DUTCH TO PLEDGE USD 15 MN AT MADRID

C O N F I D E N T I A L SECTION 01 OF 02 THE HAGUE 002692

SIPDIS

E.O. 12958: DECL: 10/23/2013
TAGS: PREL EAID ECON NL
SUBJECT: DUTCH TO PLEDGE USD 15 MN AT MADRID

REF: (A) STATE 297590 (B) THE HAGUE 2675

Classified By: AMBASSADOR. REASONS 1.5(B) AND (D)


1. (C) SUMMARY: The Netherlands will pledge EUR 13 mn (USD
15 mn) at Madrid. FinMin Zalm told visiting DOD U/S Zakheim
and an interagency delegation that the GoNL sees its troops
on the ground as its principal contribution to the
stabilization effort, but that the passage of UNSCR 1511
helped the government to reconsider its previous no-new-money
stance. Another EUR 1 mn for police training is under
consideration, but is not yet ready for public announcement.
End summary.


2. (C) The GoNL announced October 22 that it would make a EUR
13M (USD 15M) pledge at the Iraq Donors Conference in Madrid.
The pledge, which follows months of steady Dutch resistance
to further contributions, came as an interagency team headed
by DOD U/S Dov Zakheim visited The Hague to press for
additional Dutch support. U/S Zakheim, joined by Ambassador
Sobel, Ambassador Robin Raphel, Treasury A/S for
International Affairs Randal Quarles, officials from the CPA,
USAID, and DOD, and Embassy staff, thanked a group of senior
Dutch officials headed by Finance Minister Gerritt Zalm for
the Netherlands' contributions to date, while asking for an
early announcement of additional support for the 2005-07
period.


3. (C) U/S Zakheim noted the pledges being made by such
countries as Canada (USD 230 mn) and Sweden (USD 30 mn),
neither one of which had supported the coalition effort in
Iraq, adding that it would be anomalous if such an important
and influential donor country as the Netherlands, which did
have troops on the ground, did not come through at this time.
Zakheim emphasized that support for Iraqi reconstruction
could take many forms, from cash transfers to specific
projects to other non-cash means, such as the exhumation of
mass graves the Dutch have expressed a willingness to take
on. Treasury A/S Quarles explained that the new multi-donor
trust fund would operate under IFI procurement rules, to
which the Dutch have long been accustomed. He asked for
Dutch support via their executive directors at the IMF and
World Bank for those institutions' more active engagement in
Iraq, mentioning the IFC's new credit facility for SMEs as an
example of the kind of initiative that should be backed.
Ambassador Raphel emphasized that the US did not want to
monopolize the Iraqi reconstruction process, and that was
important for the Iraqi people to see other nations involved,
beyond the principal coalition partners. As a possibility
for additional Dutch involvement, she cited the trade credit
facility backed by a US Eximbank guaranty being created by
the new Trade Bank of Iraq, and wondered if the GoNL had
given any consideration to doing something similar.


4. (C) Finance Minister Zalm (who was flanked by Economy
Minister Karen van Gennip, MFA political director Herman
Schaper, and MOF no. 2 Joop Wijn, who will lead the Dutch
delegation at Madrid) explained that the GoNL had only agreed
to reconsider its previous no-new-money position at the 10-17
Cabinet meeting, at which an EUR 10 mn Dutch pledge for the
Madrid conference was approved. Zalm explained that the
unanimous passage of UNSCR 1511 had been an important step in
marshalling support for the additional funding. Five million
euros would come from the development assistance budget, and
five million from other sources. (Note: The remaining three
million euros in the Dutch Madrid pledge represents the
Economy Ministry's previously-arranged facility to support
Dutch business in Iraq.) That, however, was all the GoNL
could do at this time, said Zalm, although more might be made
available for 2005 and after. Zalm commented that the Dutch
consider their 1100 Marines in the UK zone in southern Iraq,
who cost roughly 60 mn euros (almost USD 70 mn) every six
months to support, as their principal contribution to Iraq
reconstruction. The MFA's Schaper noted that the Dutch were
considering placing someone with the Council for
International Coordination in Baghdad as a means of
increasing the Netherlands' involvement in the reconstruction
effort. However, the security situation there had caused the
Dutch to draw down their personnel at the Dutch mission in
Baghdad to minimal levels for the present.


5. (C) Earlier, Amb. Raphel and A/S Quarles discussed the
role of the private sector in Iraqi reconstruction with
Jacques Schraven, head of the Dutch employers' association
VNO-NCW. Schraven outlined the Dutch business community's
strong interest in Iraq and the results of a recent
conference and fact-finding mission to the region organized
by his group. He also, however, expressed frustration with
what he saw as the GoNL's arms-length attitude to the
business community and its concerns in the allocation and
management of Dutch development assistance, and hoped that
the GoNL would become more active in Iraq as a means of
increasing opportunities for Dutch businesses there. Raphel
and Quarles also pushed for greater Dutch involvement in the
reconstruction effort with members of parliament Camiel
Eurlings and Geert Wilders, the foreign affairs spokespeople
for the Christian Democrats and liberal VVD, the two largest
parties in the governing coalition. Raphel and Quarles
outlined U.S. expectations for the Madrid conference, fielded
questions regarding the state of play of the reconstruction
effort and opportunities for the private sector, and
explained how the new multi-donor trust fund was expected to
work.


6. (U) U/S Zakheim did not have the opportunity to review
this cable before his departure.


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