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