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Cablegate: Update On Opic Mortgage Finance Facility

VZCZCXRO7806
PP RUEHROV
DE RUEHJM #1362 2101523
ZNR UUUUU ZZH
P 281523Z JUL 08
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC PRIORITY 2297
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS JERUSALEM 001362

SIPDIS

NEA/IPA FOR GOLDBERGER/SACHAR; EEB/IFD/OIA FOR CULLINANE; R
FOR MCDANIEL; TREASURY FOR ROSE; DEPT PLEASE PASS TO OPIC
FOR ROBERT DRUMHELLER

E.O. 12958: N/A
TAGS: ECON EFIN KWBG
SUBJECT: UPDATE ON OPIC MORTGAGE FINANCE FACILITY

REF: JERUSALEM 350

1. (U) Summary: Representatives of the Overseas Private
Investment Corporation (OPIC) visited Jerusalem and Ramallah
July 18-23 to further OPIC,s affordable mortgage finance
initiative, launched by PA President Abbas and OPIC CEO
Mosbacher on April 14. OPIC VP Drumheller discussed timing
and implementation of the program with PA and Palestinian
bank officials, with the goal of operationalizing the program
by early 2009. OPIC also discussed the feasibility of a
project in the health sector with the PA Minister of Health
and followed up on a rental apartment project under
development in conjunction with the Anglican Church. End
summary.

Housing and Mortgage Facility
-----------------------------

2. (U) Following up on the April 14, 2008 announcement of a
500 million dollar mortgage finance facility, OPIC Vice
President Robert Drumheller and Investment Analyst Maria
Goravanchi visited Ramallah and Jerusalem July 18-23 to
review the status of the project with its partners, the
International Finance Corporation (IFC), the Palestine
Investment Fund (PIF), Bank of Palestine and the UK's DFID.
The program is designed to provide long-term housing loans to
low- and middle- income Palestinians through the Affordable
Mortgage and Loan Corporation (AMAL). AMAL will work with a
select group of local financial institutions, who will
originate and service the loans, and serve as the public face
to the customers. Discussions with six Palestinian banks are
ongoing regarding fees, risk sharing agreements, and
reporting requirements. Presently the Bank of Palestine,
Cairo Amman Bank, and Arab Islamic bank seem the most
interested and able to participate in this project.

3. (U) The program is designed to become operational in early
2009, in conjunction with large housing projects undertaken
by PIF and Bayti Real Estate Development -- projects that
would likely flounder in the absence of affordable mortgages
for low-income buyers (reftel). The Bayti development
(Rawabi) was the signature project of the Palestine
Investment Conference held in Bethlehem in May. Bayti's CEO,
Bashar al-Masri, has repeatedly stressed to ConGenOffs that
his project will not succeed absent affordable mortgages for
Palestinians.

Potential Projects
------------------

4. (U) Separately, Drumheller met with PA Minster of Health
Fathi Abu Moghli to discuss possible OPIC involvement in the
health sector. The MoH estimates it spends approximately $50
million annually to send patients to Jordan, Israel, and
Egypt for treatment due to the lack of specialized facilities
in the Palestinian Territories. OPIC will explore the
feasibility of funding specialized clinics in conjunction
with the MoH, which would serve patients in the West Bank and
ultimately become self-sufficient. (Note: A similar project
in Gaza was explored in early 2006, but was suspended once
the Hamas government took power.)

5. (U) Drumheller also continued discussions with the
Anglican Church about financing the construction of an
apartment building in Jerusalem, proceeds from which would
support health clinics and schools run by the Church in the
West Bank.

6. (U) OPIC cleared this message.
WALLES

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