work to Be Done
--------------


6. (C) Zuheika said that most zakat committees possessed
substantial assets and properties and also maintained ties to
a variety of charitable societies, thus complicating PA
efforts. He noted that the zakat committee in Nablus ran six
major institutions, including two hospitals and a dairy
company, and had been able to disburse funds to different
organizations without Awqaf authorization. Zuheika stated
that the Nablus Zakat Committee has been restructured and has
a new head, Dr. Mohammed Hannoun, Vice President for
Administrative Affairs at al-Najah University. Undesirable
members, such as Dr. Abd al-Rahim Hanabali have been ousted.


7. (C) Comment: There is still work to be done to ensure
complete Awqaf control over the restructured committees. The
Ministry lacks capacity and established systems to ensure
compliance throughout the West Bank. Former members are
lobbying to be reinstated and exert influence on the local
committees. Zuheika believes that committees, forced to deal
with pressure from previous members and Hamas activists, may
try to make compromises at the local level, beyond the reach
of the Awqaf. End Comment.

Hamas Response
--------------


8. (C) In response to PA actions, Hamas is seeking to
establish new charitable committees in the West Bank and is

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asking its donors, both foreign and domestic, to redirect
their contributions to these entities, according to Zuheika.
Officially recognized committees are losing funding, and
beneficiaries are increasingly holding the PA responsible.

WALLES