CHALLENGES OF SINAI ASSISTANCE

C O N F I D E N T I A L CAIRO 001761

SIPDIS

STATE PASS F, ALSO FOR NEA, ALSO FOR EB

E.O. 12958: DECL: 09/10/2019
TAGS: EAID ECON PREL PGOV EG
SUBJECT: CHALLENGES OF SINAI ASSISTANCE

REF: CAIRO 1725

Classified By: Ambassador Margaret Scobey for reasons 1.4 (b) and (d)


1. (C) Key Points:

-- Although security restrictions and other factors
associated with working in the Sinai will continue to make it
more difficult to implement our programs there, progress is
being made.

-- In May 2009, the Governor of North Sinai agreed to help
facilitate access, and USAID-funded transport and water
projects are now moving forward using FY 2007 funds.

-- In addition, the GOE has provided a short list of possible
new Sinai projects.

-- USAID and GOE are discussing how to manage use of $50
million in FY 2009 Supplemental funds for North Sinai --
Egyptian desire for control of the funds is being balanced by
USAID requirements for oversight and accountability.


Rough Terrain, Modest Gains
--------------


2. (SBU) The Sinai is a difficult region in which to
implement economic assistance programs. Security measures
intended to combat smuggling and other criminal activity have
also restricted the type of access required in implementing
and evaluating assistance programs. The Sinai's difficult
terrain, widely dispersed population and remoteness
constitute additional impediments.


3. (C) In FY 2007 Congress appropriated $10 million to
support community development in the Central Sinai under
USAID's LIFE Sinai Project (Livelihood and Income from the
Environment). LIFE Sinai was an extension of a very
successful program implemented in other poor, remote
communities along the Red Sea. An agreement was signed with
the GOE in FY 2008 but progress on the ground was slowed by
the security restrictions in the area. USAID provided funds
to the technical assistance contractor, International
Resources Group (IRG),over a year ago and IRG began its
field work. However, technicians were only afforded limited
access to beneficiary Bedouin communities, and indispensable
grassroots analyses and feasibility studies suffered serious
delays.


4. (C) In May 2009 the Governor of North Sinai reached
agreement with USAID to accelerate progress by opening up
access to IRG and USAID technicians to work more directly in
the area. Regular meetings between USAID Mission Director
and the Governor as well as the adoption of formalized
procedures involving State Security and Military Intelligence
continue to facilitate access. As a result, two of the
agreed-to activities are now moving forward:

-- The design of a public transportation system to service
students, teachers, and the general North Sinai population:
Nine buses have been purchased and delivered to the North
Sinai Governorate. The operations and maintenance contract
is currently being negotiated and signed between the
Governorate and a private sector operator. The system will
go into full operation on September 26th for the beginning of
the Egyptian school year.

-- The location of sites and community analyses for the
installation of water treatment plants at existing wells in
the Central Sinai: Water quality analysis has been completed
and design and procurement are underway. The first of three
high priority plants will be installed and operating by March

2010.

-- Additional activities focused on community participation
and income generation with civil society and women's groups,
including micro credit, are in the planning stages through
organizations that have the approval of the Governor.

New Phase, New Challenges
--------------


5. (C) Reaching agreement with the GOE on the use of FY 2009
Supplemental funds (50 million dollars) to support
development of North Sinai Bedouin communities remains under
discussion. In January the Ministry of International
Cooperation (MIC) and Prime Minister's Office informed post
that the GOE was preparing a comprehensive development plan
for the Sinai (including Northern Sinai) to circulate to
all
international donors. They stated the plan would be GOE
controlled and managed, and donors would be expected to
contribute to a common fund. The GOE subsequently and
repeatedly advised USAID that there could be "no US
footprint" in North Sinai under this new phase, and funds
should be transferred to the GOE for direct management. In
late July 2009, USAID received -- apparently in place of the
promised plan -- a brief list of possible projects adding up
to approximately 50 million dollars. The projects included
basic infrastructure, a hospital and school construction,
economic activities such as support for industrial zones,
agriculture, and a fishing port.


6. (C) In a August 27 letter to MIC, USAID identified those
sectors and projects that seem to make the most sense based
on its current work in the area and guidance from Washington
clarifying Congressional intent for the use of the funds.
The letter recommended prioritization of projects that
directly increase employment opportunities in agriculture,
fisheries, technical education, and micro and small business
development. In the same letter USAID also detailed the
limited options it has available to be able to ensure full
GOE management and ownership of the North Sinai project going
forward. In a brief September 9 exchange with USAID Director
on the subject, Aboul Naga recommended that the bilateral
agreement for use of the $50 million be signed by Prime
Minister Nazif. PM Nazif's engagement on the issue will lend
itself to a multi-ministerial approach.

Comment
--------------


7. (C) We anticipate that developing and implementing
projects for the political sensitive Sinai will remain a
challenge and require constant oversight and encouragement
from USAID to avoid having the programs bogged down by the
GOE's relatively poor technical capacity to run these
programs. We believe the Governor of North Sinai will be the
most important partner in this effort and we are exploring
ways to bring this effort under the overall supervision of
the Prime Minister.
Scobey