BOLIVIA DEMANDS USAID PORTFOLIO REVIEW

C O N F I D E N T I A L LA PAZ 000695

SIPDIS

AIDAC
SIPDIS

FOR WHA/FO THOMAS SHANNON AND CHRISTOPHER MCMULLEN WHA/AND
ARNOLD CHACON, AID/LAC/AA PAUL BONICELLI, TULLY CONICK,
JOSE CARDENAS, AND DAN BATLLE, LAC/SA JEFFREY BAKKEN,
LAC/SPO CARL DERRICK

E.O. 12958: DECL: 03/28/2018
TAGS: BL EAID
SUBJECT: BOLIVIA DEMANDS USAID PORTFOLIO REVIEW

REF: LA PAZ 677

Classified By: Ambassador Philip S. Goldberg for reasons 1.4 (b) and (d
).


1. (C) SUMMARY: Against a tense political backdrop and at
the request of the GOB, USAID and the GOB have initiated a
hurried and dense review of USAID,s portfolio, unprecedented
in its level of detail. While we are making a sincere effort
to be responsive to the steady stream of ad hoc and
improvised information requests, we are also firmly
maintaining that this is a bilateral process and that we
cannot violate USG statutes, regulations, and policies. So
far, the review covered USAID,s Integrated Alternative
Development program (the fist of six programs),but much more
work is required to see this through and we do not believe it
will be possible to conclude the review of our entire
portfolio in the 30 day period desired by the GOB. USAID is
working closely with the Embassy to prepare for the final
phase of the process, which the GOB has stated will culminate
in recommendations to their Executive on modifying, ending or
continuing USAID programs. We have emphasized that while
ending programs can be done unilaterally (and could have
serious implications across our portfolio) modifying or
continuing USAID programs is a bilateral decision. The GOB
is evidently reviewing other donor programs as well but we
have only limited information on this. END SUMMARY


2. (C) At the recent and hurried request of the Government
of Bolivia (GOB),USAID and the GOB have begun an
unprecedented in-depth portfolio review of USAID programs
(Note: USAID requested an annual portfolio review with the
GOB on at least three occasions in 2007, but to no avail; the
GOB canceled each time on short notice. End Note). The
GOB,s objective is to make joint recommendations to the
Executive on which USAID programs should continue, end or be
modified. The review process involves four steps: (1)
program overview presented by USAID technical team; (2) more
detailed presentation of specific program activities by USAID
implementing partners; (3) site visits to view projects in
the field and speak with beneficiaries; and (4) a negotiation
phase to jointly determine modifications, close out or
continuation of projects. The review comes during the run up
to the May 4 referendum on Santa Cruz,s autonomy statute,
which is creating a series of significant political tensions
here. (Note: The GOB has a habit of lashing out at others,
including the USG and USAID, when the going gets tough on the
political front. End Note).


3. (C) From the beginning the GOB has insisted the
four-step review is a technical process, but we see a strong
political element. While the titular head of the GOB,s
review commission is the Minister of Development Planning (a
respected technocrat),she kicked off the process and then
promptly disappeared (we have since sent her a letter laying
out our understanding of the process, in part to show that we
still see her as leading this). The day-to-day review
coordination lies with a lawyer from the Ministry of the
Presidency, the ministry which led the very public and
political anti-USAID campaign here. The review committee
also includes members from technical ministries that work
with USAID (Rural Development and Health) as well as a
representative (at times) from the Vice Ministry of Public
Investment and External Finance (part of the Ministry of
Development Planning).


4. (C) So far, we have advanced considerably in the review
of the Integrated Alternative Development (IAD) program. We
have stated that we see this first program review as a way of
piloting the process and working out kinks. The IAD review
has been somewhat belabored and confusing, with the GOB
defining in-depth information requests as we proceed. We are
doing our best to be responsive while ensuring compliance
with our rules, firmly maintaining that we will not be pushed
as this is a bilateral program and review. We have provided
the general overview of the IAD program; project partners
have made their presentations; and visited projects in the
Yungas municipality of Coroico.


5. (C) Early impressions include: the Minister of the
Presidency's lawyer ) while clearly an astute interlocutor
with a good grasp of development programs and a growing
appreciation for what we do and how we do it ) seems to have
a mandate to bring something back to the GOB through this
process and this means we must advance with great caution;
the GOB is in a hurry to obtain what for us is a lot of
hard-to-gather information; we sense the lawyer is seeking
more GOB leadership on these programs; he and his colleagues


have a deep interest in detailed cost information (presumably
to tighten the Ministry of the Presidency's focus on the
administrative versus investment costs of USAID projects,
which the Minister of the Presidency falsely attacked us for
in an August 2007 public presentation); the Ministry of Rural
Development and its Vice Ministry of Coca and Integrated
Development are using the process to directly control USAID
funds (Note: in the past, we have offered to work with them
to build their capacity to manage USG funds for a small
initial pilot experience, explaining that such institution
building is a prerequisite to managing USG funds and is a
process that will take time and commitment on their part. End
Note); and there are still important uncertainties on which
we need clarification, especially regarding the final phase
of the process, i.e. negotiation of program adjustments.


6. (C) With regard to this final, negotiation stage, we
believe there will be a question as to whether we negotiate
program adjustments at the end of the entire review process
or after reviewing each program. We will insist on the
former to ensure we can comply with US congressional
reporting requirements and to maintain the mutually
reinforcing elements of our program. As this process
advances, USAID will continue to consult closely with the
Embassy and Washington, as needed.


7. (U) The GOB is evidently also reviewing other donor
programs although our knowledge of these is limited.


8. (C) COMMENT: On the one hand, this review process is
long overdue and something USAID has sought, albeit not with
such detail, for at least a year. Nor do we have anything to
hide. In fact, we welcome the interest in our programs and
well-intentioned suggestions for improvements that align with
shared USG and GOB objectives. However, the workload burden,
the unrealistically short time frames, and the ease with
which this process could turn political are cause for
concern. The big question is where this is all going in
terms of continuing, modifying or closing out USAID programs,
an exercise we will be fully engaged in during the coming
weeks. We will continue to report as this process evolves.
END COMMENT
GOLDBERG