DEMARCHE ON UN DEMOCRACY FUND NICARAGUA PROJECT

C O N F I D E N T I A L USUN NEW YORK 000696 SIPDIS E.O. 12958: DECL: 07/31/2013 TAGS: KDEM PHUM PREL SUBJECT: DEMARCHE ON UN DEMOCRACY FUND NICARAGUA PROJECT REF: SECSTATE 78873 Classified By: Ambassador Wolff for reasons 1.4(b) and (d). ¶1. (C) Ambassador Wolff made reftel demarche to the SG's deputy chief of staff, Kim Won-soo, on July 30. Kim said he had given no instructions to UNDEF to cancel the MpN project in Nicaragua. He agreed the Nicaraguan complaint needs to be resolved in a way that preserves UNDEF's ability to fund projects despite possible objections from host governments, and that protects the SG from host government pressure in cases such as the Nicaraguan one. ¶2. (C) In a conference call later the same day among Ambassadors Wolff and McMahan, UNDEF Executive Head Roland Rich, and UNOP (UN Office for Partnerships) Executive Director Amir Dossal, Dossal proposed that in UNDEF's third round it continue to notify missions in New York of projects approved for funding in their countries, but do so before the short list approved by the Advisory Board is sent to the SG for approval. (In the second round, notification letters were sent after the SG had approved the list.) This would allow governments with objections to take them to the Advisory Board, rather than to the SG. Dossal called this a face-saving way for the UN to resolve the dilemma created by Nicaragua's complaint. (He said Venezuela has also complained about UNDEF's decision to fund an OAS freedom-of-information project there.) Projects provoking objections would not be among those sent to the SG for his approval until the objections had been resolved at the level of the Advisory Board, if possible. ¶3. (C) Ambassador Wolff emphasized that any mechanism allowing for objections by host governments undermines the very concept of UNDEF, a voluntary fund for which the UN is only the administering agency. U.S. support for UNDEF cannot be sustained if countries can reject projects for political reasons. Sending letters of notification as a courtesy is one thing, said Wolff, but if they result in countries having a veto over UNDEF Advisory Board decisions it means the end of UNDEF. ¶4. (C) Rich said the key for UNDEF is to preserve the integrity of the project selection process, which is based solely on criteria approved by the Advisory Board. But he also said it is impossible for UNDEF to fund a project against the wishes of a host government. Doing so would raise the risk of UNDEF funds being seized and project 
personnel being arrested. He said UNDEF's selection process minimizes the likelihood of objections and called Nicaragua's an aberration. Ambassador Wolff said he feared it would open the floodgates to other objections. He also noted that allowing host countries to make arbitrary objections threatened the integrity of UNDEF and its extensive evaluation process. ¶5. (C) Ambassador McMahan asked the reason for the decision to send letters of notification in the second round, as none had been sent in the first round. Dossal said in the first round UN resident coordinators in project countries had determined there were no objections based on informal consultations with host governments. In the second round, said Dossal, the coordinators had complained this procedure was too cumberQme. ¶6. (C) Rich has convened a meeting of the UNDEF Advisory Board at the expert level The first item on the agenda is the Nicaraguan project: the experts are asked to approve a Carter Center freedom-of-information project from the "long short list" (number 4144). Rich said he will explain that UNDEF cannot proceed with the original project (number 4231) due to technical difficulties. (The Nicaraguan NGO that is implementing the project said in its application UNDP would be the executing agency, but UNDP says it never agreed to this.) Dossal said the experts would not be asked to make a decision on the replacement project, only to inform their missions. Rich said meanwhile the Nicaraguan Mission has spoken to many others about its objections, so the Advisory Board will know full well that this is also a factor in UNDEF's decision not to proceed with the original project. ¶7. (C) Comment: the problem posed by Nicaragua's objection was foreseeable and, while it cannot be entirely attributed to the letters of notification, (as the information about the approved projects is publicly available),the official notification aggravated the situation and made such complaints more likely. Dossal's idea of sending the letters before the SG signs off on the project list is a promising one for the third round, which begins this fall. It would give countries for the first time a mechanism to register concerns, but preserve the principle that UNDEF does not require host-country approval for its funding decisions and put the onus on the UNDEF Board, not the SG. It doesn't help us in the second round, but so far only Nicaragua and Venezuela have lodged objections and so the problem seems manageable at this point. (In the Venezuelan case, the implementing agency is the Pan American Development Fund of the OAS, and UNDEF has advised the GOV to raise the matter directly with the OAS.) Wolff