PA'S HOUSING RECONSTRUCTION PLAN HINGES ON THE

C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 000466 SIPDIS NEA FOR FRONT OFFICE AND IPA; PRM FOR PRM/ANE; NSC FOR SHAPIRO/PASCUAL, TREASURY FOR PARODI/AHERN/VELTRI; PLEASE PASS TO USAID FOR BORODIN/NANDY/LAUDATO E.O. 12958: DECL: 03/12/2019 TAGS: EFIN EAID ECON KWBG PGOV IS SUBJECT: PA'S HOUSING RECONSTRUCTION PLAN HINGES ON THE CROSSINGS REF: JERUSALEM 259 Classified By: Consul General Jake Walles, for reasons 1.4(b) and (d) ¶1. (SBU) Summary: The Palestinian Authority (PA) has moved quickly to put in place a program to assist Gaza residents whose homes were damaged or destroyed during IDF operations in January. The USD 350 million PA plan, designed by PM Fayyad, would put money directly into the hands of individuals to reconstruct their homes. While there is still some confusion among residents, the PA's implementing partners are on the ground in Gaza ready to start work, and thousands of homeowners have taken application papers from the banks. However, in addition to donor funding, the program requires access for cash and building materials in order to succeed. End summary. The PA's Home Reconstruction Program -------------- ¶2. (SBU) One of the key components of the PA's plan for Gaza is a USD 350 million program to repair homes damaged or destroyed by IDF operations. The PA has taken out print and television ads to promote this plan, by which the PA will offer grants through Gaza bank branches to allow people to rebuild their homes. The PA is working in cooperation with banks registered with the Palestine Monetary Authority (PMA) and has hired the international NGO CHF to oversee implementation in Gaza. Recipients of cash assistance through the PA's ongoing compensation program via UNDP are not eligible to participate, nor are refugees. ¶3. (SBU) Banking contacts report receiving more than 1,000 applications as of March 12. The deadline for applications is March 26. CHF expects a total of around 8,000 applications from eligible beneficiaries. ¶4. (C) After the March 26 deadline, banks will turn over completed applications to CHF. CHF engineers will conduct detailed site visits to estimate the amount of damage done, as well as the costs of reconstruction. CHF will also confirm ownership, and will propose a total figure for each application. The banks will disburse up to 80 percent of the assessed amount as a grant (with the remaining 20 percent available as a loan) in installments. CHF will monitor construction progress and report to the bank before additional installments are disbursed. In line with the PA's objective of "building Gaza back better", CHF may recommend a family receive funding to build something significantly larger than what was destroyed, based on family size. Vetting -------------- ¶5. (C) The PA has designed the program to take advantage of existing bank controls to ensure vetting of recipients. PMA-regulated banks follow strict anti-terror regulations, including refusing to open accounts or honor payments by Hamas, PIJ, or other affiliated groups. Cairo Amman Bank President Joseph Nesnas told EconOff that his bank will only accept applications from existing customers. Other banks appear to be pursuing a similar policy, and/or said they would require applicants to open an account with them (which includes formal vetting procedures) before accepting their applications. CHF has also recommended including an OFAC check as part of the application process. Success Depends on Factors Outside the PA's Control -------------- -------------- ¶6. (SBU) CHF contacts, however, are concerned about unduly raising expectations, noting that the program is wholly dependent on three factors outside of the control of the PA: (1) sufficient donor funding; (2) the ability to get cash into Gaza, and (3) the availability of building materials in Gaza. ¶7. (SBU) CHF recommended to the PA that the next phase of this program should proceed only when donor funds are available and when Israel has agreed to allow some building materials and currency into Gaza. In the absence of progress on these conditions, CHF recommended the PM's office inform Gazans that their applications are safe, and that reconstruction will begin as soon as Israel permits the entry of necessary materials. JERUSALEM 00000466 002 OF 002 The View on the Ground -------------- ¶8. (C) Contacts in Gaza report enthusiasm, but not optimism, about this program. WHO Gaza head Mahmoud Daher said that Gazans are hearing about the PA plan via the TV and print ads and are "lining up" at the Gaza banks to apply. At the same time, many Gazans view the plan as "confusing" or "distant." ¶9. (C) A USAID contractor in Gaza said that that this program is commonly "known as the banks' program, rather than that of the PA." He also noted that people have more confidence in UN programs, as "the UN is on the ground in Gaza; the PA is not." Despite this, he predicted that thousands of Gazans would apply for the PA housing program. ¶10. (C) Comment: The PA has told us that they could get funds out the door through this program in six weeks. Given the large number of applications, there is an opportunity here for the PA to get some much needed credibility on the ground, but the program will not succeed unless the GOI dramatically increases the amount and type of goods allowed into Gaza. WALLES