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Cablegate: Request to Deliver Letters From the Secretary To

VZCZCXYZ0001
OO RUEHWEB

DE RUEHC #8787 2372356
ZNR UUUUU ZZH
O R 252338Z AUG 09
FM SECSTATE WASHDC
TO RUEHAD/AMEMBASSY ABU DHABI IMMEDIATE 0000
RUEHDO/AMEMBASSY DOHA IMMEDIATE 0000
RUEHMK/AMEMBASSY MANAMA IMMEDIATE 0000
RUEHKU/AMEMBASSY KUWAIT IMMEDIATE 0000
RUEHEG/AMEMBASSY CAIRO IMMEDIATE 0000
INFO RUEHJM/AMCONSUL JERUSALEM 0000
RUEHTV/AMEMBASSY TEL AVIV 0000

UNCLAS STATE 088787

SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON EAID KWBG PGOV OPDC PREL IS
SUBJECT: REQUEST TO DELIVER LETTERS FROM THE SECRETARY TO
FOREIGN MINISTERS IN SUPPORT OF THE PALESTINIAN AUTHORITY
(S/ES: 200915544)

1. This is an action request. Please see paragraph 4.

2. Summary: On August 11, the Kingdom of Saudi Arabia
announced its intent to transfer $200 million in budget
support to the Palestinian Authority (PA). The transfer was
completed on August 19. This level of support matches the
U.S. government's recent cash transfer announced by the
Secretary on July 24, and is part of a $1 billion financial
assistance package pledged by King Abdullah in January 2009 to
help the Palestinians cope with their budget crisis. Despite
recent U.S. and Saudi assistance, the PA faces an estimated
end-of-year deficit of $200 to $300 million to fully fund its
Gaza recovery plan, continue paying PA civil servant salaries
on time, and
repay accumulated bank loans and commercial arrears.
Several Arab donors, including Kuwait, Bahrain, and
Qatar, have not yet committed to providing budget assistance
to the PA this year, while Egypt and the UAE have provided
significantly less support in 2009 than they did in 2008.
Arab States had indicated in earlier solicitations that they
were reluctant to make commitments until Saudi Arabia had
taken action. They also cited Palestinian divisions to
justify their hesitation. Now, with the Saudi contribution
and the conclusion of the Fatah party Congress, which
reaffirmed President Abbas's leadership and commitment to a
negotiated solution to the Palestinian-Israeli conflict, we
have a platform to urge Arab States to follow the Saudi lead
and aggressively and tangibly support Abbas and the
Palestinian Authority.

3. With these letters, we will draw attention to the
PA's continued fiscal needs, emphasize the PA's record of
transparency and good governance, and urge Arab donors to meet
or exceed their 2008 level of support, highlighting the Saudi
contribution as an example for others to follow. (Note:
Western donors were similarly targeted with letters from
the Secretary in July. End note.) End summary.

4. Action Request: The Department requests that action
addressees deliver the letter included below from Secretary
Clinton to her counterpart in the foreign ministry. Before
delivery, posts are asked to add the final paragraph of text
specific to your capital above the Secretary's signature, as
instructed in the paragraph 6. Finally, posts are requested
to report delivery of the letters and any host country
response by front channel cable.

5. Begin main body of letter:

Dear Mr./Madam Minister: (or other appropriate salutation)

On July 21, the United States transferred $200 million in
direct budget support to the Palestinian Authority (PA),
fulfilling a critical component of the assistance package I
announced at the March donors' conference in Sharm el-Sheikh.
Our contribution reflects the continuing commitment of
President Obama, the U.S. Congress, and the American people to
a two-state solution to the Israeli-Palestinian conflict and
peace between Israel and its Arab neighbors.

At this important moment, as we ask parties in the region
to take difficult, but necessary steps to restart
negotiations, it is important that the PA be able to meet
its financial commitments and continue its impressive two-
year track record of institutional and security reforms.
Donor assistance is essential to improve the Palestinian
standard of living and help the PA build the foundations of a
future Palestinian state.

On August 19, the Kingdom of Saudi Arabia contributed $200
million in direct budget support to the PA, bringing the total
2009 Saudi contribution to $238 million. Saudi Arabia has
long been a leader in providing budget assistance to the
Palestinians, providing $234 million in 2008, and we applaud
their generous and continued support. However, the PA
continues to have a critical need for additional donor
support.

The United States has great confidence in the PA's ability to
ensure donor funds are handled in a transparent and
accountable manner. The PA under President Abbas and Prime
Minister Fayyad has a demonstrated track record of performance
on economic reform and prudent financial management, as noted
by the World Bank, the IMF, and our own reviews. We will
continue to work with the Palestinian leadership to bolster
these safeguards to make sure that funding is delivered
exactly where -- and to whom -- it is intended.

(Include relevant text below.)

Sincerely yours,

Hillary Rodham Clinton

End main body of the letter.

6. Begin text of country-specific information, which
should be included as the last paragraph of the letter:

-- For the United Arab Emirates: The UAE has been one of the
PA's most generous supporters, providing $134 million in
budget assistance to the PA in 2008, and $25 million so far in
2009.
I urge you to meet or exceed your 2008 contributions in 2009
so that, together, we can achieve our shared goal: a strong,
viable Palestinian state living in peace and security with its
neighbors.

-- For Bahrain: Bahrain has proven generous in its support
for the Palestinian people through its annual commitment
of $13.2 million to the Arab League and its pledge of $23
million at the March Sharm al-Sheikh donors' conference. I
urge you to fulfill those commitments in 2009 so that,
together, we can achieve our shared goal: a strong, viable
Palestinian state living in peace and security with its
neighbors.

-- For Kuwait: Kuwait was one of the PA's more generous
supporters in 2008, providing $80 million for budget
assistance to the PA. At the Sharm al-Sheikh donors'
conference in March 2009, Kuwait pledged $200 million in
assistance over five years. I urge you to provide generous and
timely budget support this year in line with 2008
contributions so that, together, we can achieve our shared
goal: a strong, viable Palestinian state living in peace and
security with its neighbors.

-- For Egypt: Egypt has been a strong advocate for Middle
East peace and the Palestinian people. In 2008, Egypt
provided $14.6 million in budget support to the PA. The
United States highly values Egypt's continued support for the
PA and would welcome further contributions from Egypt in 2009.
By working together we can help realize our shared goal: a
strong, viable Palestinian state living in peace and security
with its neighbors.

-- For Qatar: Qatar generously provided $110 million in
budget support to the PA in 2007, and has made pledges of
support at both the Paris and Sharm al-Sheikh donors'
conferences. I urge you to fulfill your pledges and provide
generous and timely support for the PA in 2009 so that,
together, we can achieve our shared goal: a strong, viable
Palestinian state living in peace and security with its
neighbors.

7. Donors interested in making a transfer to the PA should
coordinate directly through PM Fayyad. However, if countries
ask for guidance, the method used by the Saudis was to
transfer their contribution in Euros through the Arab Bank in
Frankfurt to the same central bank account that we use to make
our transfers. Please direct any questions or requests for
additional information to POC Karlene Frelich, Desk Officer,
Israel/Palestinian Affairs, at frelichkh@state.gov.
CLINTON

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