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Cablegate: Major Donors Discuss Coordination Strategy For

VZCZCXRO8920
RR RUEHAG RUEHBC RUEHDE RUEHDF RUEHIK RUEHKUK RUEHLZ RUEHROV
DE RUEHBS #0902/01 0781136
ZNR UUUUU ZZH
R 191136Z MAR 07
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHTV/AMEMBASSY TEL AVIV
RUEHKO/AMEMBASSY TOKYO
RUEHNY/AMEMBASSY OSLO
RUCNDT/USMISSION USUN NEW YORK
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 BRUSSELS 000902

SIPDIS

SENSITIVE
SIPDIS

FOR NEA/DAS DANIN, NEA/IPA WILLIAMS/SHAMPAINE; PASS USAID
FOR ANE MCCLOUD/BORODIN; NSC FOR ABRAMS/DORAN/WATERS;
TREASURY FOR SZUBIN/LOEFFLER/NUGENT/HIRSON

E.O. 12958: N/A
TAGS: EAID PREL KPAL IS EUN
SUBJECT: MAJOR DONORS DISCUSS COORDINATION STRATEGY FOR
ASSISTANCE TO PALESTINIANS


1.(SBU)SUMMARY. In a Brussels meeting March 13, the European
Commission solicited comments from the international donor
community on its concept paper proposing an International
Mechanism for Support to Palestinians (IMSP). The EC paper
was drafted in response to the Quartet,s call for proposals
to further develop the existing Temporary International
Mechanism (TIM) in the areas of governance, institution
building, and economic development as a means to meet
Palestinian needs and support the political process.
However, despite EC insistence that its proposed IMSP
coordination mechanism had no bearing on the likely near-term
emergence of a new Palestinian Authority government, EC
officials admitted that their presentation of the proposal to
EU Member States earlier in the day had uncovered
considerable skepticism in this regard. Some EU States had
argued that the paper, by differentiating between Palestinian
entities with which support could be expanded now
(Presidency, independent agencies) and others (PA Ministries)
with which engagement would need to await improved political
circumstances (at least implicitly, acceptance of the Quartet
principles) sought to unduly pre-empt subsequent EU political
decisions on engaging a new PA government. As a result, the
EC said it would wait for the EU to reach a decision
regarding whether a new PA government reflected the Quartet
principles before recirculating the IMSP paper ) only in the
event the EU determined the new PA did not reflect the
principles would the paper go forward. EC officals added
that in the absence of EU consensus on the inclusion of
security in the IMSP, that section of the proposal should be
considered moot for the time being.END SUMMARY.

Proposed Structure of the IMSP
=======================
2.(SBU) The draft concept paper describes a mechanism that
establishes an "International Consultative Group" (ICG)
underneath the Quartet serving to coordinate aid through
three main channels: I. Social and Emergency Assistance
(possibly led by the UN); II. Governance and Institution
Building (possibly led by the EC); III. Economic Development
(possibly led by the World Bank). Within the ICG would be a
chairmanship led by a rotation of leading donors. Membership
would include other involved donors, Quartet envoys, and the
Office of the PA President. Operations would be coordinated
by a Secretariat.

Objectives and Principles
==================
3.(SBU) As the chair of the meeting, DG RELEX Middle East,
Southern Mediterranean Director Hugues Mingarelli dominated
the floor on behalf of the EU. Flanked by Andreas Reinicke,
foreign ministry representative of the German EU Presidency,
and Richard Weber, Director of DG EuropeAid, Mingarelli also
briefed on behalf of the Member States, who discussed the
paper with the EC earlier that day. Mingarelli outlined four
main objectives and principles to be accomplished by the
meeting:

a. Create consensus on moving from humanitarian assistance to
development and institution building;

b. Learn from existing coordination mechanisms, notably the
Ad-Hoc Liaison Committee (AHLC) led by Norway;

c. Establish a supportive link in furtherance of the
political process being pursued by the Quartet; and

d. Ensure broad participation of all stakeholders in the
coordination mechanisms, i.e. strong international support
and Palestinian ownership.

He stressed that the EC does not intend to set up a new
agency or fund, emphasizing that the mechanism should remain
temporary. Furthermore, he stated that an ideal situation
would involve engagement under the terms of the IMSP as
quickly as possible, irrespective of subsequent political
developments regarding emergence of a new PA government, in
order to avoid the perception of EU aid as a political
response. However, Mingarelli noted a lack of consensus
among the Member States, who shared many of the same issues

BRUSSELS 00000902 002 OF 003


participants in the meeting later discussed.

4. (SBU) Against this backdrop, donors and IOs presented
their views, which ranged from the highly critical (Norway)
to the mildly supportive (U.S.). EU PLO Representative Leila
Shahid expressed support for more aid to Palestinians, but
argued that seeking to make political distinctions between
"politically acceptable" and "politically unacceptable"
Palestinian governmental entities had served only to harm the
well-being of the Palestinian people and to damage President
Abbas and other advocates of a negotiated peace. In any
case, Israel,s responsibilities should be included in the
paper, and GOI participation in discussion and implementation
of the mechanism sought, given Israel,s "responsibility" to
provide Palestinian tax and customs revenue and to facilitate
movement and access. Norway complained that the proposed
IMSP was unnecessary and harmful in that it would duplicate
the existing Ad Hoc Liaison Committee (AHLC) structure, which
included Israel. Norwegian MFA DDG Kare Eltervag said Norway
intended to resurrect the AHLC and would begin consultations
with members and other interested parties immediately after a
new Palestinian government is established to discuss
convening an AHLC meeting before the expiration of the German
EU Presidency in June. (Comment: EU officials separately
told NEA/IPA Director Williams that German advocacy of an
AHLC in that morning,s EU member states, discussion of the
IMSP, and apparent "collusion" between Norway and Germany in
this regard, had caused considerable unhappiness within the
EU and EC. End Comment.)

5. (SBU) Williams said the US appreciated the EC,s effort to
be responsive to the request of the Quartet for a proposal to
further develop the TIM and to broaden it beyond humanitarian
assistance into the areas of governance, economic
development, and institutional capacity
preservation/building. The broad approach outlined in the
IMSP paper made sense -- clearly delineating those
Palestinian entities with which such efforts could and should
be undertaken now (such as the PA Presidency and independent
agencies) while emphasizing that broader engagement must
await political developments. Here the paper should be
revised to make crystal clear that the necessary political
development was the emergence of a PA government clearly and
credibly committed to the Quartet principles. Williams
encouraged the EC to be clearer with regard to the specifics
of its proposals, particularly in the governance area, and
throughout to condition any engagement with PA government
entities upon acceptance of the Quartet principles. He added
that more focus on the economic development area would be
useful, to include consideration of working with non-FTO
municipalities on infrastructure, and that a reference to the
lead role of the USSC in coordinating donor assistance
related to the AMA/Karni project would be appropriate.
Finally, he observed that coordination and consultation with
President Abbas and his designated representatives should be
undertaken before moving forward with the Palesing upon which the EC shoQ
greater effort.

6. (Qoy Yakovlev expressed tt no EC action o
scheduling issues. Mingarelli responde that given the lack
of consensus on the pape within the EU, securing approval
prior to a ossible Quartet meeting in April was "highly
Qnlikely."

7. (SBU) Arab League SYG CoS Hisham Yousef joined the UN,
Egypt and World BanQ in arguing that an approach which sought
to #ondition assistance mechanisms, particularly development
assistance mechanisms, upon politicalcommitments represented
"an approach without Q vision." While the AL had channeled

BRUSSELS 00000902 003 OF 003


its aid over the past year solely via the office of President
Abbas, the overall consequence ) despite considerable
increases in donor assistance ) had been a real
deterioration in the quality of life of the Palestinian
people. The best remedy, he noted (in words variously echoed
by the aforementioned delegations), would be to re-establish
across the board engagement with a new PA government (which
he expressed confidence would "sufficiently" reflect the
Quartet principles), and to re-instate the single Treasury
account to ensure accountability and appropriate oversight of
donor funds. Israel should transfer Palestinian revenues to
facilitate economic recovery.

Conclusion
========
8. (SBU) Mingarelli ended the meeting by expressing
appreciation for donors, views. He indicated that
consultations with the PA Presidency would continue on how
best to structure the mechanism, if a decision was taken to
move forward with the concept. In that event, donor input
would be factored into a revised proposal which would be
circulated for consideration. Donor satisfaction would be
crucial, he noted, not least because the EC has no additional
funds to expend on an expanded mechanism (and indeed the
EC,s TIM funding will expire by the summer. He closed by
warning participants about an "expectation gap," urging
donors to prioritize and sequence their actions to reduce
overlap and ensure maximum benefit for the Palestinian people.

9. This cable was cleared by NEA/IPA Director Thomas E.
Williams.

GRAY.
.

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