VZCZCXYZ0010
PP RUEHWEB

DE RUCNDT #1083 3322033
ZNY CCCCC ZZH
P 282033Z NOV 07
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC PRIORITY 3207
INFO RUEHKO/AMEMBASSY TOKYO PRIORITY 8389
RUEAWJA/DEPT OF JUSTICE WASHDC PRIORITY

C O N F I D E N T I A L USUN NEW YORK 001083 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 11/28/2011 
TAGS: OFDP UN WE JA
SUBJECT: UN REITERATES PLEA FOR U.S. HELP TO RELEASE 
BLOCKED FUNDS 
 
REF: A. GRESSER/WILCOX EMAIL--11/20/07 
     ¶B. LIGHT/WILCOX EMAIL--04/05/07 
     ¶C. USUN 2211 (2006) 
     ¶D. STATE 7911 (2006) 
     ¶E. USUN 255 (2006) 
 
Classified By: Minister Counsellor Carolyn L. Willson, for 
reasons 1.4(b) and (d). 
 
¶1.  BEGIN SUMMARY:  (C) On November 21, UN lawyers pressed 
USUN legal officers to respond to the UN's 2005 request for 
the United States to secure the release of funds the Japanese 
government donated to the UN in 2005 for humanitarian 
projects in the West Bank and Gaza Strip (refs).  The Bank of 
New York has held the funds in a non-interest bearing account 
since July 2005, pursuant to a judgment entered against the 
Palestinian Authority and the PLO, and the UN lawyers said 
the Japanese government is pressuring the UN to ensure that 
the funds are recovered.  USUN advised the UN that the 
Department continues to explore possible solutions, noted 
that the Department is working with the Palestinians to 
encourage the Palestinians to resolve litigation that has led 
U.S. banks to freeze Palestinian funds, and suggested that 
the UN contact the Palestinians' lawyers.  UN lawyers pressed 
USUN for a speedy resolution of this ongoing irritant.  END 
SUMMARY. 
 
¶2.  (C) On November 21, UN Office of Legal Affairs and UN 
Development Program (UNDP) lawyers sought an update on U.S. 
efforts relating to the UN's request for assistance in 
releasing $1,842,543.50 in humanitarian assistance funds. 
The Bank of New York has blocked the funds since 2005 
pursuant to a U.S. judgment against the Palestinian Authority 
and the PLO.  The UN lawyers thanked the United States for 
the extensive briefing the USUN and Department lawyers 
provided last April (ref B) and hoped the United States had 
achieved progress in resolving the matter.  The UN lawyers 
also commented the Japanese government routinely presses the 
UN about the status of the funds and thought the Japanese had 
raised the issue bilaterally with the United States.  They 
reiterated the UN's contention that the frozen funds belong 
to the UN and are inviolable, meaning that the Headquarters 
Agreement obligates the United States to intervene either 
with the Bank of New York or with the appropriate U.S. court 
to release them.  The Bank of New York seized the funds in 
July 2005, after the UNDP, through its bank in Israel, tried 
to transfer the funds electronically to the Palestinian 
Economic Council for Development and Reconstruction (PECDAR). 
 
 
¶3.  (C) USUN responded by stressing that the United States 
continues to explore ways to try to assist the UN, while 
noting that the complexity of the issue has precluded 
reaching a simple and quick solution.  USUN asked the UN if 
it has given any more thought to bringing its own suit 
against the Bank of New York, noting the difficulty for the 
United States to initiate action.  USUN also stressed that 
while the UN has made its perspective clear, the United 
States does not necessarily agree that the funds remain UN 
property and thus are immune from seizure. 
 
¶4.  (C) USUN also noted that the Bank of New York has frozen 
other funds belonging to the Palestinian National Authority 
pursuant to U.S. litigation and said the United States has 
been exploring with the Palestinians ways to resolve that 
litigation.  USUN suggested that the UN contact the 
Palestinians' lawyers at Miller & Chevalier. 
 
¶5.  (C) The UN lawyers responded that, as a matter of 
principle, the UN does not bring actions in national courts 
except in extraordinary and limited circumstances that do not 
apply in this case.  They added that, because the UN remains 
responsible to the Japanese government to ensure that the 
funds are used for the humanitarian purposes for which Japan 
donated them, the funds remain UN property even after they 
have left the UN's possession.  Just as the UN retains title 
to all goods it provides through its assistance programs, the 
UN retains "effective" ownership of funds it transfers, they 
said.  Taking a different view could jeopardize the UN's 
ability to conduct operations worldwide, they contended. 
Therefore, they concluded that the UN's case is not 
comparable to the Palestinian cases and consulting with the 
Palestinians' lawyers might not be a relevant step for the UN 
pursue. 
 
Khalilzad