VZCZCXRO1583
OO RUEHROV
DE RUEHJM #0284/01 0441330
ZNR UUUUU ZZH
O 131330Z FEB 09
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4104
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUEHEG/AMEMBASSY CAIRO PRIORITY 5127
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 JERUSALEM 000284 
 
SIPDIS 
SENSITIVE 
 
NEA FOR FRONT OFFICE AND IPA; PRM FOR PRM/ANE; NSC FOR 
SHAPIRO/PASCUAL, TREASURY FOR PARODI/AHERN/VELTRI; 
PLEASE PASS TO USAID FOR BORODIN/NANDY/LAUDATO 
 
E.O. 12958: N/A 
TAGS: ECON EAID EFIN KWBG PGOV PTER IS
SUBJECT: PA PLANS FOR MARCH 2 CAIRO CONFERENCE 
 
¶1. (SBU) Summary:  In advance of the Cairo Conference in 
Support of the Palestinian Economy on March 2, the 
Palestinian Authority has prepared a plan for the early 
recovery and reconstruction of Gaza.  The PA's goal at the 
conference is to demonstrate that the PA is ready and able to 
take charge of the recovery effort in Gaza, and to seek 
coordinated financial assistance in the form of direct budget 
support and project funding to implement the recovery in 
Gaza, synchronized with the Palestinian Reform and 
Development Plan (PRDP).  End summary. 
 
The Gaza Early Recovery and Reconstruction Plan 
--------------------------------------------- -- 
 
¶2. (SBU) The PA Ministry of Planning has drafted a Gaza Early 
Recovery and Reconstruction Plan ("Gaza Plan") with input 
from the UN, World Bank, the Palestinian Central Bureau of 
Statistics, Palestinian Economic Council for Development and 
Reconstruction (PEDCAR), the Ministry of Finance, and other 
organizations.  The PA will present the plan on March 2.  The 
guiding principle of the Gaza Plan is Palestinian ownership 
of the recovery process, through the leadership of the PA, 
and according to the PRDP.  The plan delineates priority 
areas for intervention and proposes recovery projects in five 
categories: Social Sector, Infrastructure Sector, Economic 
Sector, Governance, Natural Resources and the Environment. 
The plan also lists the specific damage and needs resulting 
from the conflict, as well the estimated cost of each 
recovery project. 
 
¶3. (SBU)  According to Ministry of Planning contacts, the 
PA's goal at the Cairo conference is to (1) create awareness 
of the needs in Gaza, (2) make clear the PA is taking charge 
of the recovery effort, and (3) seek systematic, coordinated 
financial assistance.  The PA will seek donor support in two 
main areas:  a) direct, un-earmarked budget support through 
the Single Treasury Account, and b) un-funded gaps in the 
Gaza Plan.  PM Salam Fayyad will attend the Cairo conference; 
President Abbas is considering his attendance. 
 
Financing Mechanisms 
-------------------- 
 
¶4. (SBU) The PA will urge donors to channel assistance 
directly to the PA, through the Single Treasury Account, as 
un-earmarked budget support.  Contacts noted the PA is facing 
desperate budget constraints, and needs direct budget support 
to pay salaries in the West Bank and Gaza, as well as to 
implement parts of the recovery plan.  The Gaza Plan 
encourages donors to support existing mechanisms such as the 
PRDP Trust Fund and World Bank program, PEGASE, and the 
Islamic Development Bank, all of which can transfer funds 
quickly to the PA and to other public entities for recovery 
activities.  The PA also supports the funding of UN agencies, 
but wants such funding to be closely coordinated with the PA. 
 Finally, in recognition of possible donor constraints, 
Ministry of Planning contacts said the PA is willing to 
explore other funding mechanisms, provided they do not 
duplicate or undermine existing mechanisms. 
 
¶5. (SBU) The PA will also highlight the measures it has 
already taken to provide immediate relief in Gaza.  This 
includes allocating USD 50m to compensate people whose homes 
were totally or partially demolished during the fighting. 
USD 20m has already been transferred to UNDP, which reports 
that disbursement began on February 11.  The PA will also 
note its commitment to provide USD 17m for water/sanitation 
and electricity repairs, to be carried out by broadening the 
scope of projects already underway in Gaza.  Finally, the PA 
will seek donor support for its USD 600m project to provide 
grants (with a small loan component) through commercial banks 
to people whose houses were damaged during the conflict. 
 
Cash and Crossings 
------------------ 
 
¶6. (SBU) Contacts in the PA, NGO, and international community 
all stated that success of any recovery efforts in Gaza will 
depend on GOI policies at the crossings.  On February 6, the 
PMA transferred NIS 175m (USD 44m) worth of banknotes from 
West Bank banks into Gaza.  PM Fayyad stated that a portion 
of this will be used to fund the first phase of the cash 
assistance program, which UNDP is implementing.  (Note:  The 
first phase of the cash assistance program will require 
approximately NIS 80m, or nearly half of the cash that was 
 
JERUSALEM 00000284  002 OF 002 
 
 
allowed into Gaza on February 6.  End note.)  Salaries are 
also due to be paid no later than February 18, and the PA 
payroll in Gaza equals approximately NIS 200m. 
 
Reactions in Gaza 
----------------- 
 
¶7. (SBU) A business contact in Gaza told Econoff Febuary 12 
that although he understands the PA's need to "do something" 
in Gaza, the business community as a whole is not supportive 
of Fayyad's decision to fund the cash assistance program at 
the expense of salary payments.  Contacts were skeptical that 
the USD 600m assistance program for house reconstruction 
could succeed, given the scarcity of cash and of building 
materials in Gaza due to GOI crossing policies. (Note: 
Contacts also referred to the cash assistance program as "the 
UN reconstruction effort" indicating that if these programs 
are successful, the PA will have to work hard to claim credit 
for PA-funded recovery programs.  End note.) 
WALLES