SOUTH AFRICA: SAG ENCOURAGES MORE COLLABORATION

UNCLAS SECTION 01 OF 02 PRETORIA 004358

SIPDIS

SENSITIVE

DEPT FOR AF/S (MTABLER-STONE)
DEPT PLEASE PASS TO USAID (AFR/SA/LDOBBINS AND ELOKEN)

E.O. 12958: N/A
TAGS: EAID EFIN EINV ECON PREL PGOV SNAR SF
SUBJECT: SOUTH AFRICA: SAG ENCOURAGES MORE COLLABORATION
ON USG ASSISTANCE

(U) This cable is Sensitive But Unclassified. Not for
Internet distribution.


1. (SBU) Summary. South Africa's National Treasury
conducted a review of U.S. assistance to ensure that all
development assistance is South African-led and fully
aligned with its development priorities. In checking its
findings with U.S. agencies at post, National Treasury
officials appreciated discovering the depth of U.S.
development assistance to South Africa beyond that of
USAID. The officials recommended continuing a dialogue
with U.S. agencies that would include working with USAID
on a revised joint strategy and including other U.S.
agencies in National Treasury's annual discussions with
USAID. End summary.

Context of the Meeting
--------------


2. (U) In response to a request from the South African
National Treasury, CDA Teitelbaum hosted a meeting for
National Treasury's Directorate of the International
Development Co-operation (IDC) at Embassy Pretoria on
September 16. National Treasury wanted to check its
findings from a recent review of U.S. assistance. USAID
organized the meeting and invited all U.S. agencies who
provide assistance to South Africa. Leading the SAG
delegation was National Treasury's Chief Director for
International Development Cooperation (IDC) Shaheed
Rajie. Accompanying him were IDC Director Elaine Venter,
IDC Program Manager Paula van Dyk, and Department of
Foreign Affairs USA Directorate officials Angus September
and Thebe Rammutle.


3. (U) According to material provided by National
Treasury officials, the IDC Directorate was responsible
for assuring the "efficient and effective management" of
Official Development Assistance (ODA) and mobilizing all
possible development assistance resources in pursuit of
South African Government (SAG) priorities. These
priorities included alleviating poverty, accelerating
economic growth, creating jobs, strengthening human
resources, ensuring the security of its citizens,
transforming government to reflect the people-centered
nature of its democracy, and improving regional
cooperation. The IDC applied a broader definition of ODA
than did the OECD; included were grants, technical
cooperation, concessional loans, and official assistance
to non-state actors (e.g., credit guarantees to the South
Africa Department of Trade and Industry).

South Africa's Review
--------------


4. (SBU) The primary strategic objective of National
Treasury's review was to ensure that all development
assistance was South African-led and fully aligned with
SAG development priorities. Essential elements of
National Treasury's review consisted of assessing the
absolute level of ODA provided, any conditions that were
tied to the release of ODA, the long-term effect of short-
term ODA, and "power imbalances" that might exist between
the donors and recipients. Rajie explained that the
goals of South African-led development partnerships were
to ensure that development assistance was predictable,
transparent, and adhered to strong criteria to ensure its
optimal use. According to Rajie, an example of a good
partnership was the "trilateral cooperation" among South
Africa the United States in assisting the DRC, Burundi,
Sudan, and Ivory Coast.


5. (SBU) Noting South Africa's new found Upper Middle
Income Status (2006 World Bank Development Report),Rajie
wondered whether USAID planned to exit the country,
despite the continuing challenges that South Africa faced
in overcoming a legacy of social inequality. He also
noted that the U.S. budget process did not allow for long-
term commitments without, as he put it, "the catch
phrase: subject to availability of funds."


6. (SBU) To ensure that U.S. assistance was in line with
SAG objectives, IDC Director Venter stressed that
National Treasury needed to know how and where the money
was spent. This would allow National Treasury to fully
account for U.S. assistance and fully recognize the U.S.
contribution. Currently, IDC could only account for $69
million of the $136 million in U.S. ODA estimated for FY

2005. [Note: Post estimates that USG ODA to South Africa
was closer to $187 million for FY2005. IDC appears to
have excluded $50 million in PEPFAR funds. End Note.]
Venter said that the SAG wanted to draft a broad
bilateral strategy document that incorporated all U.S.
assistance for CY2006.

Our Response
--------------


7. (SBU) In response, CDA Teitelbaum characterized the
uniqueness of the U.S. economy and international
cooperation. He pointed out that U.S. assistance was far
greater than the numbers captured by ODA, which usually
referred only to specific USAID programs. U.S.
assistance also included other USG agency programs (not
classified as ODA under OECD definitions),and private
sector contributions to non-profit organizations. He
elaborated on the global benefits of U.S. trade and
investment, individual remittances, as well as trade
preference programs such as the African Growth and
Opportunity Act.

Results and Next Steps
--------------


8. (SBU) Rajie and his team appreciated discovering the
depth of U.S. development assistance to South Africa
beyond that of USAID. While at the beginning of the
meeting Rajie noted that U.S. ODA fell far short of the
"internationally-agreed" level of 0.7% of GDP, at the end
he agreed that the United States provided far more
development assistance than would be categorized under
the OECD's definition of ODA. Rajie recommended that the
United States and South Africa continue to discuss
development assistance programs and that the IDC continue
working with USAID on a revised joint strategy to be
completed by December 2005. He also recommended that
other U.S. agencies participate in annual USAID
discussions with the IDC to ensure that the SAG grasped
the extent of USG contributions to South African
development.

TEITELBAUM