CAUTIOUS OPTIMISM FOR 3D FUND ROLLOUT

C O N F I D E N T I A L SECTION 01 OF 03 RANGOON 000419

SIPDIS

SIPDIS

STATE FOR EAP/MLS;
PACOM FOR FPA

E.O. 12958: DECL: 09/21/2016
TAGS: SOCI EAID PHUM KHIV PGOV BM
SUBJECT: CAUTIOUS OPTIMISM FOR 3D FUND ROLLOUT

REF: RANGOON 099

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Classified By: Econoff TLManlowe for Reason 1.4 (b,d)


1. (SBU) Summary: As manager of the new Three Diseases Fund
(3DF),on May 1, UNOPS signed the first contracts for
projects in Burma to address malaria, TB and HIV/AIDS. UNOPS
will obligate only funds already received from donors,
approximately fifty percent of projects approved by the 3DF
Board. The European Commission (EC) expects to contribute
funds by September 1, when 3DF will fund another round of
projects. Over half of the approximately $25 million
approved for the first year will fund HIV/AIDS work. 3DF
sponsors seek additional funding, understanding that
international attention will focus on their ability to
deliver effective services and to maintain transparency and
accountability. They acknowledge the potential pitfalls, but
remain optimistic they will succeed. End summary.


2. (SBU) UNOPS has opened its Rangoon office and hired a CEO,
Mikko Lainejoki, to manage the Three Diseases Fund (3DF)
focused on the diseases of malaria, TB and HIV/AIDS in Burma.
The office is recruiting six expatriate and twenty foreign
national positions. At a 3DF Board meeting on March 15-16,
four donor representatives (from UK, Sweden, and two from EC)
and three international health experts approved specific
proposals after receiving the results of a proposal review by
a larger panel of international experts. After the meeting,
UNOPS notified the organizations that were chosen as
Implementing Partners (IPs) for the first round of projects.
These IPs, drawn from UN agencies and INGOs, will work with
local NGOs, professional associations, the private sector,
government-sponsored NGOs, and local civilian administrations
to carry out programs. 3DF's call for expressions of
interest attracted proposals that totaled "hundreds of
millions of dollars," according to one donor.


3. (SBU) The overall total pledged by 3DF donors so far is
approximately $100 million over 3-5 years. The 3DF Board
approved forty projects for the first year, which totaled
approximately $15 million for HIV/AIDS, $5 million each for
malaria and TB, and $2 million for "integrated" projects that
will address more than one disease. However the EC has not
yet made its share of this year's funds available, so UNOPS
only contracted for the amount already collected,
approximately $10 million. According to UN and INGO
contacts, almost all the approved proposals extend existing
projects. The initiation of the 3DF was timed to coordinate
with the ending of the UN's Fund for HIV/AIDS in Myanmar
(FHAM) funds. Brian Williams, Country Coordinator for
UNAIDS, said that UNOPS negotiated with each recipient to
determine which projects from the approved list should begin
immediately with funding in hand, and which could wait until
September to begin when UNOPS expected to have the EC's
contribution in hand. Contracts will cover one year and some
will include a provision for extension. The 3DF plans to
announce the next round of proposal solicitations in
September, with a stronger focus on the inclusion of civil
society groups and local NGOs.

Potential Hurdles
--------------

4. (C) Rurik Marsden, Director of DFID at the British
Embassy, outlined three potential hurdles facing
implementation of 3DF goals: funding shortfalls, external
politicization, and internal politicization. The first
concern is money. Funding available in 2007 for HIV/AIDS is
much less than what was available in 2006 from the Fund for
HIV/AIDS in Myanmar (FHAM) and bridge funding from the Global
Fund. HIV/AIDS programs face a $30 million funding gap in

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2008, which 3DF cannot entirely fill. That gap will grow,
Marsden said, as the number of patients needing
anti-retroviral therapy (ART) grows. A WHO mission that
visited Rangoon in January estimated the funding gap for TB
will grow to $15 million by early 2009. WHO specialist
Leonard Ortega said malaria will require similar support.
Current donors (the EC, UK, Norway, Sweden, Netherlands and
Australia) hope to recruit new donors from among European
nations. Japan and the U.S. are the only countries funding
humanitarian programs in Burma that do not already contribute
to the 3DF, Marsden said. He dismissed Korean aid to Burma as
strictly business-focused, but said the donors will meet with
the new Korean Ambassador to solicit his support.


5. (C) Marsden cited growing opposition, which he said came
from Burmese exiles in Thailand and England who say the money
should not be used to support government programs. Marsden
said the donors acknowledge the high level of international
scrutiny focused on the 3DF, and recognize that any failure
would generate a broader reaction that could threaten the
program's continued existence. For that reason, donors
engaged the Ministries of Health, Home Affairs, Education,
and National Planning in the preliminary stages of planning,
and made sure to receive the blessing of the Cabinet and
Senior General Than Shwe on proposed operating procedures.
Observers will be especially concerned about transparency,
access, and accountability issues, he noted, and said that
donors received official agreement on procedures to address
these concerns, partially contained in a Memorandum of
Understanding (MOU).


6. (SBU) The MOU signed between UNOPS and the Ministry of
Health (MoH) in October 2006 identifies three goals of the
3DF: to reduce transmission of HIV/AIDS and enhance treatment
and care for HIV/AIDS-affected persons; to reduce morbidity,
mortality and transmission of TB, and prevent further
emergence of drug resistant forms of TB; and to reduce
malaria morbidity by at least 50% by 2010. The MOU covers a
five-year period and assigns the MoH responsibility for
timely clearance of equipment imports and visa issuances, as
well as assistance with authorizations for travel to project
sites. UNOPS will manage the program through "transparent
mechanisms and accountability," and for procurement,
allocation of grants, audits, and monitoring. UNOPS must
prepare an annual report to the donor consortium.


7. (C) Internal politicization or political interference,
according to Marsden, could also hinder progress. Despite
high-level political support, Marsden feared that local
leaders, including regional commanders and members of the
regime's mass member organization, the Union Solidarity and
Development Association (USDA),may create obstacles or
interfere with 3DF projects. Donors and the Board have
already decided on procedures to handle such cases, Marsden
said, which includes first trying to resolve problems with
local authorities at the lowest level, and, if resolution
isn't possible, halting the program in that area. The goal
will be to keep a localized difficulty from contaminating the
whole program, he said. Despite these concerns, Marsden
expressed optimism that the program would operate smoothly.
Brian Williams at UNAIDS said that, aside from funding
problems, he also did not anticipate any difficulty with
actual 3DF implementation.


8. (SBU) Comment: the Ministry of Health may have the
responsibility to ensure that projects around the country can
be implemented, but in the end military commanders down to
the local level have the final say. Successful
implementation of 3DF projects will largely depend on the
relationships providers have, or develop, with local

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authorities who call the shots. Many UN agencies and INGOs
have well-established cooperative relationships with local
authorities, who allow INGOs to address the healthcare needs
of local residents that the Burmese government does not.
More aggressive attempts by the USDA to insert themselves
into the process will bear close attention. Recent
high-profile reports that highlight the regime's restrictions
on INGOs' humanitarian assistance programs in Burma will
increase pressure on the 3DF to demonstrate quickly full
transparency, accountability, and performance. How well the
3DF manages to navigate around the potential obstacles will
be watched closely by international donors and humanitarian
providers. The needs of the people are real, so 3DF success
could encourage more assistance, while failure would be
devastating. End comment.
VILLAROSA