Cablegate: Pa Makes Its Case to Donors One Last Time Before

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TO RUEHC/SECSTATE WASHDC IMMEDIATE 0019
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUEHFR/AMEMBASSY PARIS PRIORITY 3725
RUEHBS/USEU BRUSSELS PRIORITY
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RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 JERUSALEM 002560

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SENSITIVE
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NEA FOR FRONT OFFICE; NEA/IPA FOR GOLDBERGER/BELGRADE; EEB
FOR DEMARCELLUS; NSC FOR PASCUAL; TREASURY FOR HIRSON;
BRUSSELS FOR LERNER; PARIS FOR DWYER
PLEASE PASS TO USAID FOR RAGLAND

E.O. 12958: N/A
TAGS: EAID EFIN ECON PGOV KWBG
SUBJECT: PA MAKES ITS CASE TO DONORS ONE LAST TIME BEFORE
PARIS

1. (SBU) Summary. PA Prime Minister Fayyad and Planning
Minister Abdallah used meetings of the Local Development
Forum (LDF) and Paris Steering Committee on December 12 to
push donors to make the upcoming Paris Conference a success.
Fayyad was direct about the urgent need for budget support:
"Don't get me wrong, I like development projects. But if the
PA's not able to function, we won't be around to implement
projects." The PA has also circulated the latest version of
the Palestinian Reform and Development Plan (PRDP) that will
be presented to donors in Paris. End Summary.

PM: "Success in Paris Hinges on Budget Support"
--------------------------------------------- --

2. (SBU) At the last meeting of the LDF before the Paris
Donors Conference on the 17th, PM Fayyad told donors on
December 12 that the PA had met its targets in preparing for
the donors conference and had produced a comprehensive reform
and expenditure plan for the first time in its history. He
called for pledges in Paris to target assistance where it is
needed most: budget support. The GOI had transferred to the
PA the last of the funds withheld during the previous
government, funds that had provided the PA an additional USD
120 million a month in revenue over the past six months.
"Now there is a hole that size in our budget."

3. (SBU) Fayyad said the PA had paid its November wage bill
(during the first week of December) and would be able to pay
December wages in early January. After that, Fayyad said, he
could not predict what would happen. "I am not trying to be
dramatic. These are the facts." While the PRDP lays out a
three-year development plan, Fayyad said, "Our needs are more
immediate than the medium term." He noted that the PRDP
requests donor support for development projects in all
sectors. "But if the PA's not able to function, we won't be
around to implement projects."

4. (SBU) Fayyad expressed appreciation to both the U.S. and
the EC for the commitment to pledge significant amounts in
Paris. He noted that the Temporary International Mechanism
(TIM) would continue through March, but said, "As we move
forward, we want more donors to use the Single Treasury
Account (STA) which is a hallmark of our reform effort."
Fayyad expressed support for the World Bank's offer to
establish a multi-donor trust fund for those donors unable to
contribute directly to the STA. The World Bank's monitoring
of PA performance, he said, would be "more meaningful" if
done in conjunction with disbursements.

Reforms Already Underway
------------------------

5. (SBU) Fayyad emphasized that the PA was already moving
forward to implement the reforms laid out in the PRDP. He
said that he had approved a decision regarding utility
payments from municipalities intended to address the problem
of 'net lending', which continues to place an extraordinary
burden on the PA's recurrent expenditure budget. "We are
going to Paris with more than just promises and a plan, but
with a track record of actions already taken."

6. (SBU) Calling Paris "a station along the road", Fayyad
urged donors to follow-up on pledges made by re-invigorating
the existing donor coordination mechanisms. He said the Ad
Hoc Liaison Committee (AHLC) should meet twice a year,
including in "early Spring 2008". Similarly, the LDF needs
to "get down to business and get involved in aid
coordination" with the line ministries.

PRDP Ready for Paris
--------------------

7. (SBU) Following the LDF, Planning Minister Abdallah
reiterated the PM's points on the urgent need for budget
support to the Paris Steering Committee. He also described
to the group the changes in the latest version of PRDP, which
will be presented by Fayyad in Paris. Abdallah described the
process of compiling the sector-specific programs and budget
figures (in Annex 4) as a "long process of prioritization"
with the various PA line ministries. He emphasized that the
PA had made difficult choices in an effort to limit the
request to donors for project support to only the "bare

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minimum" necessary for the PA's 2008-2010 program.

8. (U) The final PRDP document is avialable on ConGen
Jerusalem's unclassified intelink website at:
http://www.intelink.gov/communities/state/pal econ
WALLES

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