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DE RUEHJM #0330/01 0541623
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P 231623Z FEB 10
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC PRIORITY 7655
INFO RUEHTV/AMEMBASSY TEL AVIV 5212
RUEHAM/AMEMBASSY AMMAN 8819
RUEHEG/AMEMBASSY CAIRO 0050
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C O N F I D E N T I A L JERUSALEM 000330 
 
SIPDIS 
 
DEPT FOR D BUTTE-DAHL, NEA FOR IPA AND SEMEP; AID FOR 
SBORODIN; NSC FOR KUMAR 
 
E.O. 12958: DECL: 02/21/2020 
TAGS: PGOV EAID KWBG KPAL IS
SUBJECT: DEPUTY SECRETARY LEW MEETS PALESTINIAN AUTHORITY 
MINISTER OF PLANNING, VISITS USAID HEALTH PROJECT 
 
Classified By: CG Daniel Rubinstein, for reasons 1.4(b) and (d) 
 
¶1. (C) Summary:  During his February 21 meeting with Deputy 
Secretary Jacob J. Lew, Palestinian Authority (PA) Minister 
of Planning Ali Jarbawi described the PA's development 
project planning process and his ministry's donor 
coordination role.  Jarbawi stressed the importance of easing 
restrictions on West Bank movement and access in order to 
stimulate private sector growth and decrease the Palestinian 
economy's reliance on donor assistance and public spending. 
He also highlighted restrictions relating to the Gaza Strip, 
East Jerusalem, and Area C as detrimental to the PA's 
humanitarian and development programming.  Separately, the 
Deputy Secretary visited the Palestine Medical Center, a 
five-year, USD 86 million USAID project, with PA Minister of 
Health Fathi Abu-Moghli.  In his comments to the press, the 
Deputy Secretary highlighted U.S. efforts to strengthen 
health systems worldwide and the importance of PA institution 
building, and stressed U.S. support for Prime Minister 
Fayyad's statebuilding efforts.  End summary. 
 
Private Sector Growth Essential 
------------------------------- 
 
¶2.  (C)  In a meeting with Deputy Secretary Lew on February 
21 in Ramallah, Planning Minister Jarbawi acknowledged that 
the Palestinian economy was driven by public sector spending 
in the form of salary payments and project assistance.  He 
said that the PA could not reduce the role of the public 
sector without substantial private sector growth.  "Imagine 
the difference 10 or 15 major factories exporting to the 
region could make to the Palestinian economy," he said. "But 
why would they come here," he asked, "when we can't guarantee 
access to markets?" 
 
Donor Coordination and Planning Process 
--------------------------------------- 
 
¶3. (C) Jarbawi described the Palestinian Reform and 
Development Plan (PRDP, the three year blueprint for 
development and assistance) process as a combination of the 
Ministry of Finance's budget process, the Ministry of 
Planning's infrastructure and development project planning, 
and one of the coordination mechanisms for the international 
donor community.  He noted that, while not perfect, it was an 
improvement over the "shopping list" of unprioritized 
projects that existed prior to 2008.  He said that the 
2011-2013 PRDP would include 23 different sector strategies 
and involve PA ministries, civil society, and private sector 
representatives. 
 
¶4. (C) The 2010 list of priority projects included 201 
projects worth nearly USD 5.5 billion, of which Jarbawi 
expected USD 676 million to be programmed in 2010.  The 
remaining projects would roll over to the next list and be 
included in the upcoming PRDP, he said.  (Note:  Jarbawi 
added that the next PRDP would also roll over year by year: 
in 2012, it would become the 2012-2014 PRDP, and in 2013, the 
2013-2015 PRDP, etc.  This would enable greater flexibility 
in planning.  End note.)  Jarbawi said that when the PA's 
dependence on assistance ended, he anticipated that the 
Planning Ministry's function would be absorbed into the 
Ministry of Finance's budgetary process.  Jarbawi said that 
currently there are "so many donor coordination mechanisms 
and structures, I can't even remember them all." 
 
¶5. (C) Jarbawi identified three issues that must be 
addressed, in his view, for sustainable socio-economic 
development:  the closure of Gaza, the situation of East 
Jerusalem, and access to Area C.  Jarbawi said that the 
closure of Gaza was putting money in Hamas's pocket, as the 
PA received no taxes, no customs revenues, and yet 
contributed heavily to salaries and the delivery of services. 
 Jarbawi expressed concern about the situation in Jerusalem, 
pointing to demolitions, Israeli confiscation of Jerusalem 
residents' identity cards, and the GOI's move to decrease the 
operating space of international NGOs as causes for worry. 
Finally, he emphasized the impact of Area C restrictions on 
development projects, adding that UNRWA could not expand the 
girls' school in Jalazone Camp (which the Deputy Secretary 
had visited earlier) because it was located in Area C, under 
Israeli control. 
 
Modernizing Health Care Systems and Improving Services 
--------------------------------------------- --------- 
 
¶6. (SBU) Following his meeting with Jarbawi, Deputy Secretary 
Lew visited the Palestine Medical Complex (PMC) with Minister 
of Health Abu-Moghli.  USAID, via its five-year USD 86 
million Flagship Project, is rehabilitating some of the 
facilities, upgrading the equipment, training the staff, and 
modernizing the systems of five separate medical facilities, 
in order to combine them into one modern complex.  Abu-Moghli 
underscored the importance of the project, not only to 
provide better health care to Palestinians, but also to 
decrease the number of Palestinians referred abroad for 
health care, a significant drain on the PA's finances.  In a 
press conference covered by local and international media at 
the PMC, both the Health Minister and the Deputy Secretary 
emphasized the importance of health care reform and 
delivering services to Palestinians as a part of the path to 
statehood. 
 
RUBINSTEIN