NZAID: CONTINUING TO EXPAND AID TO THE PACIFIC

UNCLAS WELLINGTON 000350 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR EAP/ANP TVAJDA AND KMCKELLOG E.O. 12958: N/A TAGS: PREL NV XV SUBJECT: NZAID: CONTINUING TO EXPAND AID TO THE PACIFIC REF: 06 WELLINGTON 462 ¶1. (SBU) Summary: Since the establishment in 2002 of New Zealand's International Aid & Development Agency (NZAID) as a semi-autonomous agency of the Ministry of Foreign Affairs and Trade (MFAT),the GNZ has steadily increased its nominal overseas development assistance (ODA) to the Pacific region as well as the share of Pacific aid in NZ's overall aid program. While New Zealand's total aid will remain a low 0.27 percent of gross national income (GNI),contacts at NZAID tell us that the 2007/2008 budget, to be announced later this month, will include increased ODA to the Pacific with a greater focus on Melanesia. The anticipated step-up will build on increases over the last five years, as GNZ seeks to raise direct ODA to the Pacific to 50-percent of New Zealand's overall aid program. Foreign Minister Winston Peters, who also holds portfolio responsibility for NZAID, has cited NZ's "development cooperation with the Pacific Islands region as the centerpiece of New Zealand's fight against poverty and hardship." End summary. Background -------------- ¶2. (U) Later this May, GNZ will announce its 2007/2008 budget, which will include an overall increase in ODA and continue a gradual shift in allocation that will target 50 percent of ODA directly to the Pacific region. New Zealand currently directs 45 percent of its ODA to the Pacific with additional allocations through multilateral organizations bringing the amount to 55 percent (reftel). New Zealand's ODA is centered on 18 countries, with 11 of those in Melanesia and Polynesia. Funding growth will be principally focused on Melanesia. Also in May, New Zealand's International Aid & Development Agency (NZAID) will submit to Cabinet its proposal to guide New Zealand's development program in the Pacific Islands region: "Pacific Strategy 2007-2015: Tackling Poverty in Our Region." The strategy will emphasize sector-focused aid on poverty reduction, as opposed to funding specific projects. It will focus on four areas: strengthening governance, broader-based growth and livelihoods, improving education & health, and reducing vulnerability. The new strategy is designed to address the Pacific's failure to meet the poverty reduction and development targets agreed to under the UN's Millennium Development Goals (MDGs). Pacific-focused assistance program -------------- ¶3. (SBU) On April 3, the OECD Development Assistance Committee (DAC) reported that its 22 members provided 5.1 percent less aid in 2006 than in 2005. At 0.27 percent of gross national income (GNI),NZ's 2006 aid fell well short of the United Nations target of 0.7 percent, prompting NZ media to criticize NZ's low funding levels. However, Craig Hawke, Director of NZAID's Pacific Group, told Poloff that while NZ's overall ODA remains low compared to the United Nations target, New Zealand has exceeded the target of 0.25 percent to which it agreed during the Monterey International Conference on Financing for Development in 2002. Hawke could not disclose how much ODA to the Pacific will be increased in this year's budget, but noted that since 2002, New Zealand has nearly doubled its Pacific aid program, from NZD 90 million (USD 67.5 million) in fiscal year 2001/2002 to NZD 173 million (USD 130 million) for 2005/2006 (reftel). This contribution makes New Zealand the fourth largest DAC donor to the region, behind Australia, the United States and France. Donor coordination -------------- ¶4. (SBU) Hawke will represent New Zealand at the Pacific Islands Conference of Leaders (PICL) meetings in Washington from May 7 to 9, and says the GNZ's general objective is to improve donors' strategic coordination in the Pacific. Previously, Hawke told Poloff that he would like to explore opportunities for U.S.-New Zealand cooperation in the region (reftel). Hawke is also interested in meeting in Millennium Challenge Corporation (MCC) officials, having remarked to Poloff that New Zealand was a "bit surprised" when MCC announced its USD 65 million award to Vanuatu in January ¶2005. Hawke has said the Pacific is an over-aided region, suggesting that it would be more useful for the U.S. to use its weight and influence to promote policy dialogues (reftel). In this regard, the PICL fits the bill. McCormick