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UNCLAS STATE 095980 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID KPAL PGOV WBG EU IS
SUBJECT: DEMARCHE REQUEST: U.S. OBJECTIVES FOR THE AD-HOC 
LIAISON COMMITTEE MEETING, SEPTEMBER 22 
 
¶1. (U) This is an action request.  Please see paragraph 3. 
 
¶2. (SBU) Summary: The Department requests that action 
addressees inform appropriate government officials of USG 
support for the September 22 working-level meeting in New 
York City of the Ad Hoc Liaison Committee (AHLC), the 
principal external coordinating mechanism for donor 
assistance to the Palestinian Authority (PA).  Norway has 
developed an agenda that provides an opportunity for 
substantive dialogue among subject matter experts from the 
donor community, the PA, and the Government of Israel (GOI) 
about ways to facilitate the effective coordination and 
delivery of donor assistance.  In support of this approach, 
we should encourage participating countries to refrain from 
delivering prepared speeches.  The U.S. will use this meeting 
of the AHLC to: emphasize the continuing need for donors to 
provide immediate budget support to the PA; mobilize support 
for Prime Minister Salam Fayyad's two-year plan to develop 
the institutions of a future state; and encourage increased 
access for goods and personnel into Gaza to support recovery 
efforts.  We would support a later meeting of the AHLC at the 
ministerial-level in the context of the resumption of 
negotiations.  End summary. 
 
¶3. (U) Action request: The Department asks that Posts seek 
meetings with the appropriate host country officials to 
convey the objectives outlined below. 
 
¶4. (SBU) Objectives: 
 
-- Assure donors that we are making steady progress toward 
the resumption of negotiations and that continued support for 
the PA and the Palestinian economy is essential to create the 
conditions for success.  The AHLC can support efforts to 
create the conditions for successful negotiations by helping 
to mobilize assistance in support of Palestinian economic and 
institutional development. 
 
-- Emphasize that this meeting of the AHLC should be at the 
working level, not at the ministerial level, and that we 
encourage governments to send experts who are prepared to 
discuss concrete ways to meet the PA's financial needs and 
develop Palestinian institutions.  We hope that delegations 
will avoid delivering prepared remarks in favor of open 
discussion. 
 
-- We would support a ministerial-level meeting of the AHLC 
at an appropriate time and place following the resumption of 
negotiations. 
 
-- Share the primary U.S. goals for the AHLC: fill the PA's 
recurrent budget deficit in 2009 and coordinate continued 
support in 2010, particularly for the early months of the 
year with steady flows of assistance; mobilize support for 
Prime Minister Salam Fayyad's two-year plan as a blueprint 
for building the viable institutions of a future state; 
emphasize the unique roles that donors, the PA and the GOI 
have in preparing for Palestinian statehood; and convey our 
ongoing concern for the people of Gaza and our support for 
increasing the scope of goods and equipment allowed into Gaza. 
 
-- For the GOI: Emphasize our interest in having the GOI not 
politicize PM Fayyad's two-year plan through public 
criticisms.  We do not see it as a unilateral declaration of 
statehood, but a mechanism to focus the PA's efforts on 
building the institutions of a future state.  In addition, we 
encourage the GOI to announce concrete progress toward 
implementing the Serry plan for the recovery and relief of 
Gaza. 
 
-- For Norway:  As Senator Mitchell told Foreign Minister 
Stoere, we hope that with Norway's leadership, the AHLC can 
be held at the ministerial-level later in the year, linked to 
the resumption of negotiations. 
 
-- For the PA: We are committed to mobilizing donor support 
for the PA, particularly in the Gulf.  We also will find 
appropriate moments to build support for the PA's 
institutional reform program in our statements related to the 
political process, and will encourage other parties to do the 
same. 
 
-- For Cairo: We need to ensure that the AHLC does not 
distract from our efforts to create the conditions for 
successful negotiations by becoming a venue for one-sided 
criticism of Israel. 
 
¶5. (U) Reporting: Posts should report initial host country 
responses as soon as possible by email or cable.  Please 
contact Andrew Lentz, Desk Officer for Palestinian Economic 
Affairs, by email at lentzan@state.gov if you have any 
questions or requests for additional background. 
 
Background 
- - - - - - - - - - - 
 
¶6. (SBU) Participation: The U.S. will be represented at the 
AHLC in New York City by Tom Goldberger, Office Director of 
the Office of Israel and Palestinian Affairs.  The delegation 
will be comprised of representatives from State, USAID, the 
office of the Special Envoy for Middle East Peace, and the 
Department of the Treasury.  This meeting of the AHLC should 
provide subject matter experts from the donor community, the 
PA and the GOI with the opportunity to engage in substantive 
discussions about ways to facilitate the effective 
coordination and delivery of donor assistance. 
 
¶7. (SBU) PA Budget Needs: According to the IMF, the PA 
requires $1.49 billion in external financing to cover the gap 
between revenue and expenses in its 2009 recurrent budget 
(down from over $1.7 billion in 2008).  This figure includes 
$300 million that the PA asked for at the Sharm al-Sheikh 
donors' conference to cover additional budget expenses 
related to the Gaza conflict.  Against this need, the PA has 
received just over $950 million in donor support through 
August, including $200 million from the United States and 
$200 million from Saudi Arabia.  The PA reports that with 
donor financing to date, it will be able to pay September 
salaries in time for the end of Ramadan.  The PA, however, 
still faces an anticipated end-of-year budget deficit of as 
much as $400 million and will need additional donor financing 
as early as October.  The PA again will require substantial 
donor support in 2010 to meet an anticipated $927 million 
deficit in the operating budget.  Through reform and 
institutional development, the PA under Prime Minister Salam 
Fayyad is reducing the burden on donors, but donor financing 
still is necessary to ensure the PA's viability.  Donors 
should come prepared to fulfill the PA's end-of-year 
budgetary needs. 
 
¶8. (SBU) PM Fayyad's Two-Year Plan: On August 25, Prime 
Minister Salam Fayyad released a program for the new PA 
government that was sworn in on May 19 titled "Palestine: 
Ending the Occupation, Establishing the State."  The plan is 
both a political document and an action plan for the PA 
government and its ministries to develop viable institutions 
of statehood by 2011.  There has been no official response to 
the plan from the Government of Israel, although Finance 
Minister Yuval Steinitz publicly criticized the plan as a 
unilateral declaration of statehood.  The plan, however, does 
not call for the creation of a state absent negotiations and 
commits the PA to "all of (the PLO's) bilateral and 
multilateral agreements," which encompass the Quartet 
principles of recognition of Israel, renunciation of 
violence, and acceptance of previous agreements negotiated by 
the PLO.  Implementing the plan will be costly, requiring 
substantial assistance from the international community.  The 
identified action items are not, however, costed-out.  We 
should urge donors and the parties to consider concrete steps 
in support PM Fayyad's institution building efforts. 
 
¶9. (SBU) Future meeting of the AHLC: Norway originally 
planned to hold this meeting of the AHLC at the ministerial 
level.  We conveyed to Olso our position that such a meeting 
would be far more effective after negotiations have begun. 
This sequencing would (1) keep the focus in UNGA on the 
launch of negotiations; (2) support negotiations and the PA; 
and (3) put donor support in the context of negotiations, 
thus increasing the chances of success for the AHLC to 
mobilize international and financial support for Palestinian 
reform and development.  We are willing to work with Norway 
to organize a ministerial-level meeting that is linked to the 
resumption of negotiations at a venue and date to be 
determined. 
CLINTON