VZCZCXRO6974
PP RUEHROV
DE RUEHJM #1800/01 2821432
ZNR UUUUU ZZH
P 091432Z OCT 09
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC PRIORITY 6259
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 02 JERUSALEM 001800 
 
SENSITIVE 
SIPDIS 
 
NEA/IPA FOR LENTZ; EEB/IFD/OIA; TREASURY FOR KNOWLES; USAID 
FOR BORODIN; PLEASE PASS TO OPIC FOR VP DRUMHELLER; NSC FOR 
KUMAR 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV KWBG IS
SUBJECT: OPIC'S AFFORDABLE MORTGAGE, RISK INSURANCE 
PROJECTS PICK UP PACE; RAWABI STILL WORKING THROUGH HURDLES 
 
¶1. (SBU) Summary: An Overseas Private Investment Corporation 
(OPIC) delegation visited Jerusalem and Ramallah October 5-7 
to further a number of projects, including the affordable 
mortgage and political risk insurance programs, as well as to 
expand the loan guarantee fund (LGF).  OPIC estimates the 
mortgage facility could be operational in early 2010, though 
it expressed concern that a major residential project which 
would provide the target market for these loans (Rawabi) is 
lagging behind schedule.  End summary. 
 
¶2. (SBU) OPIC VP Robert Drumheller and Investment Analyst 
Maria Goravanchi visited Jerusalem and Ramallah October 5-7 
to meet with partners in the approximately USD 500m mortgage 
finance facility and other projects. 
 
Rawabi: Land and road issues still outstanding 
--------------------------------------------- - 
 
¶3. (SBU) Bayti CEO Bashar Masri briefed OPIC on the status of 
the planned community Rawabi, which OPIC sees as central to 
its market for loans.  Masri said he is engaged in 
negotiations with area landowners to purchase and transfer 
land in/around Rawabi.  PA officials have been facilitating 
these negotiations, he said.  The latest proposal is for 
Masri to purchase directly any land to which individuals can 
show clear title.  For land where the title is less clear, 
Masri will deposit funds in an escrow account with the PA, to 
be disbursed as the land is registered and transferred to 
Rawabi.  Masri said he gave key landowners a deadline by 
which to respond, and claimed that President Abbas has agreed 
to meet him in mid-October to discuss the status of the 
negotiation.  (On October 9, Masri reported to EconOff that 
he had reached a verbal agreement with the most significant 
landowner; but he would not be confident until it was put in 
writing.) 
 
¶4. (SBU) Masri said he still needs permission from the GOI to 
construct an access road (around 3 km of which will pass 
through Area C) as well as the PA's blessing on the route. 
He told OPIC that if the land issue is resolved, he will move 
bulldozers to the site and begin excavation and leveling -- 
without closure on the road.  He characterized this as a 
risky move, but said he wants to demonstrate to the PA, GOI, 
and donors that Rawabi is "damn serious" about moving forward. 
 
¶5. (SBU) Masri said he has received strong support from the 
PA Ministers of Planning, Local Government, National Economy 
and Agriculture.  He confirmed that there is still work to do 
with the Ministry of Public Works and Housing in order to 
resolve the route. 
 
¶6. (SBU) OPIC's intention has been to synchronize the launch 
of the loan facility with the beginning of sales in Rawabi, 
as this project provides the greatest market.  Other less 
ambitious projects, such as al-Reehan, also have an 
affordable mortgage component.  OPIC and its partners are in 
the financing development phase of the program, which 
stresses the need to launch the housing developments 
alongside the registration of the AMAL loan facility.  OPIC 
estimates there are currently nine housing projects in the 
West Bank, requiring a total of USD 116.5m in infrastructure 
funding from donors in order to keep the purchase price in 
the affordable range - betweeen USD 50k and USD 120k. 
 
OPIC Ready to Use LGF in Gaza, but Opportunities are Limited 
--------------------------------------------- --------------- 
 
¶7. (SBU) OPIC met with Bank of Palestine (BoP) General 
Manager Hashim Shawa and Rami Khoury of CHF to encourage the 
expanded use of the Loan Guarantee Fund (LGF) for projects in 
Gaza.  Shawa said he had some loan applications from Gaza in 
the SME pipeline, but lamented that "there is not much 
economic activity in Gaza, and almost none that operates 
independently of the tunnels."  Econoff encouraged Shawa to 
put the proposals forward to CHF, and the ConGen will work 
with CHF to ensure the LGF is not used in a way that promotes 
the tunnel economy.  As a result of the conversation, Shawa 
said he will forward proposals in certain sectors, including 
a beef importer, microfinance, and IT training/development. 
 
Moevenpick 
---------- 
 
¶8. (SBU) OPIC and CHF confirmed that the LGF board has agreed 
to guarantee a percentage of a USD 5m loan for the Moevenpick 
 
JERUSALEM 00001800  002 OF 002 
 
 
hotel in Ramallah.  The BoP and Cairo Amman Bank are in 
negotiations to finalize the breakdown of the loan 
(the hotel requires USD 8m total to launch.) 
 
Political Risk Insurance 
------------------------ 
 
¶9. (SBU) In a meeting with Samir Shehadeh of the National 
Insurance Company, Drumheller noted that two consultants have 
been hired to undertake the necessary surveys to establish a 
baseline, and finalize the insurance product.  The product 
will be offered on a pilot basis at first to 13 "known 
traders" in the Hebron/Bethlehem area - large companies with 
a significant volume of trade through Tarqumiya crossing. 
 
¶10. (U) OPIC has cleared this cable. 
RUBINSTEIN