VZCZCXRO1005
OO RUEHROV
DE RUEHJM #2560/01 3471457
ZNR UUUUU ZZH
O 131457Z DEC 07
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0019
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUEHFR/AMEMBASSY PARIS PRIORITY 3725
RUEHBS/USEU BRUSSELS PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 JERUSALEM 002560 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA FOR FRONT OFFICE; NEA/IPA FOR GOLDBERGER/BELGRADE; EEB 
FOR DEMARCELLUS; NSC FOR PASCUAL; TREASURY FOR HIRSON; 
BRUSSELS FOR LERNER; PARIS FOR DWYER 
PLEASE PASS TO USAID FOR RAGLAND 
 
E.O. 12958: N/A 
TAGS: EAID EFIN ECON PGOV KWBG
SUBJECT: PA MAKES ITS CASE TO DONORS ONE LAST TIME BEFORE 
PARIS 
 
 
¶1. (SBU) Summary.  PA Prime Minister Fayyad and Planning 
Minister Abdallah used meetings of the Local Development 
Forum (LDF) and Paris Steering Committee on December 12 to 
push donors to make the upcoming Paris Conference a success. 
Fayyad was direct about the urgent need for budget support: 
"Don't get me wrong, I like development projects.  But if the 
PA's not able to function, we won't be around to implement 
projects."  The PA has also circulated the latest version of 
the Palestinian Reform and Development Plan (PRDP) that will 
be presented to donors in Paris.  End Summary. 
 
PM: "Success in Paris Hinges on Budget Support" 
--------------------------------------------- -- 
 
¶2. (SBU) At the last meeting of the LDF before the Paris 
Donors Conference on the 17th, PM Fayyad told donors on 
December 12 that the PA had met its targets in preparing for 
the donors conference and had produced a comprehensive reform 
and expenditure plan for the first time in its history.  He 
called for pledges in Paris to target assistance where it is 
needed most: budget support.  The GOI had transferred to the 
PA the last of the funds withheld during the previous 
government, funds that had provided the PA an additional USD 
120 million a month in revenue over the past six months. 
"Now there is a hole that size in our budget." 
 
¶3. (SBU) Fayyad said the PA had paid its November wage bill 
(during the first week of December) and would be able to pay 
December wages in early January.  After that, Fayyad said, he 
could not predict what would happen.  "I am not trying to be 
dramatic.  These are the facts."  While the PRDP lays out a 
three-year development plan, Fayyad said, "Our needs are more 
immediate than the medium term."  He noted that the PRDP 
requests donor support for development projects in all 
sectors.  "But if the PA's not able to function, we won't be 
around to implement projects." 
 
¶4. (SBU) Fayyad expressed appreciation to both the U.S. and 
the EC for the commitment to pledge significant amounts in 
Paris.  He noted that the Temporary International Mechanism 
(TIM) would continue through March, but said, "As we move 
forward, we want more donors to use the Single Treasury 
Account (STA) which is a hallmark of our reform effort." 
Fayyad expressed support for the World Bank's offer to 
establish a multi-donor trust fund for those donors unable to 
contribute directly to the STA.  The World Bank's monitoring 
of PA performance, he said, would be "more meaningful" if 
done in conjunction with disbursements. 
 
Reforms Already Underway 
------------------------ 
 
¶5. (SBU) Fayyad emphasized that the PA was already moving 
forward to implement the reforms laid out in the PRDP.  He 
said that he had approved a decision regarding utility 
payments from municipalities intended to address the problem 
of 'net lending', which continues to place an extraordinary 
burden on the PA's recurrent expenditure budget.  "We are 
going to Paris with more than just promises and a plan, but 
with a track record of actions already taken." 
 
¶6. (SBU) Calling Paris "a station along the road", Fayyad 
urged donors to follow-up on pledges made by re-invigorating 
the existing donor coordination mechanisms.  He said the Ad 
Hoc Liaison Committee (AHLC) should meet twice a year, 
including in "early Spring 2008".  Similarly, the LDF needs 
to "get down to business and get involved in aid 
coordination" with the line ministries. 
 
PRDP Ready for Paris 
-------------------- 
 
¶7. (SBU) Following the LDF, Planning Minister Abdallah 
reiterated the PM's points on the urgent need for budget 
support to the Paris Steering Committee.  He also described 
to the group the changes in the latest version of PRDP, which 
will be presented by Fayyad in Paris.  Abdallah described the 
process of compiling the sector-specific programs and budget 
figures (in Annex 4) as a "long process of prioritization" 
with the various PA line ministries.  He emphasized that the 
PA had made difficult choices in an effort to limit the 
request to donors for project support to only the "bare 
 
JERUSALEM 00002560  002 OF 002 
 
 
minimum" necessary for the PA's 2008-2010 program. 
 
¶8. (U) The final PRDP document is avialable on ConGen 
Jerusalem's unclassified intelink website at: 
http://www.intelink.gov/communities/state/pal econ 
WALLES