REQUEST FOR DEPARTMENT GUIDANCE ON ESF FUNDS

C O N F I D E N T I A L DAMASCUS 000278

SIPDIS

DEPARTMENT FOR NEA/ELA, EEB/ESC/TFS, L/AN, AND L/LFA

E.O. 12958: DECL: 04/14/2019
TAGS: PHUM PGOV PREL SY
SUBJECT: REQUEST FOR DEPARTMENT GUIDANCE ON ESF FUNDS
ALLOCATED FOR SYRIA

Classified By: CDA Maura Connelly for reasons 1.4 (b) and (d)


1. (SBU) This is an action request. See para 6.


2. (C) SUMMARY: Embassy Damascus seeks Department guidance on
how to proceed with planning for the recent USD 2.5 million
allocation of "Governing Democratically and Justly" Economic
Support Funds (ESF). In particular, we seek L's opinion on
the legal restrictions that would apply to dispensing these
funds in Syria, and we would like to know whether Washington
would be willing to increase Embassy capacity for managing
any new programming. END SUMMARY.

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SARG Restrictions
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3. (C) In pursuing human rights programming the Embassy faces
a major challenge in avoiding negative attention from the
SARG. Much of the current in-country civil society
programming receives funding from MEPI, but there have been
difficulties in the past with getting the money into the
country. Moreover, these programs are extremely sensitive
and, if discovered by the SARG, would provoke harsh reprisals
for any Syrians involved and very probably increase
operational limitations on Embassy personnel.

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Legal Issues
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4. (C) Post understands that Congress has appropriated USD
2.5 million in ESF funds to support "Governing Democratically
and Justly" policy objectives. In considering the
implications of that decision however, Post is unclear on how
Syria's designation since 1979 as a State Sponsor of Terror
governs the use of those ESF funds. Further, any programs
directed toward the economic sector here might require the
logistical participation of the Commercial Bank of Syria
(CBS). The Treasury Department designated CBS as "an
institution of primary money laundering concern" in 2004
under Section 311 of the U.S.A. Patriot Act, requiring U.S.
financial institutions to cut off all banking relationships
with it. Even though CBS is the only Syrian bank so
designated, U.S. banks largely refuse to transact business
with all banks in Syria out of concern over corporate risk
and public perception. These legal and practical issues beg
the question of how best Post can disburse money in Syria.

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Resource Issues
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5. (C) As we move forward in our efforts to use the ESF, we
must confront the issue of having only one authorized grants
officer at Post. That officer works in the PD section, a
section which is down to two officers, one of whom, the
section head, will curtail this summer. We therefore seek
Washington guidance on whether additional resources might be
available should there be a decision to spend this money in
Syria.


6. (C) Post requests the Department's legal guidance on the
issue of spending ESF funds in Syria as it develops its own
policy-oriented proposals for the deployment of these funds.
CONNELLY