US embassy cable - 05CAIRO6510

UNCLAS CAIRO 006510 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREL, PGOV, EAID, ECON, ETRD, EFIN, KPAL, EG, IS 
SUBJECT: ARAB ASSISTANCE TO THE PALESTINIAN AUTHORITY: 
EGYPT AND THE ARAB LEAGUE 
 
REF: STATE 146261 (NOTAL) 
 
Sensitive but unclassified.  Please protect accordingly. 
 
1.  (SBU) Reftel requests financial information on Egyptian 
and other Arab contributions to the Palestinian Authority in 
order to assist the work of Special Envoy James Wolfenson. 
MFA officials responded to post's request with the following 
information, noting that the financial data had just been 
compiled at the request of the Foreign Minister. 
 
2.  (SBU) According to the Egyptian MFA and confirmed by Arab 
League contacts, Arab assistance to the Palestinian Authority 
falls within the following categories.  First, the Arab 
League administers two separate funds for the Palestinian 
Authority, one known as the "Al Aqsa Fund," and the second 
called the "Intifada Fund."  The original capitalization 
target for the funds, which reportedly Arab states "do not 
differentiate between," was a total of one billion USD.  The 
funds were set up shortly after the November, 2000 Arab 
Summit in Sharm El Sheikh but with only base capital of $700 
million USD.  Furthermore, during the Beirut Arab Summit of 
2002, leaders formally agreed to increase the funds' 
capitalization by an additional $150 million USD.  As of 
September, 2005, according to the Egyptian MFA, Egypt owed 
$168.3 million USD for the funds.  The money, however, would 
be very difficult to secure from the GOE Ministry of Finance, 
according to our MFA contacts, due to Egypt's lack of 
financial resources. 
 
3.  (SBU) The second main category of Arab funding to the 
Palestinians involves direct budgetary support to the 
Palestinian Authority.  According to the MFA, leaders of the 
22 Arab League member states agreed during their March, 2002 
Beirut Summit to contribute a total of $330 USD million every 
six months ($660 million per annum) for direct budgetary 
support to the PA.  That pledge was repeated during the 
following three Arab summits, leading to a total $1,980 
million USD (e.g., 3 times $660 USD million) being pledged. 
Of this figure, our MFA contacts tell us that only $608 
million USD has actually been contributed by Arab states 
leaving a shortfall of $1,372 million USD outstanding. 
 
4.  (SBU) According to the MFA, financial contributions from 
the Arab states have increased considerably over the past six 
months.  Citing World Bank and PA Finance Ministry 
statistics, our MFA contacts tell us that $146 million USD 
has been paid for direct PA budgetary support, with Algeria 
($77 million USD), Kuwait ($40 million USD), and Saudi Arabia 
($15.4 million USD) being the primary sources.  Saudi Arabia 
was the only state that had fulfilled its commitments, 
whereas Syria, Lebanon, Iraq, Libya, Somalia, Djibouti, 
Mauritania, and Comoros had consistently failed to make its 
payments.  The few states where external pressure was likely 
to succeed in extracting commited funds for the PA, we were 
told, were Kuwait, Qatar, Bahrain, and Libya. 
 
5.  (SBU) Egypt regularly provides the Palestinian Authority 
with humanitarian assistance including medical supplies, food 
stuffs, ambulances, and other items, primarily through the 
Egyptian Red Crescent Society.  Typically, this assistance 
(denominated in Egyptian currency) is channeled to an 
Egyptian bank account and drawn upon directly by the 
Palestinian Authority for the purchase of Egyptian supplies. 
We have also seen media reports that Egypt provided the PA 
with approximately $1.7 million USD for building hospitals in 
remote areas of the occupied territories.  In addition to the 
much publicised provision by Egypt of security-related 
training and assistance (both within Egypt and Gaza), the 
Egyptian government has also reportedly encouraged local 
businessmen to invest in commercial projects to help with the 
reconstruction and development of Gaza and the West Bank.  We 
have heard reports that Egypt recently opened a 
representative office in Ramallah by which to pursue its 
interests in the West Bank.  The only official representation 
that Egypt currently maintains in the territories is its 
Embassy in Gaza. 
 
6.  (U) Minimize considered. 
 
 
Visit Embassy Cairo's Classified Website: 
http://www.state.sgov.gov/p/nea/cairo 
 
You can also access this site through the 
State Department's Classified SIPRNET website. 
 
JONES