DEPUTY SECRETARY LEW MEETS PALESTINIAN AUTHORITY

C O N F I D E N T I A L JERUSALEM 000330 SIPDIS DEPT FOR D BUTTE-DAHL, NEA FOR IPA AND SEMEP; AID FOR SBORODIN; NSC FOR KUMAR E.O. 12958: DECL: 02/21/2020 TAGS: PGOV EAID KWBG KPAL IS SUBJECT: DEPUTY SECRETARY LEW MEETS PALESTINIAN AUTHORITY MINISTER OF PLANNING, VISITS USAID HEALTH PROJECT Classified By: CG Daniel Rubinstein, for reasons 1.4(b) and (d) ¶1. (C) Summary: During his February 21 meeting with Deputy Secretary Jacob J. Lew, Palestinian Authority (PA) Minister of Planning Ali Jarbawi described the PA's development project planning process and his ministry's donor coordination role. Jarbawi stressed the importance of easing restrictions on West Bank movement and access in order to stimulate private sector growth and decrease the Palestinian economy's reliance on donor assistance and public spending. He also highlighted restrictions relating to the Gaza Strip, East Jerusalem, and Area C as detrimental to the PA's humanitarian and development programming. Separately, the Deputy Secretary visited the Palestine Medical Center, a five-year, USD 86 million USAID project, with PA Minister of Health Fathi Abu-Moghli. In his comments to the press, the Deputy Secretary highlighted U.S. efforts to strengthen health systems worldwide and the importance of PA institution building, and stressed U.S. support for Prime Minister Fayyad's statebuilding efforts. End summary. Private Sector Growth Essential -------------- ¶2. (C) In a meeting with Deputy Secretary Lew on February 21 in Ramallah, Planning Minister Jarbawi acknowledged that the Palestinian economy was driven by public sector spending in the form of salary payments and project assistance. He said that the PA could not reduce the role of the public sector without substantial private sector growth. "Imagine the difference 10 or 15 major factories exporting to the region could make to the Palestinian economy," he said. "But why would they come here," he asked, "when we can't guarantee access to markets?" Donor Coordination and Planning Process -------------- ¶3. (C) Jarbawi described the Palestinian Reform and Development Plan (PRDP, the three year blueprint for development and assistance) process as a combination of the Ministry of Finance's budget process, the Ministry of Planning's infrastructure and development project planning, and one of the coordination mechanisms for the international donor community. He noted that, while not perfect, it was an improvement over the "shopping list" of unprioritized projects that existed prior to 2008. He said that the 2011-2013 PRDP would include 23 different sector strategies and involve PA ministries, civil society, and private sector representatives. ¶4. (C) The 2010 list of priority projects included 201 projects worth nearly USD 5.5 billion, of which Jarbawi expected USD 676 million to be programmed in 2010. The remaining projects would roll over to the next list and be included in the upcoming PRDP, he said. (Note: Jarbawi added that the next PRDP would also roll over year by year: in 2012, it would become the 2012-2014 PRDP, and in 2013, the 2013-2015 PRDP, etc. This would enable greater flexibility in planning. End note.) Jarbawi said that when the PA's dependence on assistance ended, he anticipated that the Planning Ministry's function would be absorbed into the Ministry of Finance's budgetary process. Jarbawi said that currently there are "so many donor coordination mechanisms and structures, I can't even remember them all." ¶5. (C) Jarbawi identified three issues that must be addressed, in his view, for sustainable socio-economic development: the closure of Gaza, the situation of East Jerusalem, and access to Area C. Jarbawi said that the closure of Gaza was putting money in Hamas's pocket, as the PA received no taxes, no customs revenues, and yet contributed heavily to salaries and the delivery of services. Jarbawi expressed concern about the situation in Jerusalem, pointing to demolitions, Israeli confiscation of Jerusalem residents' identity cards, and the GOI's move to decrease the operating space of international NGOs as causes for worry. Finally, he emphasized the impact of Area C restrictions on development projects, adding that UNRWA could not expand the girls' school in Jalazone Camp (which the Deputy Secretary had visited earlier) because it was located in Area C, under Israeli control. Modernizing Health Care Systems and Improving Services -------------- -------------- ¶6. (SBU) Following his meeting with Jarbawi, Deputy Secretary Lew visited the Palestine Medical Complex (PMC) with Minister of Health Abu-Moghli. USAID, via its five-year USD 86 million Flagship Project, is rehabilitating some of the facilities, upgrading the equipment, training the staff, and modernizing the systems of five separate medical facilities, in order to combine them into one modern complex. Abu-Moghli underscored the importance of the project, not only to provide better health care to Palestinians, but also to decrease the number of Palestinians referred abroad for health care, a significant drain on the PA's finances. In a press conference covered by local and international media at the PMC, both the Health Minister and the Deputy Secretary emphasized the importance of health care reform and delivering services to Palestinians as a part of the path to statehood. RUBINSTEIN