This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 04 AMMAN 003242 
 
SIPDIS 
 
DEPT FOR PRM AND NEA; PLEASE PASS TO USAID 
 
E.O. 12958: DECL: 06/02/2013 
TAGS: PREF PREL KPAL KWBG EAID IS JO
SUBJECT: UNRWA MAY 21-22 DONORS MEETING:  BUDGET 
SHORTFALLS, WEST BANK AND GAZA WOES, AND CONTINUING US 
EFFORTS ON TEXTBOOKS AND TERRORISM 
 
REF: TEL AVIV 2916 
 
Classified By: PolCouns Doug Silliman, per 1.5 (b) and (d). 
 
¶1.  (U) Summary:  UNRWA's May 21-22 meeting of major donors 
and host governments revealed an agency in an atypically 
sound cash-flow position but troubled by overall budget 
shortfalls and underfunded emergency needs in the West Bank 
and Gaza, with only USD 25 million received against its 
current USD 94 million emergency appeal.  UNRWA reported that 
Israeli security restrictions in the West Bank and Gaza 
continue to impede the agency's ability to provide basic 
services and emergency humanitarian assistance.  In response 
to donor requests for more technical discussions, UNRWA 
updated donors on initiatives in the relief and social 
services and education departments (including the US-funded 
tolerance project), announcing that it had secured USD 5.6 
million in funding for its long-planned Palestine refugee 
record project.  In meetings and a visit to Fawwar refugee 
camp held on the margins of the UNRWA meeting, PRM PDAS 
Greene briefed UNRWA and GOI officials on the US Government's 
continuing efforts to balance humanitarian assistance, 
stability and security needs in the Palestinian refugee 
context.  End summary. 
 
¶2.  (U) UNRWA held its semiannual meeting of major donors and 
host governments May 21-22 in Amman.  The US Delegation 
included Ambassador Gnehm, PRM PDAS Richard Greene, Regional 
Refugee Coordinator and Refugee Assistant.  At the meeting, 
Ambassador Gnehm announced an initial US contribution of USD 
80 million to UNRWA's General Fund and a separate USD 15 
million contribution to UNRWA's emergency appeal. 
 
General Fund Finances:  Improved Cash-Flow but Funding Gap 
Remains 
--------------------------------------------- --------------- 
 
¶3.  (U) UNRWA ComGen Hansen reported that the agency is in 
its best cash-flow situation in recent years, due largely to 
an early General Fund payment from the European Commission, 
which previously made its payments at the end of the calendar 
year.  Unexpected exchange rate gains, savings from 
management reforms and a USD 4 million repayment of VAT owed 
by the Palestinian Authority have also improved the agency's 
financial posture.  Nevertheless, UNRWA still expects to face 
a USD 55 million funding gap for calendar year 2003.  The US 
and European Commission delegations asked UNRWA for a 
qualitative assessment of the effects of the projected 
funding gap and an explanation of how UNRWA prioritizes 
programming in such circumstances.  Hansen responded that 
reductions in maintenance spending and staff salaries (e.g., 
the 1999 staff salary rules) bore the brunt of funding 
shortfalls. 
 
¶4.  (U) PRM PDAS Greene asked whether UNRWA would consider 
merging the West Bank and Gaza emergency programs into the 
General Fund, eliciting a relatively spirited debate among 
donors and host governments.  Hansen responded that the 
agency would continue to need additional funds for emergency 
programming in the West Bank and Gaza as long as the current 
situation continued.  He added that the agency believed it 
was easier for donors to respond to these needs if they 
continued to be cast as extraordinary, extrabudgetary needs. 
Several donors, including Australia, Sweden, Germany and 
Norway noted that they have an easier time providing 
emergency funding than convincing their parliaments to 
increase annual General Fund contributions to UNRWA.  Syria 
and Jordan expressed concern that inclusion of emergency West 
Bank and Gaza programming in UNRWA's General Fund budget 
could undercut support for Palestinians in UNRWA's other 
three fields of operations. 
 
Impact of Chronic Underfunding 
------------------------------ 
 
¶5.  (U) Deputy ComGen Karen AbuZayd briefed donors on a study 
conducted by UNRWA's Policy Analysis Unit, analyzing the 
effects of an estimated USD 570 million in unfunded needs 
since 1990.  Although UNRWA's annual income has increased by 
24 percent since 1990, the Palestinian refugee population has 
increased by 62 percent in the same period due largely to 
spikes in UNRWA registration rolls following the 1990-1 Gulf 
War and the Oslo peace accords.  UNRWA reports that due to 
chronic underfunding, its spending per refugee has dropped 
from USD 99 per refugee in 1990 to USD 73 per refugee in 
¶2002.  Cost-cutting measures such as the 1999 area staff 
rules (reducing UNRWA Palestinian staff salaries) have 
doubled both the number of resignations per year and the 
recruitment time required to fill vacant positions.  UNRWA 
reported that chronic underfunding has had a significant, 
negative impact on education programs, requiring 
double-shifting in almost all schools in Jordan and Syria and 
leaving UNRWA schools unable to keep up with local 
educational norms, such as the introduction of computer 
science classes.  Underfunding has also required UNRWA to 
decrease its health expenditures (from USD 20 per refugee per 
year in 1990 to a current USD 13 per refugee) and its relief 
services, limiting special hardship cases to just six percent 
of the refugee population, down from seven percent in 1990. 
 
 
West Bank and Gaza Emergency Programs -- Needs Remain Great, 
Funds Remain Short 
--------------------------------------------- -------- 
 
¶6.  (U) Hansen characterized the current situation in the 
West Bank and Gaza as "the most difficult in recent years." 
150 Palestinian fatalities occurred in the first four months 
of 2003, a 45 percent increase over the same period in the 
last two years.  Hansen reported that 12,700 Palestinians 
have become homeless since September 2000 due to Israeli home 
demolitions with an "alarming" increase in demolitions in the 
last three months.  According to the World Bank, 50 percent 
of Palestinians in the West Bank live below the poverty line 
while the number in Gaza reaches nearly 75 percent.  However, 
poor donor response to UNRWA's emergency appeal -- a mere USD 
25 million received of the USD 94 million requested -- has 
hampered UNRWA's ability to respond to the crisis.  Hansen 
said that limited funding has required UNRWA to reduce its 
emergency food distributions and temporary jobs programs. 
Separately, UNRWA West Bank Deputy Director Guy Sirri told 
PRM PDAS Greene during a May 20 visit to Fawwar refugee camp 
that UNRWA was forced to cancel 300 direct hire temporary 
jobs on April 1, due to limited funding. 
 
¶7.  (U) UNRWA West Bank Director Richard Cook reported that 
the effects of nearly 32 months of violence and growing 
Palestinian poverty are increasingly obvious in UNRWA 
schools.  (UNRWA began its presentation on West Bank and Gaza 
emergency programming with a short film on an UNRWA student 
injured at her school desk during clashes in Khan Younis 
refugee camp.)  UNRWA teachers are reporting increasing signs 
of psychological distress such as speech impediments, 
bedwetting and psychosomatic problems.  Increasing numbers of 
UNRWA schoolchildren are arriving at school hungry. 
Children's classroom time continues to be cut short by 
closures and curfews; Cook reported that UNRWA lost a total 
of 82,000 staff days in 2002, an average of 1,000 staff days 
per West Bank school.  West Bank Education Director Lamis 
Alami separately told PDAS Greene during a May 20 camp visit 
that only 28 percent of UNRWA's West Bank schools met the 
minimum requirement of being open for a full 200 working days 
during the 2001-2 school year.  Alami added that although 
test scores are falling, UNRWA can only hold back five 
percent of its students per year due to limited classroom 
space.  Cook told donors that academic performance is worst 
in schools that have been hardest hit by violence.  In 
UNRWA's Tulkarm schools, for example, only 27 percent of 
students achieved a passing score on recent Arabic language 
tests, compared to 75 percent of students in nearby NurShams 
camp, which has been relatively isolated from the violence. 
 
Access Difficulties Continue in West Bank and Gaza 
--------------------------------------------- ----- 
 
¶8.  (U) Hansen told donors that UNRWA continues to experience 
severe access difficulties, with 124 of 151 recent access 
problems in the West Bank and Gaza involving UNRWA staff. 
New Israeli restrictions on international staff movement in 
and out of Gaza (ref) were particularly difficult for the 
agency.  Hansen told donors that UNRWA had accrued USD 20 
million in direct or indirect losses due to closures and 
other Israeli security measures implemented since September 
¶2000. 
 
¶9.  (U) West Bank Director Cook reported that the new IDF 
liaison system for humanitarian agencies had not resulted in 
access improvements on the ground.  Cook cited the April 2003 
occupation of UNRWA's Tulkarm girls school, the May 2003 
shooting of an UNRWA bus driver in Deir Ammar, and several 
separate incidents in which IDF soldiers at checkpoints held 
guns to the heads of UNRWA international staff members as a 
few examples of deteriorating operating conditions for UNRWA 
staff.  Cook told donors that he believes the IDF's failure 
to hold individual soldiers responsible for their actions is 
largely responsible for UNRWA's growing access problems. 
Cook added that the Israeli government's security wall will 
worsen UNRWA's access problems.  21 UNRWA installations, 
including the West Bank field's sole hospital at Qalqiliya, 
will be completely isolated by the wall. 
 
¶10.  (U) PRM PDAS Greene noted that the US has raised access 
issues with the Israeli Government since the onset of the 
current difficulties and would continue to do so.  However, 
it is important for donors and host governments to remember 
the context of the current situation; closures and other 
Israeli security measures are implemented in response to 
terrorist attacks.  Five suicide bombings in the 48 hours 
preceding the UNRWA meeting cannot be forgotten or ignored. 
Hansen agreed, telling donors that Jordanian Foreign Minister 
Muasher's opening remarks regarding the need for a political 
solution to end the violence, including immediate 
implementation of the Quartet's roadmap, set the tone for the 
larger context in which UNRWA issues should be considered. 
 
Technical Sessions and Workshops 
-------------------------------- 
 
¶11.  (U) In response to donor requests for more technical 
discussions in the semiannual meetings, UNRWA's Directors of 
Relief and Social Services (RSS) and Education presented 
separate briefings on new initiatives in their departments. 
Replicating last spring's successful workshop model, UNRWA 
also held smaller discussions on its Neirab/Ein Al Tal 
rehousing project, its emergency programming priorities and 
access issues.  RSS Director Beth Kuttab announced that UNRWA 
had secured USD 5.6 million in funding for its long-planned 
Palestine refugee records project, enabling the agency to 
simultaneously update its registration system and preserve 
the 1948 refugees' original documentation.  The United 
Kingdom, Switzerland, Canada, Saudi Arabia and the ruler of 
Sharja pledged money to the project.  Education Director 
Kabir Shaikh updated donors on the US- and German-funded 
tolerance education projects, announcing that 80 schools in 
five fields were participating in the projects on a pilot 
basis, involving 587 staff and 42,000 students.  Shaikh also 
announced that the UK's Quality Assurance Project had been 
implemented in 376 schools.  The Syrian delegation noted that 
all new UNRWA education initiatives must be closely 
coordinated with host governments, as UNRWA schools are 
obliged to follow host governments' curricula. 
 
Textbooks and Terrorism:  Bilateral Meetings with Israeli and 
UNRWA Officials on Margins of Meeting 
--------------------------------------------- ------------ 
 
¶12.  (C) In separate meetings held on the margins of the 
donors meeting and in Israel prior to the meeting, PRM PDAS 
Greene briefed UNRWA and GOI officials on the US Government's 
continuing efforts to balance humanitarian assistance, 
stability and security needs in the Palestinian refugee 
context.  He assured GOI Legal Adviser Alan Baker on May 20 
that the USG was working to ensure that UNRWA was taking 
"every possible measure" to ensure its programs and 
installations remain free from outside influences and that 
its beneficiaries have not engaged in terrorism.  Baker 
responded that the GOI continues to be troubled by the very 
public, political positions taken by UNRWA ComGen Peter 
Hansen.  Hansen's published articles, "critical of Israel," 
are a negative influence on GOI officials responsible for 
dealing with UNRWA.  On the more serious charges of UNRWA 
complicity in terrorism, Baker said that he "doesn't know" 
whether UNRWA is actively preventing armed activity in West 
Bank and Gaza refugee camps.  He explained that, in the 
aftermath of his very public criticism alleging UNRWA 
complicity several months ago, he had not been following the 
issue very closely. 
 
¶13. (C) Baker also asserted that UNRWA is not undertaking 
activities to reduce incitement in its schools.  He told 
Greene that incitement is an integral part of terrorism that 
must be addressed by all parties providing assistance to the 
Palestinians, including UNRWA.  (During a May 20 visit to 
Fawwar refugee camp, UNRWA West Bank officials told Greene 
that the agency works successfully to keep political 
materials out of its installations but has a difficult time 
keeping them off outside walls.  Some exterior walls of UNRWA 
installations in Fawwar camp, for example, were spray-painted 
with Hamas graffiti.) 
 
¶14.  (SBU) In a May 21 meeting, UNRWA ComGen Hansen and 
Deputy ComGen AbuZayd told Greene that UNRWA continues to 
take seriously the charges of incitement in Palestinian 
textbooks and has begun its own internal review of PA 
textbooks.  The agency also continues to implement the 
US-funded tolerance project, viewing it as an important 
supplementary teaching tool.  Hansen and AbuZayd assured 
Greene that UNRWA "never" resorted to public statements 
critical of Israel as a first approach to problem solving; 
they asserted that UNRWA issued public statements only in 
"grave situations," where UNRWA had been unable to resolve 
differences via quiet diplomatic channels.  AbuZayd also told 
Greene that UNRWA welcomed the imminent US General Accounting 
Office (GAO) investigation of UNRWA programs and procedures 
and was eager to facilitate the GAO's work. 
 
¶15.  (U) PRM PDAS Greene, ConGen Jerusalem and Embassy Tel 
Aviv cleared this message. 
GNEHM