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notifying UNODC that INL had withdrawn $432,885 (unexpended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