UAE APPROACH TO FOREIGN ASSISTANCE

C O N F I D E N T I A L SECTION 01 OF 03 ABU DHABI 000757

SIPDIS

E.O. 12958: DECL: 06/25/2018
TAGS: PREL EAID ECIN PHUM ECON EFIN PGOV AE
SUBJECT: UAE APPROACH TO FOREIGN ASSISTANCE

REF: A) STATE 052635, B) 07 ABU DHABI 1126, C) 07 ABU DHABI 949, D)
05 ABU DHABI 4283, E) 04 ABU DHABI 4218

Classified by Charge d'Affaires Martin Quinn, reasons 1.4 (b) and (d).


1. (C) The following answers to ref A (para four) questions are
based on Post understanding of UAE foreign aid trends and are
developed without specific inquiries to the UAEG. Conclusions are
therefore Post's considered judgment rather than stated UAEG goals.
(Comment: Post is uncomfortable with the "G-4" construct in reftel,
as it implies a pool of like-minded donors to whom the USG might
extend a collective tin cup; our judgment suggests that potential
donors will act much more independently and would be less cooperative
if "pooled" in this manner. End comment.)


2. (C) ASSISTANCE TRENDS. UAE aid is not coordinated by a central
agency and is made largely by the individual emirates on behalf of
the UAE. It is driven by emerging crises or either policy or
humanitarian imperatives. Much assistance is dispatched by
quasi-official organs, like the UAE Red Crescent Society
(humanitarian aid) or the Abu Dhabi Fund for Development (development
aid). The UAEG is not accustomed to advertising its aggregate
contributions to specific causes. Thus, while Foreign Minister
Abdullah bin Zayed Al-Nahyan (quite credibly) claimed in 2007 that
the UAE has given a total of US$70 billion in assistance over the
past thirty years, few precise figures are available on overall UAEG
outlays over time to back up his accounting. Nonetheless, the UAEG
clearly does expend extensive funds for humanitarian and development
aid -- the lion's share to regional causes, with significant outlays
directed to Lebanon, the Palestinian Authority (PA),and Afghanistan.
(Note: According to one UAEG website, overall UAE bilateral
contributions to humanitarian projects in Gaza and the West Bank
totaled $544 million over the past 30 years -- whereas Minister of
State for Foreign Affairs Dr. Anwar Gargash announced at a conference
in Vienna June 23 that the UAE has given over $4.2 billion in various
forms of assistance to the Palestinians since 1994. The various
entities involved, and diverse forms of assistance, help account for
the different figures. On another front, total humanitarian aid to
Afghanistan during the 2001-06 time frame totaled over $120 million
according to official figures, with an additional $250 million
pledged at the June 13 Paris Conference. End note.) In some
specific cases, increases over the past 3 years are apparent: for
example, grants to the PA increased from US$30 M (2006) to US$80 M
(2007) to US$91.6 M (2008). The rise in oil prices has certainly
made UAEG coffers more flush and its generosity has adjusted upwards,
yet has not led to a discernible new trend in foreign assistance.


3. (C) UAE PRIORITIES. The UAEG primarily devotes funding to
infrastructure development and humanitarian assistance in the Middle
East region, with a clear preference for funding projects rather than
making cash donations. (A notable exception was the $100 million
given to the U.S. in September 2005 after Hurricane Katrina, which
was followed up in October 2005 with $100 million in project-based
funding after the Pakistan earthquake.) The UAE often funds health,
education, and housing projects -- frequently naming the resulting
schools or clinics after UAE founder Sheikh Zayed or current
President Khalifa -- and to a lesser extent allocates funds through
multilateral institutions, as in the $10 million given to the UN in
2007 to address Iraqi refugee issues in Syria. The UAE assists, and
increasingly invests in, less wealthy Arab and Muslim countries.
Many of its donations are made in the interest of regional stability.
Much of its humanitarian aid is allocated through the
quasi-governmental UAE Red Crescent Society or similar organs,
suggesting that aid decisions are influenced by a sense of Muslim
unity and duty toward the Muslim poor. As shown by the "Sheikh Zayed
Cities" found in Egypt, Gaza, and Afghanistan, contributions are also
designed to improve the reputation of the UAE's leadership. It has
also contributed to disaster relief around the world, including
Myanmar, China, Pakistan, and the USA. The UAE seeks to relieve
suffering and (possibly more importantly) maintain political
relationships through these contributions.


4. (C) BILATERAL VS MULTILATERAL AID. The UAE displays a preference
for bilateral, project-related grants. Over the last 30 years, the
UAE claims to have made $27 billion (of its $70 billion in total aid)
available through multilateral institutions such as the IMF and World
Bank. The Abu Dhabi Fund for Development (ADFD) manages financial
assistance provided directly by the Government of Abu Dhabi in some
cases. Over the past 35 years, ADFD has given over $5 billion in
assistance, loans, and grants. (The ADFD also makes direct
investments in private sector projects, and has allocated over $200
million in soft loans for infrastructure projects over the next 5
years.) Humanitarian aid in particular is largely given as bilateral
grants. The UAE generally runs its own projects or directly
contracts for their completion, but also gives direct financial
assistance (examples include budget assistance to the PA and Lebanon,
as well as post-Katrina funds to the U.S.). The UAEG is an active
participant in a number of multilateral aid-giving institutions,
including the World Bank, IMF, International Development Agency
(IDA),and regional bodies like the OPEC Fund for International
Development, the Arab Gulf Fund for the UN (AGFUND),the Arab Bank
for Economic Development in Africa (BADEA),the Abu Dhabi-based Arab
Monetary Fund (AMF) and the Islamic Development Bank (IDB).

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5. (C) SWF CONTRIBUTION TO DEVELOPMENT. The UAE's Sovereign Wealth
Funds (SWF),with the Abu Dhabi Investment Authority (ADIA) as the
granddaddy among them, invest for economic gains and are generally
not aid agencies. In the past, there have been some regional
investments, managed by ADIA and now the Abu Dhabi Investment
Council, that appear to have had an assistance motivation. In
addition, UAE investment organizations invest in developing markets.
In fact, were the USG to push for SWFs to serve as aid agencies, this
could risk undercutting our position that SWF investments should be
made solely on economic/commercial grounds (rather than to advance
geopolitical goals). The UAE leadership has made some effort to
press corporate interests to fulfill their "corporate responsibility"
in assisting the underprivileged, as was the case when the Ruler of
Dubai (and UAE VP and PM) Mohammed bin Rashid launched his late 2007
appeal for "Dubai Cares." Dubai cares focuses largely on regional
primary and secondary education assistance. The effort raised $930
million for educational initiatives globally; after a very successful
campaign which raised about $465 million, the Ruler essentially
matched the funds with a final donation of his own. This
contribution of personal wealth, however, is distinct from SWF
allocations.


6. (C) NON-TRADITIONAL AID. The UAE reportedly has provided oil
subsidies in the past to countries such as Jordan, but this does not
appear to be a primary means of assistance. (On May 25, the UAE
announced $300 million in assistance to Morocco to help with energy
costs, but the form of this aid was unclear.) A long-standing
dialogue with the U.S. on potential debt forgiveness for Iraq (on an
outstanding balance of $3.5 billion dollars) is so far inconclusive.
While the UAE is not requiring Iraqi repayment, and is open to
further discussions as the Iraqi Government proves its credentials as
a steward of Iraqi resources, the UAE has not shown that it wishes to
use debt relief as a primary assistance tool -- a decision somewhat
reflective of Abu Dhabi's preference for projects it can control
rather than funding it loses control over. The $10 billion pledged
by VP/PM and Dubai Ruler Mohammed bin Rashid for the Mohammed bin
Rashid Foundation aims to be managed like the Harvard endowment --
dispersing a certain amount (100s of millions) per year yet
self-renewing through investment. The MbR Foundation is focusing its
efforts on supporting regional education, entrepreneurship, and
culture throughout the Middle East, Africa and south Asia via a
series of its own programs (e.g. scholarship funds) and partnerships
with other NGOs and educational institutions in the those regions,
Europe, and North America.


7. (C) FORMS OF HUMANITARIAN AID. The UAEG dedicates several
hundred million dollars to humanitarian assistance every year, with
the largest grants given by the UAEG directly and significant
humanitarian aid administered by the UAE Red Crescent Society. (The
Red Crescent reportedly spent $68 million outside the UAE in 2006 and
a total of $730 million from 1999 to 2006.) The Red Crescent
administers some of its own programs and often partners with local
institutions in aid delivery. Humanitarian assistance generally
takes the form of food, medicine, housing, and other basic provisions
for victims of war (Palestinian Authority, Lebanon, Iraq,
Afghanistan, Sri Lanka, Kosovo, Bosnia-Herzegovina),famine (Yemen,
Sudan, Somalia, Egypt),or natural disasters (U.S., Pakistan,
Myanmar, China, Iran, Indonesia). The Red Crescent has provided
medical services in kind for Iraqi war victims -- including a recent
case of a young female burn victim brought to the UAE's attention by
the USG. The Red Crescent provided medical care and travel expenses
for the patient and her family. The Red Crescent reports that its
aid to Iraq totals over $42 million since November 2002. The Red
Crescent is headed by an Abu Dhabi ruling family member, Deputy Prime
Minister Sheikh Hamdan bin Zayed, and most private charities (with a
few notable exceptions) are required by law to route their funds
through the Red Crescent. Aside from its work in most of the Arab
world, the UAE Red Crescent is active in Niger, Mali, Ethiopia,
Eritrea, Djibouti, Chad, Sierra Leone, Kenya, Mauritius, the Comoro
Islands, Burkina Faso and Cameroon as well as India, Pakistan,
Bangladesh, the Maldives, Tajikistan and the Philippines.


8. (C) DEMAND OF ACCOUNTABILITY. The UAEG preference for
project-based assistance is partially due to its desire for
accountability of expenditures, in addition to control over projects
and the public relations value of building infrastructure to which it
can attach its name. That said, the UAE makes extensive donations to
Muslim causes with little attempt to account for -- or take credit
for -- the largesse. It has made no demands for accounting from the
U.S. for a $100 million cash donation after Katrina.


9. (C) FULFILLING PLEDGES. Post's best assessment is that the UAEG
generally follows through on pledges it makes in the international
donor arena, although project delays, recipient country red tape, and
other causes may often delay disbursements. Based on available data,
the majority of pledged funds were disbursed. Humanitarian aid
channeled through the Red Crescent, development funds managed by
ADFD, and security assistance to Lebanon (including a long-standing
de-mining program in southern Lebanon) are often above and beyond
what the UAEG has actually pledged. Cash pledges made in donor
conferences are, to our knowledge, largely followed up with
disbursements.

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10. (C) REGIONAL COORDINATION OF AID. Inasmuch as a large
percentage of regional aid stems from donor conferences and
multilateral deliberations, there is clearly an element of
international coordination among the Gulf States. Nonetheless, the
UAEG often notes (with some obvious irony) that the GCC does not
coordinate well and that others do not always follow up on their
stated commitments. Coordination at the 2007 Arab Summit in Riyadh,
for example, led to several Arab League countries pledging financial
support to the PA. It is uncertain how carefully the Arab League or
other regional institutions might have followed up on commitments
made. The Gulf states also coordinate -- with varying degrees of
granularity -- through multilateral institutions such as the OPEC
Fund for International Development, the Arab Gulf Fund for the UN
(AGFUND),the Arab Bank for Economic Development in Africa (BADEA),
the Abu Dhabi-based Arab Monetary Fund (AMF) and the Islamic
Development Bank (IDB). In the end, however, most UAE assistance
decisions are driven by UAE priorities.


11. (C) DESIRE FOR DAC COORDINATION? The UAE seeks to balance its
political relationships with a broad range of partners and its
decisions on aid can be influenced to some degree by various
multilateral fora or the knowledge of amounts of assistance other
states are extending. Although the UAEG may participate in
discussions that might give it a clearer sense of the aid priorities
of other states, the UAE will likely pull out its checkbook when
projects or causes sut its purposes -- generally in a bilateral
contet -- and not according to other actors' prioritiesestablished
in a broader dialogue.


12. (C) ADITIONAL COORDINATION REDUNDANT? The UAE already
coordinates many aid decisions closely with the Unted States, often
under a sense of pressure fromWashington to contribute to certain
causes. If asked about closer coordination, the UAE may well assert
that priorities are already shared in frequent high level exchanges
and additional dialogue could be deemed redundant. Similarly, the
institutionalization of closer UAE coordination with other GCC states
is not likely in the near term. (Comment: U.S. requests for UAEG
donations run the full range of issues in the Middle East and beyond.
Emerging crises and long-standing issues rise and fall on the
priority scheme depending on various factors. An attempt to
consolidate that range of factors into a "strategic" approach to aid
would be hard pressed to accommodate the constant flux in our mutual
priorities. End comment.)

QUINN