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P 301447Z MAY 08
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC PRIORITY 1667
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
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UNCLAS SECTION 01 OF 02 JERUSALEM 000916 
 
SENSITIVE 
SIPDIS 
 
NEA FOR FRONT OFFICE; NEA/IPA FOR 
GOLDBERGER/SHAMPAINE/SACHAR; R FOR MCDANIELS 
NSC FOR ABRAMS/PASCUAL; TREASURY FOR MATHIASEN/ROSE; 
DEPT PLEASE PASS TO USAID FOR ANE/MEA:MCCLOUD/BORODIN 
 
E.O. 12958: N/A 
TAGS: EINV EAID ECON KWBG KPAL IS OVIP KIMMITT
ROBERT) 
SUBJECT: DEPUTY SECRETARY KIMMITT'S MEETINGS WITH 
PALESTINIAN PRESIDENT ABBAS AND PM FAYYAD 
 
¶1. (SBU) Summary.  Treasury Deputy Secretary Kimmitt led a 
Presidential Delegation to the Palestine Investment 
Conference in Bethlehem on May 21-23.  The delegation met 
with Palestinian Authority (PA) President Mahmoud Abbas on 
May 21 and Prime Minister Salam Fayyad on May 22.  Deputy 
Secretary Kimmitt expressed to each the USG's strong support 
for the conference's goals of increasing economic activity 
and investment in the West Bank.  He reinforced that the USG 
would continue to provide significant financial assistance to 
the PA and to support development of the Palestinian private 
sector.  President Abbas told the delegation that the success 
of the conference needs to be followed up with investments in 
tourism and housing as two critical areas for the Palestinian 
economy.  Prime Minister Fayyad emphasized that the PA 
continued to survive "hand to mouth" on financial 
contributions from the international community.  The Deputy 
Secretary noted that rigorous implementation of anti-money 
laundering legislation would give the PA a comparative 
advantage over other developing economies in the region in 
attracting foreign investment.  End Summary. 
 
¶2. (U)  Treasury Deputy Secretary Robert Kimmitt led a 
Presidential Delegation to the Palestine Investment 
Conference (PIC) in Bethlehem on May 21-23.  Also on the 
delegation was Commerce Deputy Secretary John Sullivan, OPIC 
CEO Rob Mosbacher, U.S. Trade and Development Agency Director 
Larry Walther, Aspen Institute Chairman Walter Isaacson, and 
Ziad Asali, the President of the American Task Force for 
Palestine.  Isaacson and Asali are also members of Secretary 
Rice's U.S-Palestinian Public-Private Partnership. 
 
Abu Mazen: Focus on Tourism and Housing 
--------------------------------------- 
 
¶3. (SBU) The delegation, accompanied by Consul General 
Walles, met with President Abbas (Abu Mazen) on May 21 at the 
Bethlehem Muqata, following the PIC's opening plenary 
session.  D/S Kimmitt said the conference was clearly off to 
a successful start, with such large attendance at the opening 
session.  He said the PA needs to follow-up on the conference 
in a way that delivers economic progress for Palestinians. 
He suggested the PA create an annual investment event.  Abu 
Mazen responded that he was pleased by the attendance of the 
UAE and Saudi representatives, though he had hoped for 
broader attendance from the Arab world.  He noted that many 
stayed away "for political reasons" and due to the lack of 
relationships with the GOI.  Abu Mazen noted that the UAE 
delegation arrived by helicopter so as not to deal with 
Israeli border officials. 
 
¶4. (SBU) In response to D/S Kimmitt's question about 
potential sectors on which to focus, Abu Mazen said that 
housing and tourism have the potential to drive real economic 
growth in the West Bank and Gaza.  He noted the acute 
shortage of housing and the USD 300 million deal signed 
between a Palestinian developer and a Qatari company to build 
a new residential community north of Ramallah.  On tourism, 
Abu Mazen said that the atmosphere, particularly in 
Bethlehem, is changing, with many of the armed factions 
"having disappeared" as a result of PA security efforts. 
Aspen Chairman Isaacson said that the U.S.-Palestinian 
Partnership would look to support efforts in the tourism 
sector, including by bringing a delegation of senior travel 
and hotel executives to the West Bank later in the year. 
Asali stressed that the U.S. private sector is motivated to 
support economic development in West Bank. 
 
¶5.  (SBU) TDA Director Walther noted that his agency would 
sign a grant agreement worth nearly USD 500 thousand with a 
Palestinian technology firm to promote the deployment of 
WiMax technology in West Bank cities and increase Palestinian 
access to the Internet.  D/S Kimmitt noted that, as in the 
former East Germany after the end of the Cold War, the PA had 
the opportunity to "skip a generation" of technology and 
establish the West Bank as a leading regional center for 
communication and information technology development.  OPIC 
President Mosbacher noted that he would be signing two deals 
while at the PIC, including a mechanism to provide political 
risk insurance to Palestinian businesses. 
 
¶6. (SBU)  D/S Kimmitt said that the USG would continue to 
encourage donors to live up to their financial pledges to the 
PA.  He stressed that it is critical for the PA to continue 
 
JERUSALEM 00000916  002 OF 002 
 
 
to make the necessary, but tough, decisions to improve the 
business climate and to attract investment.  It is important 
for the PA to ensure strict enforcement of anti-money 
laundering (AML) laws that are on the books.  In the current 
international financial environment, investors are 
increasingly looking at AML practices in order to ensure the 
security of their investments, he said.  Action on this front 
would give the PA an advantage in the competition for inbound 
investment dollars within the region.  In closing, both sides 
agreed to review the PIC's conclusions and develop a workplan 
to move the U.S.-Palestinian economic relationship forward. 
 
Fayyad: Conference a Success, but Fiscal Problems Remain 
--------------------------------------------- ----------- 
 
¶7. (SBU) The delegation met with Prime Minister Fayyad on May 
22 at the Bethlehem Conference Center.  Fayyad expressed his 
strong satisfaction with the progress of the conference, and 
said that he was focused on transforming the momentum into 
specific deliverables and new business opportunities. 
However, the daily functioning of the PA remained at risk due 
to the continuing fiscal crisis.  "We are living from hand to 
mouth," he said.  D/S Kimmitt said that the USG would 
continue to encourage others to meet the commitments they 
have made to the Palestinians, and that the USG intends to do 
the same.  Fayyad expressed his deep appreciation for the 
U.S. contribution of USD 150 million for budget support in 
¶2008.  "You have come through where others have not." 
 
¶8. (SBU) Walther noted TDA's support for WiMax development 
and added that he had met with representatives from the 
Palestinian stone industry.  Fayyad called U.S. support for 
the stone trades an "excellent idea", noting that the stone 
industry is the PA's largest source of export revenue. 
 
¶9. (SBU) Isaacson and Asali stressed the importance of the 
tourism industry and said they would marshal U.S. private 
sector support for Palestinian efforts to bolster the 
Palestinian tourism sector.  Fayyad said that the tourism 
sector had picked up in Jerusalem and the West Bank, and he 
hoped to double the size of the Palestinian tourism market in 
the next few years.  He also suggested that the U.S. private 
sector might be able to help is with greenhouse technology 
and in the production of herbs and other high-value cash 
crops for export to Europe. 
 
¶10. (U) Deputy Secretary Kimmitt has cleared this message. 
WALLES