Kerry tells Abbas he’ll press Israel to transfer withheld funds

US Secretary of State John Kerry held talks Friday with Palestinian Authority President Mahmoud Abbas and the leaders of Egypt and Jordan on the stalled Middle East peace process, officials said.

Kerry was attending an investment conference in Egypt’s Red Sea resort town of Sharm El-Sheikh along with hundreds of prominent figures to jumpstart its economy.

Ahead of the conference Kerry met Abbas, Egypt’s President Abdel-Fattah el-Sissi and Jordan’s King Abdullah II to discuss the peace process, a State Department official and Sissi’s office said.

Referring to the breakdown in relations with Israel and the ongoing financial crisis in the PA due to withheld tax funds, Abbas said that “there’s no alternative but to re-evaluate the security and economic relations between the Palestinian Authority and Israel.” Abbas has threatened several times recently to halt security cooperation between his forces and the IDF in the West Bank.

Kerry promised Abbas that he would press Israel to resume transferring the tax funds, Israel’s Channel 10 news said. The funds have been withheld in recent months in punishment for the PA’s decision to join the International Criminal Court in The Hague and seek to indict Israel for war crimes.

The four leaders discussed creating an environment to “push forward the peace process to reach a comprehensive and just peace in the region,” Sissi’s office said in a statement.

During the meeting Sissi “emphasized that achieving peace and stability in the region will bring stability to all the countries in the region,” the statement said.

Kerry led a bid last year to try to reach an Israeli-Palestinian peace deal, but his efforts collapsed amid bitter recriminations by both sides.

Last month the United States voiced fears that the Palestinian Authority may be teetering on the brink of collapse because of a lack of funding, as Israel withholds taxes and donor aid stalls.

“We continue to be concerned about the PA,” a State Department official told reporters traveling with Kerry on his plane before the leaders met.

“It’s really part of the continuous, ongoing conversation we’re having with the critical stakeholders here,” the official said, asking not to be named.

Kerry also delivered words of encouragement Friday for Egypt’s efforts to attract greater foreign investment but no new military assistance as demanded by the country’s president.

Kerry’s hands are tied because the Obama administration is undecided about whether to affirm Egypt’s progress on democracy and human rights or issue a national security waiver. It must do one or other under the 2015 federal budget to unblock hundreds of millions of dollars in military aid for Egypt.

America’s top diplomat said investment was needed to restore confidence in Egypt and provide stability for the region.

“This part of the world is blessed with a stunning amount of commercial potential,” Kerry said at an American Chamber of Commerce event. He said the US, whose companies invested $2 billion in Egypt last year, stood ready to help.

Kerry met with el-Sissi, who has been clamoring for US tanks, planes and other materiel held up since the military’s 2013 takeover of the government.

The president said earlier this week the logjam was creating the impression that the US isn’t standing by the Egyptians as they battle the Islamic State and other extremists. The country’s need for weapons and equipment is “dire,” he told Fox News.

Kerry had hoped to announce on his three-day trip to Egypt the delivery of F16 fighter jets, according to US officials, who weren’t authorized to speak publicly on internal deliberations and demanded anonymity.

But no path forward has emerged from multiple White House discussions in recent weeks over funds which were suspended 21 months ago when el-Sissi, then military chief, overthrew Egypt’s first democratically elected leader, Islamist President Mohammed Morsi.

The US has been providing hundreds of millions in counterterrorism assistance to its ally, which isn’t stalled as a result of the coup. Egypt says it needs the money to face growing threats from extremists creeping over the border from lawless Libya or operating in the Sinai Peninsula, and the US sees the funds as critical for stability in the volatile Middle East.

But Washington cannot provide almost half of its $1.5 billion annual aid package — along with assistance held up from previous years — until it does one of two things. It must certify advances by el-Sissi’s government on democracy, human rights and rule of law, or tell Congress the assistance should go through because it is in America’s national security interest.

The administration has reservations about both options.

It doesn’t want to endorse a post-coup Egyptian crackdown on political opponents that started with hundreds killed in street clashes and thousands jailed. There have since been mass trials and death sentences.

The administration is likewise uncomfortable with a national security declaration that would recall the decades of American support for Egypt’s former autocrat Hosni Mubarak despite his government’s obvious shortcomings.

Officials said the focus of Kerry’s trip wasn’t on military matters but rather the investment conference. Top executives from General Electric, Microsoft and other US companies attended.

Egypt’s economy was rocked after Arab Spring protesters chased Mubarak from power in 2011. El-Sissi has sought to make the county more conducive for investment and is reforming Egypt’s tax code, among other efforts to spur renewed economic vitality.

After the conference, Kerry will fly to Lausanne in Switzerland on Sunday for fresh negotiations with Iranian counterpart Mohammad Javad Zarif.

Talks with global powers for a deal reining in Iran’s uranium enrichment program in return for sanctions relief are reaching a critical stage as a March 31 deadline for a political framework accord looms.

With uncertainty still surrounding the deal, the State Department has not said how long Kerry will stay in Lausanne nor when he is expected to return to Washington.

Times of Israel staff contributed to this report.