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Cablegate: Opic-Backed Loan Guarantee Program Launched

VZCZCXRO5485
OO RUEHROV
DE RUEHJM #1575 2110700
ZNR UUUUU ZZH
O 300700Z JUL 07
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8523
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS JERUSALEM 001575

SIPDIS

SENSITIVE
SIPDIS

NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS;
TREASURY FOR SZUBIN/LOEFFLER/NUGENT/HIRSON; PASS OPIC FOR
DRUMHELLER/BEQUAI

E.O. 12958: N/A
TAGS: ECON EFIN EINV ETRD KWBG
SUBJECT: OPIC-BACKED LOAN GUARANTEE PROGRAM LAUNCHED

1. (SBU) Summary. The Overseas Private Investment
Corporation (OPIC), the Aspen Institute, and the Palestine
Investment Fund (PIF) signed a loan guarantee agreement on
July 25 that will leverage up to USD 228 million in loans to
small and medium-size Palestinian enterprises (SMEs). The
agreement establishing the initiative, known as the Middle
East Investment Initiative Program (MEII), was signed by OPIC
President Robert Mosbacher on behalf of the U.S. U/S Karen
Hughes, who witnessed the signing with President Abbas (Abu
Mazen), declared that the MEII is indicative of USG efforts
to shore up the Palestinian economy and help stabilize the
region. Abbas remarked that he would welcome similar project
launches on a weekly basis. End Summary

2. (SBU) OPIC President and CEO Robert Mosbacher, Aspen
Institute chairman Berl Bernhard, and PIF CEO Mohammed
Mustafa signed a loan guarantee framework agreement July 25
that will leverage up to USD 228 million in loans for
Palestinian SMEs. The signing ceremony took place at the
Presidential Compound in Ramallah. Abu Mazen, Under
Secretary of State Hughes, Mosbacher, Bernhard, and Mustafa

SIPDIS
took turns praising the program. Prime Minister Fayyad also
witnessed the signing. The Consul General and the Norwegian
Special Envoy for the Middle East Svein Sevje also attended.

Evidence of USG Commitment
--------------------------

3. (SBU) In her remarks, U/S Hughes noted that President
Bush renewed the USG's commitment to the peace and security
of the Palestinian people in his July 16 speech. She said
that President Bush and the American people know that "it is
crucial to improve the living conditions and the economic
opportunities for the Palestinian people." She emphasized
that the MEII embodies this commitment by providing
much-needed loans to SMEs, many of them family-owned. U/S
Hughes noted that the program presents an opportunity for
Palestinians, particularly small business owners, to set the
course of Palestinian economic development. Mosbacher said
the MEII will infuse much needed investment funds into the
Palestinian private sector, allowing even small business
owners to use their own talents and energy to improve
conditions for themselves and their families.

4. (SBU) Abu Mazen emphasized that the Palestinian people
and economy are in real need of projects. He praised the
MEII and called on Palestinian banks to facilitate these
loans as a means of boosting the Palestinian economy. He
expressed his hope that a new project will be signed every
week. The bulk of Abu Mazen's remarks, however, were devoted
to condemning Hamas actions in Gaza. He also cautioned
against differentiating between the West Bank and Gaza.

Program Details
---------------

5. (SBU) The MEII consists of a USD 110 million guarantee
from OPIC and a USD 50 million guarantee from the PIF. The
Norwegian government is providing USD 5 million over 5 years
for operating costs and training. The Aspen Institute has
raised funds from American, European, and Arab donors to
operate and manage the initiative. The U.S. NGO CHF
International will manage the program locally, working
closely with participating banks.

6. (SBU) By guaranteeing 70 percent of loan principal, the
USD 160 million will be able to leverage up to USD 228
million in credit. The remaining 30 percent will be covered
by the lending bank. Loans will range from USD 10,000 to USD
500,000. A local advisory board for the MEII comprised of
prominent members of the private sector held its inaugural
meeting July 25, after the signing ceremony.
WALLES

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