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Cablegate: Demarche Request: U.S. Objectives for the Ad-Hoc

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UNCLAS STATE 095980

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E.O. 12958: N/A
TAGS: EAID KPAL PGOV WBG EU IS
SUBJECT: DEMARCHE REQUEST: U.S. OBJECTIVES FOR THE AD-HOC
LIAISON COMMITTEE MEETING, SEPTEMBER 22

1. (U) This is an action request. Please see paragraph 3.

2. (SBU) Summary: The Department requests that action
addressees inform appropriate government officials of USG
support for the September 22 working-level meeting in New
York City of the Ad Hoc Liaison Committee (AHLC), the
principal external coordinating mechanism for donor
assistance to the Palestinian Authority (PA). Norway has
developed an agenda that provides an opportunity for
substantive dialogue among subject matter experts from the
donor community, the PA, and the Government of Israel (GOI)
about ways to facilitate the effective coordination and
delivery of donor assistance. In support of this approach,
we should encourage participating countries to refrain from
delivering prepared speeches. The U.S. will use this meeting
of the AHLC to: emphasize the continuing need for donors to
provide immediate budget support to the PA; mobilize support
for Prime Minister Salam Fayyad's two-year plan to develop
the institutions of a future state; and encourage increased
access for goods and personnel into Gaza to support recovery
efforts. We would support a later meeting of the AHLC at the
ministerial-level in the context of the resumption of
negotiations. End summary.

3. (U) Action request: The Department asks that Posts seek
meetings with the appropriate host country officials to
convey the objectives outlined below.

4. (SBU) Objectives:

-- Assure donors that we are making steady progress toward
the resumption of negotiations and that continued support for
the PA and the Palestinian economy is essential to create the
conditions for success. The AHLC can support efforts to
create the conditions for successful negotiations by helping
to mobilize assistance in support of Palestinian economic and
institutional development.

-- Emphasize that this meeting of the AHLC should be at the
working level, not at the ministerial level, and that we
encourage governments to send experts who are prepared to
discuss concrete ways to meet the PA's financial needs and
develop Palestinian institutions. We hope that delegations
will avoid delivering prepared remarks in favor of open
discussion.

-- We would support a ministerial-level meeting of the AHLC
at an appropriate time and place following the resumption of
negotiations.

-- Share the primary U.S. goals for the AHLC: fill the PA's
recurrent budget deficit in 2009 and coordinate continued
support in 2010, particularly for the early months of the
year with steady flows of assistance; mobilize support for
Prime Minister Salam Fayyad's two-year plan as a blueprint
for building the viable institutions of a future state;
emphasize the unique roles that donors, the PA and the GOI
have in preparing for Palestinian statehood; and convey our
ongoing concern for the people of Gaza and our support for
increasing the scope of goods and equipment allowed into Gaza.

-- For the GOI: Emphasize our interest in having the GOI not
politicize PM Fayyad's two-year plan through public
criticisms. We do not see it as a unilateral declaration of
statehood, but a mechanism to focus the PA's efforts on
building the institutions of a future state. In addition, we
encourage the GOI to announce concrete progress toward
implementing the Serry plan for the recovery and relief of
Gaza.

-- For Norway: As Senator Mitchell told Foreign Minister
Stoere, we hope that with Norway's leadership, the AHLC can
be held at the ministerial-level later in the year, linked to
the resumption of negotiations.

-- For the PA: We are committed to mobilizing donor support
for the PA, particularly in the Gulf. We also will find
appropriate moments to build support for the PA's
institutional reform program in our statements related to the
political process, and will encourage other parties to do the
same.

-- For Cairo: We need to ensure that the AHLC does not
distract from our efforts to create the conditions for
successful negotiations by becoming a venue for one-sided
criticism of Israel.

5. (U) Reporting: Posts should report initial host country
responses as soon as possible by email or cable. Please
contact Andrew Lentz, Desk Officer for Palestinian Economic
Affairs, by email at lentzan@state.gov if you have any
questions or requests for additional background.

Background
- - - - - - - - - - -

6. (SBU) Participation: The U.S. will be represented at the
AHLC in New York City by Tom Goldberger, Office Director of
the Office of Israel and Palestinian Affairs. The delegation
will be comprised of representatives from State, USAID, the
office of the Special Envoy for Middle East Peace, and the
Department of the Treasury. This meeting of the AHLC should
provide subject matter experts from the donor community, the
PA and the GOI with the opportunity to engage in substantive
discussions about ways to facilitate the effective
coordination and delivery of donor assistance.

7. (SBU) PA Budget Needs: According to the IMF, the PA
requires $1.49 billion in external financing to cover the gap
between revenue and expenses in its 2009 recurrent budget
(down from over $1.7 billion in 2008). This figure includes
$300 million that the PA asked for at the Sharm al-Sheikh
donors' conference to cover additional budget expenses
related to the Gaza conflict. Against this need, the PA has
received just over $950 million in donor support through
August, including $200 million from the United States and
$200 million from Saudi Arabia. The PA reports that with
donor financing to date, it will be able to pay September
salaries in time for the end of Ramadan. The PA, however,
still faces an anticipated end-of-year budget deficit of as
much as $400 million and will need additional donor financing
as early as October. The PA again will require substantial
donor support in 2010 to meet an anticipated $927 million
deficit in the operating budget. Through reform and
institutional development, the PA under Prime Minister Salam
Fayyad is reducing the burden on donors, but donor financing
still is necessary to ensure the PA's viability. Donors
should come prepared to fulfill the PA's end-of-year
budgetary needs.

8. (SBU) PM Fayyad's Two-Year Plan: On August 25, Prime
Minister Salam Fayyad released a program for the new PA
government that was sworn in on May 19 titled "Palestine:
Ending the Occupation, Establishing the State." The plan is
both a political document and an action plan for the PA
government and its ministries to develop viable institutions
of statehood by 2011. There has been no official response to
the plan from the Government of Israel, although Finance
Minister Yuval Steinitz publicly criticized the plan as a
unilateral declaration of statehood. The plan, however, does
not call for the creation of a state absent negotiations and
commits the PA to "all of (the PLO's) bilateral and
multilateral agreements," which encompass the Quartet
principles of recognition of Israel, renunciation of
violence, and acceptance of previous agreements negotiated by
the PLO. Implementing the plan will be costly, requiring
substantial assistance from the international community. The
identified action items are not, however, costed-out. We
should urge donors and the parties to consider concrete steps
in support PM Fayyad's institution building efforts.

9. (SBU) Future meeting of the AHLC: Norway originally
planned to hold this meeting of the AHLC at the ministerial
level. We conveyed to Olso our position that such a meeting
would be far more effective after negotiations have begun.
This sequencing would (1) keep the focus in UNGA on the
launch of negotiations; (2) support negotiations and the PA;
and (3) put donor support in the context of negotiations,
thus increasing the chances of success for the AHLC to
mobilize international and financial support for Palestinian
reform and development. We are willing to work with Norway
to organize a ministerial-level meeting that is linked to the
resumption of negotiations at a venue and date to be
determined.
CLINTON

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