HANDLING THE DPRK AT THE UNDP EXECUTIVE BOARD

C O N F I D E N T I A L USUN NEW YORK 000040 SIPDIS SIPDIS FOR IO, T, EAP E.O. 12958: DECL: 01/22/2017 TAGS: EAID KFPC KN KNNP KUNR PINR PREL UNDP SUBJECT: HANDLING THE DPRK AT THE UNDP EXECUTIVE BOARD Classified By: Acting Permanent Representative Alejandro D. Wolff per reasons 1.4 (b) and (d) ¶1. This is an action request. See para 9. 2.(C) Ambassadors Wolff, Wallace and Miller met with UNDP Administrator Kemal Dervis and his senior management team Monday to discuss the way forward on DPRK. We have tentative agreement, subject to Department approval, on a package that in principle satisfies all US concerns. 3.(C) UNDP has agreed to take immediate steps to address US concerns regarding the operations of the UNDP DPRK office and monitoring, evaluation and auditing of UNDP programs raised in a series of meetings and letters over the past several months. Most of the steps were announced by Dervis in a note he circulated to members of the Executive Board on January ¶22. All of the steps will be described by UNDP for the Board on July 25 when the North Korean program comes up for discussion. 4.(C) Essential elements of the proposed package include: a) an immediate audit of the DPRK country program by the UN's Board of External Auditors (BOA),with the audit to be completed within three months; b) cessation as of March 1 of hard currency transfers, Nationally Executed (NEX) programs, hiring of DPRK seconded and controlled staff, and any programs on which site visits are prevented by the DPRK government; c) deferral of action (at least until June) on the new UNDP country program for North Korea, pending the audit and appropriate redesign of program elements; d) continuation of certain elements of the so-called pipeline projects (already-approved projects in the current program) that conform to the new program restrictions and for which UNDP can guarantee that no diversion of funds is possible. 5.(C) Scenario for the Board. Dervis believes that the best scenario is for UNDP to announce the proposed package to the Board on Thursday, and for it to be accepted by the Board without discussion. Delegations with which both UNDP and the US have consulted, including Board Chair Denmark, strongly support this scenario. UNDP reported today that DPRK is not yet fully on board, but may come around. Dervis asked specifically if the US would need to make a statement under this scenario. We replied that our interest was in the outcome and moving forward in a positive way and that we had no desire for a polemical debate about the DPRK. Statements after adoption, while still sensitive, might be possible. 6.(C) What can go wrong? The scenario outlined depends on the DPRK reaction. At this stage the response of the DPRK at the meeting is unpredictable and they could oppose the package and insist on a vote. There is a strong aversion to voting in the Board, and a strong desire by a large majority of Board members to avoid controversy. While his colleagues indicated the possibility that the G-77 might side with DPRK in the event of a vote, Dervis said his reading is that most of the G-77 don't sympathize with the DPRK and would not support them. Dervis added that even if DPRK opposed the package, he intended to "stick to his guns". The Administrator's proposed scenario is supported by the WEOG and, in our view, is both our best chance to achieve our goals and also positions us best to rally support among the Board should a voting scenario develop. 7.(C) Japanese concerns. Japan has approached us separately with a proposal to link action on the proposed DPRK program to a discussion of the necessity of curtailing UN non-humanitarian activities to a country that rejects the legitimacy of a Chapter Seven UNSCR. While we support this idea in principle, we believe that this general principle is more complex in execution than the Japanese perhaps realize and that it would be difficult to manage constructively in the current context. We would thus propose to consult with the Japanese on ways to move forward with their idea on a separate track from the current DPRK/UNDP issue. 8.(C) Following the meeting, Ambassador Wolff spoke with Dervis regarding the proposal that the BOA conduct the DPRK audit. Ambassador Wolff expressed concern that the Board, consisting of the Supreme National Auditing Authority might not be viewed as a truly external and independent audit. Ambassador Wolff therefore requested modification of the proposal to ensure the involvement of outside auditing firms. Mr. Dervis said he would look into this suggestion and get back to Ambassador Wolff as soon as possible. 9.(C) Action request. Mission requests Department concurrence with the scenario outlined above. WOLFF