O 171547Z JAN 02
FM AMCONSUL JERUSALEM
TO SECSTATE WASHDC IMMEDIATE 6438
INFO ARAB ISRAELI COLLECTIVE IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 03 JERUSALEM 000143 
 
NEA FOR BURNS/SATTERFIELD; NSC FOR REIDEL AND JOHNSON 
 
E.O. 12958: DECL: 01/16/12 
TAGS: EAID ECON PTER KWBG
SUBJECT: READYING PECDAR TO FILL THE "HAMAS GAP" 
 
CLASSIFIED BY CONSUL-GENERAL RONALD SCHLICHER PER 1.5 (D). 
 
¶1.  (C) SUMMARY:  PECDAR DIRECTOR MOHAMMAD SHTAYYEH 
REPORTS THAT HE HAS ARAFAT'S BLESSING TO ESTABLISH PECDAR 
RELIEF PROGRAMS THAT WOULD FILL THE ASSISTANCE GAP 
RESULTING FROM THE PA'S CLOSURE OF HAMAS-AFFILIATED 
CHARITIES.  SHTAYYEH WELCOMED U.S. EFFORTS TO ENCOURAGE 
GULF COUNTRIES TO STEER CHARITABLE CONTRIBUTIONS AWAY 
FROM HAMAS, AND WAS HAPPY TO HEAR THAT THE USG HAS 
IDENTIFIED PECDAR HAS A CONSTRUCTIVE ALTERNATIVE.  HE WAS 
CONFIDENT THAT PECDAR WAS UP TO THE TASK, CITING ITS 235- 
PERSON STAFF AND A SOLID REPUTATION FOR TRANSPARENCY AND 
EFFECTIVENESS.  SHTAYYEH IS PLANNING TO ESTABLISH A NEW 
DEPARTMENT OF POVERTY ALLEVIATION AND RELIEF WITHIN 
PECDAR THAT WOULD FOCUS ON WELFARE ASSISTANCE (PROVIDING 
FOOD, CASH, AND HOUSING), JOB CREATION VIA MICRO- 
GRANTS/LENDING AND A JOB PLACEMENT/SUBSIDY PROGRAM. 
SHTAYYEH ARGUED STRONGLY THAT THE BEST WAY TO PUT HAMAS 
OUT OF THE WELFARE BUSINESS IS TO PROVIDE BETTER SERVICES 
THROUGH OTHER CHANNELS.  END SUMMARY. 
 
 
POSITIONING PECDAR TO FILL THE HAMAS GAP 
---------------------------------------- 
 
¶2.  (C) IN A JANUARY 16 CONVERSATION WITH ECON CHIEF, 
MOHAMMED SHTAYYEH -- DIRECTOR OF THE PALESTINIAN ECONOMIC 
COUNCIL FOR DEVELOPMENT AND RECONSTRUCTION (PECDAR) -- 
REPORTED THAT HE MET WITH ARAFAT SOON AFTER THE PA'S 
DECISION TO CLOSE THE HAMAS CHARITIES.  DURING THAT 
MEETING, SHTAYYEH NOTED THAT THE PA'S DECISION TO CLOSE 
HAMAS-AFFILIATED CHARITIES AND OTHER INSTITUTIONS 
THREATENS TO CREATE A SO-CALLED "HAMAS GAP," AS EMERGENCY 
RELIEF AND OTHER ASSISTANCE PROVIDED BY THESE 
INSTITUTIONS ENDS.  SHTAYYEH SAID HE HAD ADVOCATED WITH 
ARAFAT THAT THE PA COULD NOT CLOSE THE CHARITIES WITHOUT 
ENSURING THAT BENEFICIARIES CONTINUED TO RECEIVE 
ASSISTANCE.  ARAFAT HAD AGREED AND ASKED FOR A PROPOSAL, 
WHICH SHTAYYEH HAD PROVIDED IN THE FORM OF A BRIEF PAPER. 
ARAFAT HAD APPROVED THE PAPER AND INSTRUCTED THAT IT 
SHOULD BE DISTRIBUTED TO MINISTER FOR LOCAL GOVERNMENT 
SA'EB EREKAT AND MINISTER FOR NGO AFFAIRS HASSAN ASFOUR. 
 
¶3.  (C) SHTAYYEH REPORTED THAT ASFOUR HAD SUBSEQUENTLY 
APPROACHED HIM TO SAY THAT HE WAS "PLEASED" WITH THE 
INITIATIVE, BUT ALSO HAD SOME IDEAS OF HIS OWN.  IN 
PARTICULAR, ASFOUR HAD STRESSED THE NEED TO WORK WITH 
NGOS IN PROVIDING RELIEF.  MINISTER OF SOCIAL AFFAIRS 
INTISSAR AL-WAZIR (UMM JIHAD) HAD ALSO CALLED HIM AND HAD 
EXPRESSED CONCERN THAT SHTAYYEH WOULD BE IMPINGING ON THE 
MINISTRY'S OWN RELIEF EFFORTS.  SHTAYYEH HAD ASSURED HER 
THAT HE WOULD WORK CLOSELY WITH THE MINISTRY.  SHTAYYEH 
ACKNOWLEDGED THAT THERE WOULD LIKELY BE ONGOING TURF 
ISSUES NOT ONLY WITH THESE PA MINISTRIES BUT ALSO WITH 
EXISTING (NON-HAMAS) NGOS.  HE HOPED PECDAR COULD OPERATE 
AS A KIND OF BROKER BETWEEN DONORS, THE MINISTRY OF 
SOCIAL AFFAIRS (WHO WOULD PROVIDE LISTS OF WELFARE CASES) 
AND NGOS AND MUNICIPALITIES WHO WOULD BE INVOLVED IN 
IMPLEMENTING PROGRAMS.  HE ALSO HOPED THAT OVER TIME 
PECDAR COULD BECOME A CENTRALIZED VEHICLE FOR CHANNELING 
ASSISTANCE FROM ZAKAT COMMITTEES (RESPONSIBLE FOR 
COLLECTING AND DISBURSING ISLAMIC ALMS). 
 
¶4.  (C) DESPITE THE FACT THAT PECDAR HAS BUILT ITS 
REPUTATION ON IMPLEMENTATION OF CONSTRUCTION PROJECTS, 
NOT SOCIAL WELFARE AND EMERGENCY RELIEF, SHTAYYEH ARGUED 
THAT PECDAR WAS WELL POSITIONED TO FILL THE HAMAS GAP. 
IT HAD A 235-PERSON STAFF, HE SAID, AND SINCE 1995 HAD 
DISBURSED OVER $110 MILLION IN EMPLOYMENT GENERATION 
PROJECTS FOR A VARIETY OF DONORS INCLUDING THE WORLD 
BANK, GERMANY, AND SWEDEN.  IT WAS ALSO IMPLEMENTING A 
COMMUNITY DEVELOPMENT PROGRAM WITH THE WORLD BANK AND 
MUCH OF ITS CONSTRUCTION WORK HAD FOCUSED ON SMALL-SCALE 
PROJECTS RELATING TO SCHOOLS AND CLINICS. 
 
WHAT IF A MILLION DOLLARS ARRIVED TOMORROW? 
------------------------------------------- 
 
¶5.  (C) ECON CHIEF INFORMED SHTAYYEH THAT THE USG HAS 
URGED GULF COUNTRIES TO CONSIDER PECDAR AS A POLITICALLY 
CONSTRUCTIVE CHANNEL FOR EMERGENCY ASSISTANCE TO THE 
PALESTINIANS.  SHTAYYEH WAS APPRECIATIVE, AND WAS 
CONFIDENT THAT IF NEW FUNDS FROM THE GULF ARRIVED HE 
WOULD BE POSITIONED TO CHANNEL THE ASSISTANCE TOWARD 
RELIEF ACTIVITIES.  ASKED WHAT HE WOULD DO IF A MILLION 
DOLLARS ARRIVED TOMORROW, HE SAID HE WOULD FOCUS ON 
EMERGENCY HOUSING AND FOOD AND CASH ASSISTANCE IN 
SOUTHERN GAZA.  AS A FIRST STEP, IN ORDER TO ASSESS THE 
DIMENSIONS OF THE CHALLENGE, SHTAYYEH HAD ALREADY ASKED 
OFFICIALS IN THE SECURITY SERVICES TO PROVIDE HIM WITH A 
LIST OF THE BENEFICIARIES OF THE HAMAS CHARITABLE 
INSTITUTIONS THAT HAD BEEN SHUT DOWN. 
 
 
A THREE PRONGED STRATEGY FOR PECDAR 
----------------------------------- 
 
¶6.  (C) LOOKING TO THE MEDIUM AND LONGER-TERM, SHTAYYEH 
SAID HE HAD BEGUN DESIGNING A NEW PECDAR DEPARTMENT THAT 
WILL FOCUS ON POVERTY ALLEVIATION AND RELIEF.  THE 
DEPARTMENT WOULD FOCUS ON THREE AREAS, WITH AN INITIAL 
EMPHASIS ON EMERGENCY RELIEF.  MOST OF HAMAS' EFFORTS 
OVER THE LAST 15 MONTHS HAVE BEEN IN THIS AREA, HE SAID, 
INCLUDING THE PROVISION OF FOOD PACKAGES AND CASH TO THE 
NEEDY.  FOR STARTERS, SHTAYYEH HOPED TO ASSIST FAMILIES 
IN RAFAH WHOSE HOMES WERE DESTROYED LAST WEEK BY THE IDF. 
THE ARAB LIBERATION FRONT (A MINOR PALESTINIAN POLITICAL 
PARTY) HAD ALREADY BEEN IN RAFAH OVER THE LAST WEEK 
DISTRIBUTING IRAQI MONEY TO AFFECTED FAMILIES, HE SAID. 
ONE AREA WHERE HAMAS HAD BEEN QUITE EFFECTIVE FOR OVER A 
DECADE WAS IN PROVIDING EMERGENCY HOUSING TO FAMILIES 
WHOSE HOMES HAD BEEN DESTROYED, SHTAYYEH ADDED, AND HE 
HOPED THAT PECDAR WOULD BE ABLE TO SUPPLANT SUCH 
ASSISTANCE.  THERE WERE FAMILIES IN SOUTHERN GAZA WHO HAD 
BEEN LIVING IN TENTS FOR FIVE OR SIX MONTHS, HE NOTED, 
AND GIVEN FUNDING PECDAR COULD RENT APARTMENTS FOR THEM. 
 
¶7.  (C) SECONDLY, THE NEW PECDAR DEPARTMENT WOULD FOCUS 
ON JOB CREATION VIA MICRO-PROJECTS.  THIS WOULD ENTAIL 
OFFERING SMALL GRANTS OF UP TO $2000 TO NEEDY FAMILIES TO 
HELP THEM, FOR EXAMPLE, TO BUY SEWING MACHINES OR FARM 
ANIMALS TO INCREASE THEIR INCOMES.  OTHERS WOULD BE 
PROVIDED TRAINING TO ENABLE THEM TO QUALIFY FOR SLIGHTLY 
LARGER AMOUNTS VIA MICRO-LENDING PROGRAMS OFFERED BY 
USAID AND THE PALESTINIAN DEVELOPMENT FUND.   THIRDLY, 
PECDAR WOULD INITIATE A JOB PLACEMENT-SUBSIDY PROGRAM, 
WHEREBY EMPLOYERS WOULD BE OFFERED A ONE-YEAR, 50 PERCENT 
SUBSIDY ON THE SALARIES OF NEW EMPLOYEES. 
 
 
HOW TO PUT HAMAS OUT OF THE CHARITY BUSINESS 
-------------------------------------------- 
 
¶8.  (C) SHTAYYEH ARGUED THAT, OVER THE LONG RUN, THE BEST 
WAY TO BEAT HAMAS WAS NOT TO SHUT DOWN THEIR CHARITIES 
BUT TO OUT-COMPETE THEM BY PROVIDING BETTER, ALTERNATIVE 
SERVICES.  MOST PALESTINIANS ONLY TURNED TO HAMAS 
SERVICES IF THERE WAS NO ALTERNATIVE, HE SAID, OBSERVING 
THAT HAMAS WAS OPERATING KINDERGARTENS IN REMOTE AREAS 
FOR PRECISELY THIS REASON.  AT THE SAME TIME, ANY DONOR- 
FUNDED EFFORT TO SUPPLANT HAMAS SHOULD NOT BE PUBLICLY 
DESCRIBED AS SUCH.  HAMAS CHARITIES SHOULD BE MADE 
IRRELEVANT VIA A QUIET, APOLITICAL, LONG-TERM, SYSTEMATIC 
PUBLIC WELFARE AND RELIEF EFFORT.  WHEN ECON CHIEF 
SUGGESTED THAT HE CONSIDER A FUND-RAISING TOUR IN THE 
GULF, SHTAYYEH AGREED, BUT STRESSED THAT IT SHOULD NOT BE 
PUBLICLY BILLED AS AN ANTI-HAMAS EFFORT.  FOR ONE THING, 
A FUND-RAISING EFFORT PUBLICLY IDENTIFIED WITH SUCH A 
POLITICAL OBJECTIVE WOULD LIKELY INSPIRE LESS GENEROSITY 
IN THE GULF THAN ONE THAT FOCUSED SIMPLY ON THE NEEDS. 
 
COMMENT 
------- 
 
¶9.  (C) ECON CHIEF SPOKE SEPARATELY WITH NORWEGIAN 
REPRESENTATIVE GEIR PEDERSEN WHO INDICATED NORWAY'S 
WILLINGNESS TO PROVIDE TECHNICAL ASSISTANCE TO PECDAR TO 
HELP IT RETOOL FOR ITS NEW ROLE.  PEDERSEN SPOKE 
SUBSEQUENTLY WITH SHTAYYEH, WHO WELCOMED THE OFFER. 
PEDERSEN ENVISAGES THAT THE HAMAS GAP WILL BE A CENTRAL, 
IF IMPLICIT, ISSUE AT THE AD HOC LIAISON COMMITTEE (AHLC) 
MEETING PLANNED FOR EARLY MARCH, AND HE HAS URGED 
SHTAYYEH TO PREPARE A PRESENTATION FOR THAT MEETING. 
 
¶10.  (C) DESPITE THE POTENTIAL TURF ISSUES OF WHICH 
SHTAYYEH IS FULLY AWARE, WE ARE ENCOURAGED BY SHTAYYEH'S 
EFFORTS SO FAR AND REMAIN CONVINCED THAT PECDAR IS INDEED 
THE BEST OPTION FOR REDIRECTING ARAB ASSISTANCE AWAY FROM 
HAMAS CHARITIES.  PECDAR HAS A STRONG REPUTATION FOR 
FINANCIAL TRANSPARENCY AND EFFECTIVENESS, AND HAS 
SUCCESSFULLY IMPLEMENTED NUMEROUS PROJECTS FOR THE WORLD 
BANK AND EUROPEAN DONORS.  IT IS NOT AN OFFICIAL PA 
ENTITY, WHICH WILL LIKELY BE ADVANTAGE IN ATTRACTING 
ASSISTANCE FROM GULF DONORS.  AT THE SAME TIME, SHTAYYEH 
OPERATES IN THE PA ORBIT AND WILL IMPLEMENT THE PA LINE 
AS HE DOES HIS BEST TO DRY UP THE MARKET FOR HAMAS 
CHARITY.  HOWEVER, SHTAYYEH IS ALSO FAMED AS AN "EMPIRE 
BUILDER" AND THE NORWEGIANS AND WE WILL HAVE TO WORK WITH 
HIM TO DESIGN A PROGRAM THAT WORKS EFFECTIVELY AND 
COLLEGIALLY WITH LEGITIMATE PALESTINIAN NGOS.  WE ALSO 
TAKE SHTAYYEH'S POINT THAT WE WILL PROBABLY MAKE HIS 
FUNDRAISING AND IMPLEMENTATION JOB THAT MUCH MORE 
DIFFICULT IF WE PAINT IT PUBLICLY AS A POLITICAL, ANTI- 
HAMAS INITIATIVE -- BUT WE WILL CONTINUE TO MAKE IT CLEAR 
TO SHTAYYEH THAT OUR POLICY IS THAT THE HAMAS 
INSTITUTIONS MUST BE, AND REMAIN, CLOSED, NOT SLOWLY MADE 
IRRELEVANT BY PECDAR'S AND OTHER EFFORTS. 
 
 
SCHLICHER