OPERATIONAL PLAN REVIEW - PAKISTAN

UNCLAS SECTION 01 OF 02 ISLAMABAD 001147

SIPDIS

SIPDIS

DEPT FOR F AMBASSADOR TOBIAS

E.O. 12958: N/A
TAGS: EAID PREL PGOV PK
SUBJECT: OPERATIONAL PLAN REVIEW - PAKISTAN


1. We look forward to the upcoming Operational Plan Review
for Pakistan, scheduled to take place in Washington on March

13.


2. In advance of that review, let us quickly highlight two
items that were noted in the transmittal memo for our
Operational Plan in early February: First, the importance of
maintaining the annual budget support line item at $200
million; and, second, the importance of moving forward on a
new security and development initiative for the frontier
areas bordering Afganistan, starting with the Federally
Administered Tribal Areas (FATA).


3. The Operational Plan submitted in early February used
control figures provided by Washington within the context of
a Continuing Resolution that necessarily had to anticipate
"worst case" scenarios. We understand that the Continuing
Resolution that was actually approved by Congress provides
for a somewhat more robust foreign assistance budget,
hopefully allowing for some further flexibility as the
Operational Plan review unfolds.


4. For Pakistan, two issues are especially important:

-- CASH TRANSFER: FY 2007 marks the third year of a five-year
commitment of ongoing U.S. assistance to Pakistan. For the
last two years, we have maintained the budget support part of
that commitment at $200 million, with all obligations
occurring prior to the end of the Pakistan fiscal year on
June 30. The budget support also provides an important
foundation for an annual dialogue on shared economic
objectives. In addition, the Government of Pakistan annually
provides the equivalent of $200 million in local currency to
help meet its commitment to increase expenditures in health,
education and welfare. Given initial control figures from
Washington, the initial Operating Plan shows a budget support
of $152 million this fiscal year. We very much hope that as
part of the Operational Plan review, this figure can now be
increased to $200 million.

-- SUPPORT FOR FATA: The initial Operational Plan transmittal
memo noted that additional funding might be available for
FATA later in the year, possibly entailing "subsequent
adjustments in the current operational plan." Under any
scenario, the Operational Plan needs to be adjusted to launch
initial activities in FATA under the "peace and security"
objective implemented by USAID, including a new initiative
focused on capacity building in key FATA-related
institutions, including the FATA Secretariat and the new FATA
Development Authority (FDA).


5. Over the past several months, the country team has
developed extensive documentation on a proposed initiative to
support the Government of Pakistan's own Sustainable
Development Plan, which is about to be officially issued.
This documentation includes a strategy for supporting
Government of Paksitan efforts in FATA discussed in
Washington in December and a program summary aimed at
developing a new, stand-alone Strategic Objective within the
peace and security area of the Operational Plan that is now
being finalized. Again, as the Operational Plan discussion
takes place this week, we are firmly convinced that
adjustments need to be made in the current Operational Plan
to ensure that a new multi-year development initiative is
launched in FATA in FY 2007 rather than having to wait until
FY 2008.


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6. Thanks again for your efforts to undertake the challenging
and important task of consolidating foreign assistance
budgets and ensuring that country teams launch complementary
programs that focus on important national objectives. This
has definitely taken place within the Islamabad country team
at this critical juncture in the U.S.-Pakistan partnership.
Again, we very much hope that the two adjustments envisaged
when we submitted the initial Operating Plan in early
February -- one focused on the budget support line item, the
other on a FATA intiative appearing under the peace and
security objective -- will be made during the upcoming
Washington review.

CROCKER