US embassy cable - 05TELAVIV1386

C O N F I D E N T I A L TEL AVIV 001386 
 
SIPDIS 
 
NSC FOR ABRAMS/DANIN 
 
E.O. 12958: DECL: 03/02/2015 
TAGS: EFIN, KWBG, IS, ISRAELI-PALESTINIAN AFFAIRS, ECONOMY AND FINANCE 
SUBJECT: MARCH REVENUE TRANSFER REDUCED BECAUSE OF PA 
DECISION TO APPEAL COURT CASE 
 
 
Classified By: DCM Gene A. Cretz for Reasons 1.4 (b,d) 
 
This cable was cleared by ConGen Jerusalem 
 
1.  (C) Summary.  The GOI released a total of NIS 188 million 
in funds to the PA in early March.  This is made up of NIS 
138 million from the regular monthly revenue transfer plus 
NIS 50 million in previously attached revenues.  The regular 
transfer of NIS 138 million is significantly below the normal 
monthly amount.  Finance Ministry contacts explain this was a 
result of a decision by the PA to appeal a court case in 
Israel, which could only move forward with the PA's agreement 
to attach NIS 122 million in revenues.  This amount was 
deducted from the NIS 260 million in PA revenues collected by 
the GOI in February, yielding the net transfer amount of NIS 
138 million.  End Summary. 
 
2.  (C) GOI Finance Ministry staffer Rani Loebenstein 
provided Mission March 3 background on the large reduction in 
the monthly revenue transfer of March 1 to the PA.  He said 
that a number of months ago the PA had decided to appeal a 
court case in Israel which originally involved the attachment 
of NIS 7 million in PA revenues.  Over time, the amount of 
damages alleged by the plaintiff had ballooned to NIS 122 
million.  As the case moved through the Israeli court system, 
it finally reached the Supreme Court.  According to 
Loebenstein, Supreme Court Chief Justice Barak agreed for the 
appeal to move forward only if the full, current amount of 
alleged damages was attached by the court.  PA Finance 
Minister Fayyad, according to Loebenstein, agreed to this on 
February 21.  (Note:  Minister Fayyad told ConGen Economic 
Chief March 7 that, in order for the ruling to be appealed 
before the Supreme Court, the PA had to agree in late 
February to attach the full, updated amount of damages.  Had 
the PA not agreed to this attachment, it would have had to 
pay the full amount in order for the case to move forward. 
End Note) 
 
3.  (C) Loebenstein claimed that Fayyad had not informed the 
Finance Ministry of the new attachment, almost leading 
Loebenstein to transfer the entire monthly revenue collection 
of NIS 260 million.  Loebenstein expressed a degree of anger 
over having almost been put into the position of having acted 
against a decision of the Supreme Court.  He noted that he 
had built a relationship of trust with Fayyad over a number 
of years and could not understand why Fayyad had not been 
straightforward in this case. 
 
4.  (C) Loebenstein said he was particularly embarrassed by 
this turn of events because he had just pressed the judicial 
branch hard for the immediate release of an additional NIS 50 
million in attached revenues related to a case involving the 
Menorah insurance company.  As he put it, "How do you think 
it makes me look arguing on the one hand that the PA urgently 
needs its NIS 50 million on the one hand while the PA is 
agreeing to attach a far greater amount on the other hand." 
Loebenstein noted that the Finance Ministry transferred the 
NIS 50 million to the PA on March 3. 
 
 
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