BURMA: UNODC REACTS TO WITHDRAWAL OF USG FUNDING

C O N F I D E N T I A L RANGOON 000148 SIPDIS STATE FOR EAP AND INL; DEA FOR OF, OFF; USPACOM FOR FPA E.O. 12958: DECL: 02/01/2015 TAGS: SNAR KCRM EAID BM SUBJECT: BURMA: UNODC REACTS TO WITHDRAWAL OF USG FUNDING REF: A. RUBEN/CLINE-RANGOON E-MAILS 2/1/05 ¶B. RANGOON 138 ¶C. RANGOON 88 ¶D. RANGOON 66 AND PREVIOUS Classified By: COM Carmen Martinez for Reasons 1.4 (B,D) ¶1. (C) Summary: UNODC's Burma representative was disappointed, but not surprised, to learn of a February 1 decision by INL to withdraw funding from UNODC's supply reduction Wa Project. Having been previously briefed on UWSA indictments, he was aware that U.S. funding for the program was in jeopardy. Lemahieu is optimistic he can make up the $432,885 shortfall in the short-term, but is skeptical about the long-term viability of the counternarcotics project without his largest donor. He has urged his headquarters to offer some resistance to the INL decision, but expects that UNODC Vienna will accept the withdrawal of the earmark and reprogram the funds to activities in other countries. End Summary. ¶2. (SBU) COM (joined by DEA country attache and Pol/Econ chief) called on UNODC representative Jean-Luc Lemahieu February 2 to deliver a copy of a February 1 letter from INL A/S Charles to UNODC Executive Director Costa (ref A), notifying UNODC that INL had withdrawn $432,885 (unexpended funds) from obligated funds originally earmarked for UNODC's Wa Project in Burma. The COM explained, per information contained in the letter, that this action had been taken in light of recent federal indictments of senior UWSA leaders (ref D). ¶3. (SBU) Lemahieu expressed disappointment, but said that he was not surprised by the development. He had concluded, after receiving a sanitized briefing on the January 24 unsealing of the indictments (ref C),that U.S. funding for the program was in jeopardy. He said, however, that the withdrawal was a major setback to the project. "More significant than losing the funds," he observed, "is that we are losing our largest donor." UNODC, he explained, has in the past used U.S. support for the project as a hook for securing additional funding from other donors. ¶4. (SBU) Although Lemahieu said he had no immediate plans to shut down the Wa Project, he was skeptical about the future viability of the project (scheduled to last through 2008). U.S. funding accounts for about half of the budget and UNODC, he said, "will find it difficult, if not impossible to find $2.1 million from other sources over the next three years." He was more optimistic that UNODC could find ways to make up the immediate shortfall resulting from the withdrawal of U.S. obligated funds. ¶5. (C) Regarding the rationale behind the INL decision, Lemahieu said he was supportive of law enforcement actions targeting the UWSA and understood the need to stay clear of Wa leaders. He added, however, that he was confused as to why the United States had supported the Wa Project in the past despite a 1993 indictment against Wei Hsueh Kang and the placement of Wei and the UWSA on the Kingpins list in 2000 and 2003, respectively. Nonetheless, he said, it was unlikely that UNODC would make any public statement regarding the withdrawal of the funds. ¶6. (C) On February 4, Lemahieu told us that he had consulted with UNODC headquarters in Vienna on the withdrawal of funds and his hierarchy had expressed an understanding of the U.S. decision. However, Lemahieu added, he said had urged Vienna to offer some resistance to the INL decision on the basis that "law enforcement and alternative development are complimentary to supply reduction; we can't have one without the other." He admitted that Vienna would most likely accept the INL decision and reprogram the $432,885 to activities in other countries and not for other UNODC programs in Burma. Martinez