US embassy cable - 04BRUSSELS3211

C O N F I D E N T I A L SECTION 01 OF 02 BRUSSELS 003211 
 
SIPDIS 
 
DEPT FOR NEA/IPA, EUR/ERA 
 
E.O. 12958: DECL: 07/28/2009 
TAGS: EAID, PREL, IS, KWBG, EUN, USEU BRUSSELS 
SUBJECT: EU HAS SOME QUESTIONS ON UPCOMING AHLC 
 
REF: STATE 162864 
 
Classified By: USEU POLOFF LEE LITZENBERGER; REASONS 1.4 (B,D) 
 
 1.  (C)  Summary.  The European Commission, which has the 
lead on AHLC issues, supports US goals for having the AHLC 
focus on Gaza withdrawal, but is skeptical of the proposed 
September date.  The EC questions whether Israel will have an 
agreed, concrete withdrawal plan (or, possibly even a 
government) that can make commitments to donors in September. 
 Brussels is also concerned that the Israeli delegation 
included appropriate officials, such as National Security 
Advisor Eiland, and that Israel come prepared to take action 
to release arrears and improve internal movement and 
cross-border trade.  The EC is working with the World Bank in 
Jordan to finalize the necessary technical reports by the end 
of August, and also noted that the PA has a draft mid-term 
reconstruction plan.  Finally, Commission offiicals provided 
an update on the EC's planned 65 million euro contribution to 
the UN West Bank/Gaza Trust Fund.  End Summary. 
 
Is September Realistic? 
------------------ 
2.  (C)  On July 28, Poloff and Development Counselor 
presented reftel demarche to Christian Berger, the 
Commission's official for West Bank/Gaza issues, and Nina 
Obermaier, Programming Officer for WB/Gaza and MEPP.  Berger 
responded that the EC supports the goals laid out by the U.S. 
demarche, but is skeptical that the AHLC would actually be 
held in September.  With the Israeli Knesset in recess until 
late October, he asked, will there be an approved withdrawal 
plan?  Will there be a GOI in place that can make commitments 
to donors about the withdrawal?  The key, he said, would be 
having an Israeli delegation with a mandate and a withdrawal 
plan in hand for the meeting.  He added that the Quartet 
principals' meeting would also be critical to set the stage 
for a successful AHLC.  He noted that the EC would want the 
next AHLC agenda to include issues related to the West Bank, 
in addition to Gaza.  He liked the idea of holding a Task 
Force meeting in August, but again questioned whether there 
would be sufficient preparation to hold the AHLC by September. 
 
What -- and who -- will Israel bring to the table? 
--------------- 
3.  (C)  Berger was also concerned that Israeli 
representation at the last AHLC (FM Shalom) was not 
sufficient to address the issues donors would raise.  The 
same issues discussed then -- Israeli arrears and 
cross-border trade/internal movement -- are once again on the 
agenda; Israel had meanwhile done little to address either. 
Berger said he would hope at a minimum that Israeli National 
Security Advisor Giora Eiland would be at the AHLC, if indeed 
it would focus on Gaza withdrawal. 
 
EU will ask Questions 
------------- 
4.  (C)  Berger said the EU will ask the US and other donors 
what, concretely, we and they are prepared to do to support 
PA takeover in Gaza following withdrawal.  Berger saw the 
issue of cross-border trade and internal movement as critical 
to a successful transfer in Gaza, and wondered what kind of 
guarantees the donors would seek on this from Israel.  He 
asked how the U.S. planned to work with Israel on this and 
other issues related to unfulfilled Israeli commitments from 
the last AHLC. 
 
Econ Plan:  EU to help WB 
--------------- 
5.  (C)  On the Economic Action Plan, Obermaier said that the 
World Bank had contacted the Commission for assistance in 
finalizing the necessary technical reports in August.  The 
Commission's staff in Jerusalem will work with the WB on 
this; she said the expectation is that the short, succint 
10-page reports will be completed by the end of August.  She 
also reported that the PA has a draft of a proposed mid-term 
reconstruction plan. 
 
Update on Contributions to the Reform Trust Fund 
------------------- 
6.  (C) USEU Development Counselor asked for an update on EU 
efforts to secure other donor interest in joining them in 
funding the World Bank's new Reform Trust Fund.  Obermaier 
explained that several donors have now made commitments to 
the Trust Fund including the Australians who have paid in US 
$1 million, the Norwegians who have paid in a first tranche 
of planned US $12 million, the UK which has paid in a first 
tranche of planned US $12 million, Canada which is expected 
to disburse a first tranche of its planned US $7 million 
commitment any day now, the Japanese who are also expected to 
pay in a first tranche of their planned US $10 million 
commitment any day now and a very serious expression of 
interest from the French.  Given the other donor intentions 
to match EC funds, the EC has decided to use this vehicle for 
65 million euros of its assistance to the PA.  The 65 million 
euros will be disbursed in three tranches: 40% (26 million 
euros) within the coming days; 30% when the WB certifies 
compliance with the fund's conditions (which is expected 
soon), and the remaining 30% by the end of the calendar year. 
 
SAMMIS