DONORS PLEDGE OVER $5 BILLION IN NEW MONEY AT

UNCLAS SECTION 01 OF 10 ISLAMABAD 000902

C O R R E C T E D C O P Y (ADDED MCNS)

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID
SUBJECT: DONORS PLEDGE OVER $5 BILLION IN NEW MONEY AT
PAKISTAN DONORS' CONFERENCE IN TOKYO

REF: A. (A) SECSTATE 24367

B. B) SECSTATE 129615

C. C) SECSTATE 124618

D. D) RIYADH 590

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1. (SBU) SUMMARY: International pledges totaled more than
$5 billion at the Pakistan Donors' Conference in Tokyo on
April 17. The Donors' Conference was intended to support the
implementation of Pakistan's International Monetary Fund
(IMF) Stand-By Arrangement agreed to in November 2008.
Special Representative Richard Holbrooke announced the U.S.
pledge of $1 billion over the next two years, subject to
Congressional approval. Pakistani President Zardari and
Japanese Prime Minister Aso opened the conference. Japan and
the World Bank co-hosted the conference which was attended by
45 donor countries and multilateral organizations. END
SUMMARY.

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PLEDGE SUMMARY
--------------


2. (SBU) Donors far exceeded expectations by announcing
pledges over $5 billion of new funds over two years to
support the Pakistani government. The conference goal was to
raise $4 billion in international assistance to support the
implementation of Pakistan's International Monetary Fund
(IMF) Stand-By Arrangement agreed to in November 2008 to be
directed at social safety net and development programs and to
bolster foreign reserves. As co-hosts of the conference, the
World Bank and Japan strictly counted only new pledges of
support for the final tally, although a number of other
donors reaffirmed their existing levels of support and/or
announced consideration of additional pledges. The list
below is the unofficial U.S. tally.

NEW TWO-YEAR COMMITMENTS FROM 21 DONORS (unofficial U.S.
tally)

BILATERAL DONORS PLEDGE (in millions of USD)
Australia 43
France 264
Germany 155
Iran 330
Italy 59
Japan 1,000
Kuwait 49
Netherlands 80
New Zealand .58
Republic of Korea 40
Saudi Arabia 700

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Spain 26.4
Sweden 5
Switzerland 29
Turkey 100
UAE 300
USA 1,000

SUBTOTAL 4,181

MULTILATERAL ORGANIZATIONS PLEDGE (in millions of USD)

Asian Development Bank 200
European Commission 320
Islamic Development Bank 250
World Bank 300

SUBTOTAL 1,070

TOTAL 5,251.18

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PAKISTAN STATEMENT OF NEEDS
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3. (SBU) Pakistan President Asif Ali Zardari urged donors to
provide assistance as his country continues to combat
terrorism. Zardari stated that the Pakistani people are
suffering from a lack of resources. He also noted that this
was the first time that Pakistan had received a
second-tranche of funds from an International Monetary Fund
program, indicating his commitment to implementing
politically difficult, yet necessary, economic reforms.
Shaukat Tarin, Advisor to the Prime Minister on Finance,
Revenue, Economic Affairs and Statistics, provided a
description of Pakistan's short-term economic situation.
Tarin also stated that the long-term cost of the conflict in
Pakistan from 2001 ) 2009 was $35 billion.

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WORLD BANK TRUST FUND
--------------

4. (SBU) The Government of Pakistan announced their
intention to request a Trust Fund to be administered by the
World Bank to provide targeted assistance to the regions of
Balochistan, Northwest Frontier Province, and the FATA.
Pakistan stated a need to raise $3 billion over the next
three years to support the Fund's activities. No explicit
pledges were announced at the Tokyo Conference for the trust
fund but a majority of delegations expressed support for the
creation of the trust fund as well as a desire for the trust
fund to focus on the border regions.

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U.S. PLEDGE
--------------


5. (SBU) U.S. Special Representative to Afghanistan and
Pakistan Richard Holbrooke announced a $1 billion pledge over
a two-year period to support Pakistan's International
Monetary Fund (IMF) Stand-By Arrangement. The final details
of the assistance package will be coordinated closely with
Congress and will include project and budget assistance and
project sector grants. Assistance will be directed to
agriculture, education, health, poverty alleviation, and
energy. This $1 billion is a down payment on President
Obama's commitment to support a bipartisan bill in the U.S.
Congress, co-sponsored by Senators John Kerry and Richard
Lugar, which authorizes $1.5 billion in direct support to the
Pakistani people every year over the next five years.

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OTHER BILATERAL COMMITMENTS
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6. (SBU) Below is a brief description of the statements from
the 28 donor countries at the conference, in alphabetical
order. Pledged commitments are expressed in two-year
commitments, unless otherwise noted.

AUSTRALIA. Delegation head: Mr. Stephen Smith, Minister of
Foreign Affairs. Announced a doubling of current assistance
to add an additional $120 million Australian dollars (US
$43.2 million). Reaffirmed ongoing military and police
training as well as their broad support for security and
economic development in Pakistan.

CANADA. Delegation head: Mr. Jim Abbott, Parliamentary
Secretary to the Minister of International Cooperation.
Announced no new monetary pledge but affirmed his
government's decision to select Pakistan as a focus country
and review the current Pakistan strategy with a view towards
informing Pakistan of new future commitments.

CHINA. Delegation head: Mr. Cui Tiankai, Ambassador of China
to Japan. Announced no new monetary pledge but affirmed his
government's intention to continue to provide assistance
through bilateral investment. Noted the establishment of the
first industrial park and overseas investment company, with
additional support for the telecom sector, highways, and
development cooperation. Committed to strengthening
agricultural exchanges to improve rice production. Stated

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intention to provide professional training in the
agricultural and professional sector for 1000 students in
2009, up from 800 last year. Acknowledged $500 million USD in
foreign exchange lending provided to Pakistan in fall 2008.

DENMARK. Delegation head: Mr. Carsten Damsgaard,
Under-Secretary for Political Affairs, Ministry of Foreign
Affairs. Announced no new monetary pledge but affirmed his
government's intention to launch an assistance program in
Pakistan for the first time, details of which will be
released at a later date.

FINLAND. Delegation head: Mr. Rauli Suikkanen, Deputy
Director of Ministry of Foreign Affairs. Announced no new
monetary pledge but affirmed that Finland was exploring new
additional assistance beyond their $3 million euro overseas
development assistance for 2009. Finland reaffirmed Euro 10
million in Earthquake support for Azad Jammu Khasmir and Euro
12 million in support for the internally displaced persons
(IDPs) through the International Committee of the Red Cross
plus an additional 1 million euro to support civil society
organizations.

FRANCE. Delegation head: Mr. Pierre Lellouche, Special
Representative for Afghanistan and Pakistan. Announced a
pledge of 300 million euros over three years ($264 million
over two years) to support capacity building in Pakistan's
public sector, and an emphasis on energy efficiency.

GERMANY. Delegation head: Mr. Bernd Mutzelburg, Special
Envoy for Afghanistan and Pakistan. Announced $155 million
USD focused on project assistance, education, skill
development with a particular focus on refugees and in the
Northwest Frontier Province (NWFP).

INDONESIA. (observer) Delegation head: Mr. Triyono Wibowo,
Vice Minister of Foreign Affairs. Announced intention to
provide capacity building technical assistance to Pakistan
through the Australian-based Law Enforcement Center.

IRAN. Delegation head: Mr. Manouchehr Mottaki, Minister of
Foreign Affairs. Announced $330 million in assistance -- $320
million in loans and a $10 million grant of overseas
development assistance. Iran also reaffirmed its desire to
move forward with bilateral discussions on a natural gas
pipeline with Pakistan.
ITALY. Delegation head: Ambassador Massimo Iannucci,
Director General for Asia, Oceania, the Pacific and
Antarctica/Special Envoy for Afghanistan and Pakistan.
Announced new assistance to Pakistan of 42 million euro ($59
million USD). Assistance is comprised of a $40 million soft

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loan in microfinance directed to Balochistan, NWFP and FATA
region, and an additional 2 million euro program to
development rural cultivation of olive trees and olive oil
production. Reaffirmed existing soft loan of $20 million euro
to provide vocational training.

JAPAN. Delegation head: Mr. Taro Aso, Prime Minister.
Announced a pledge of $1 billion in assistance, premised on
continued Pakistani implementation of its IMF program. The
assistance will be directed at poverty alleviation and
capacity building to facility the implementation of economic
reforms. Reaffirmed April 7 announcement of a $5 million USD
contribution to assist the internally displaced people of
Pakistan.

KUWAIT. Delegation head: Mr. Abdul-Rahman Al Otaibi,
Ambassador to Japan. Announced a $49 million USD loan from
the Kuwait Fund for Arab Economic Development for the
Reconstruction of Higher Education Institutions Projects in
the earthquake affected areas of Azad Jammu Kashmir. Kuwait
also announced its consideration of participation in the
financing of the Neelum Jhelum Hydropower project. Kuwait
reaffirmed existing support totaling $323 million from 14
loans issued since 1976 in the sectors of transportation ($96
million),agriculture ($29 million),industry ($6 million),
energy ($177 million),and water and sanitation ($15
million).

MALAYSIA. (observer) Delegation head: unknown. Reaffirmed
intention to provide technical assistance by training 500
officials in public administration, information technology,
and agriculture this year.

NEW ZEALAND. Delegation head: Mr. Ian Kennedy, Ambassador to
Japan. Announced a new pledge of NZ $1 million ($ 580,000
USD)in humanitarian assistance to Pakistan. Specific
multilateral delivery mechanism to be determined.

NORWAY. Delegation head: Mr. Haakon Gulbrandsen, State
Secretary for International Development. Announced no new
monetary pledge but reaffirmed existing commitments of $100
million in grants (focused on primary education, good
governance, cultural programs, institution building, and the
environment and energy programs); $25 million in humanitarian
assistance to the UN and ICRC; and, $80 million in post-05
earthquake assistance.

OMAN. Delegation head Mr. Al Muslahi Khalid, Ambassador of
Oman to Japan. No pledge or statement made.

QATAR. (observer) Delegation head: unknown. No pledge or

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statement made.

REPUBLIC OF KOREA. Delegation head: Mr. Yu Myung Hwan,
Ministry of Foreign Affairs. Announced new assistance of $200
million over the next 3 years of which $40 million consist of
new grants. Korea's assistance is directed at human resource
development, capacity building, strengthening public
institutions, and infrastructure development.

RUSSIAN FEDERATION. (observer) Delegation head: Mr. Alexey
Ovchinnikov, Counsellor, Embassy of Russian Federation in
Japan. No pledge or statement made.

SAUDI ARABIA. Delegation head: Mr. Yousef Al-Bassam, Vice
Chairman and Managing Director of the Saudi Fund for
Development. Announced new assistance of $700 million, of
which $300 million would finance infrastructure development
projects, $200 million to finance and guarantee Saudi non-oil
exports to Pakistan, and $200 million deposit to the
Pakistani Central bank with terms and conditions to be
agreed. Saudi Arabia reaffirmed its existing assistance of
more than $500 million, highlights of which area $133 million
grant to finance projects in earthquake-damaged areas and an
$80 million concessional loan to help finance the
Neelum-Jhelum Hydropower Project. Comment: Embassy Riyadh
reported on April 20 that the Saudi Deputy Foreign Minister
for Economic and Cultural Affairs Yousef Saadoun explained
that the Saudi Development Fund will retain control of the
pledged funds and will pick and chose among projects
submitted by the Government of Pakistan for Saudi financing.
Deputy Foreign Minister Saadoun further noted that the Saudi
government will retain the right to fund or not fund any
particular project proposal. End Comment.

SPAIN. Delegation head: Mr. Angel Lossada-Quevedo, Secretary
of State for Foreign Affairs. Announced intention to provide
$30 million Euro over three years ($26 million USD over 2
years) and hoped to direct funds to the World Bank Trust
Fund. He also reaffirmed an Euro 8 million commitment to the
United Nations Development Fund's Trust Fund as well as
400,000 euro pledge of humanitarian relief to the UNHCR and
UNICEF.

SWEDEN. Delegation head: Ms. Anna Karin Enestrom, Special
Envoy to Afghanistan and Pakistan. Announced new humanitarian
assistance of $5 million. Reaffirmed existing commitment of
$30 million in assistance through the Food and Agriculture
Organization to support the agricultural system.

SWITZERLAND. Delegation head: Mr. Pierre Combernous, Head of
Political Affairs Division II of Asia-Pacific, Ministry of

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Foreign Affairs. Announced a new pledge of 50 million Swiss
francs over 3 years ($29 million USD). Reaffirmed existing
pledge of 20 million Swiss francs this year in midterm
development programs, directed to poverty alleviation and
governance as well as support for the reconstruction and
preparedness in the region struck by the 2005 earthquake.

THE NETHERLANDS. Delegation head: Mr. Albert Gerard
Koenders, Minister of Development cooperation, Ministry of
Foreign Affairs. Announced a 120 euro pledge over three years
($80 million USD over two years) with a focus on the
Northwest Frontier Province and FATA region through water
management, education, strengthening civil society and
improving the role of women.

TURKEY. Delegation head: Dr. Mehmet Aydin, State Secretary.
Announced a new pledge of $100 million and its intention to
host the next Friends of Democratic Pakistan ministerial.
Reaffirmed ongoing trilateral cooperation with Pakistan and
Afghanistan through the Ankara process.

UNITED ARAB EMIRATES. Delegation head: Mr. Sheikh Abdullah
bin Zayed Al Nahyan, Minister of Foreign Affairs. Announced
intention to provide $300 million USD. The Foreign Minister
urged more Muslim countries to provide support to Pakistan in
the years to come. He also noted that 800,000 Pakistanis live
in the UAE.

UNITED KINGDOM. Delegation head Sir Sherard Cowper-Coles,
Special Representative for Afghanistan and Pakistan Affairs.
Announced no new monetary pledge but reaffirmed intention to
double development aid to Pakistan as part of a ten-year
partnership strategy totaling 350 pounds ($520 million USD),
which will be front-loaded for the first few years.
Components of the assistance include 60 million pounds in
direct budget support, tied to reform, and 250 million in
education sector. Additional emphasis will be on health,
public services, pro-poor growth, and the border areas.

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MULTILATERAL COMMITMENTS
--------------


7. (SBU) Of the 15 multilateral organizations present at the
conference, four provided new monetary contributions.

ASIAN DEVELOPMENT BANK (ADB). Represented by Mr. Xiaoyu
Zhao, Vice President. Announced a new commitment of $300
million over the next three years of non-concessional lending
to expand trade finance with guarantees to the Pakistani
banking sector, subject to a successful General Capital

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Increase to be considered at the ADB Annual Meeting in Bali
in May 2009. The ADB reaffirmed the existing financial
envelope of around $4.5 billion to fund priority programs and
projects in the field of (i) energy; (ii) urban services;
(iii) transport and irrigation; (iv) budget support, tied to
reforms. Noted the $20 billion of assistance that the ADB has
provided to Pakistan since 1968.

EUROPEAN COMMISSION. Represented by Dr. Benita
Ferrero-Waldner, Commissioner for External Relations and
European Neighborhood Policy. Announced a 485 million euro
($640 million) assistance package for the next five years to
focus on (i) education and rural development in the Northwest
Frontier Province and Balochistan; (ii) energy and food
security through a contribution to the World Bank's Global
Food Facility; (iii) an increase in the role of the European
Investment Bank in Pakistan and a commitment to provide 100
million euro of assistance in renewable energy projects to
include small and medium hydropower, wind, solar and biomass.
The European Commission noted that they are Pakistan's most
important trading partner, with more than $7 billion in
trade, and noted Pakistan's call for a long-term free trade
agreement.

EUROPEAN UNION (Czech Republic Presidency). Represented by
Ms. Helena Bambasova, Under Secretary, Ministry of Foreign
Affairs. Announced that they will host an EU summit on
Pakistan in June 2009.

EUROPEAN COUNCIL. Represented by Mr. Ettore Francesco Sequi,
EU Special Representative for Afghanistan. Noted plans to
focus on NWFP and FATA for development purposes. Also noted
the need to increase donor coordination.

FOOD AND AGRICULTURAL ORGANIZATION. Represented by Mr.
Mitsuhiro Yokoyama, Director, Liaison Office in Japan.
Observer only.

INTERNATIONAL LABOR ORGANIZATION. Represented by Mr. Li
Donglin, Country Director, ILO Office in Pakistan. Observer
only.

INTERNATIONAL MONETARY FUND. Represented by Mr. Adnan
Mazarei, Assistant Director. Noted Pakistan's success at
meeting the first set of benchmarks and encouraged continued
progress towards fulfilling the remaining targets over the
short and medium term. Also noted the need to move forward
with policy reforms.

ISLAMIC DEVELOPMENT BANK. Represented by Dr. Walid
Abdelwahab, Director, Asia Department. Pledged $200 million

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in new assistance with details to be forthcoming.

UNITED NATIONS. Represented by Mr. Jean Arnault, Assistant
Secretary-General for Political Affairs, a.i. Affirmed that
the UN will support of the Government of Pakistan in its
coordinating responsibilities. He emphasized the importance
of robust partnership and effective implementation of
assistance.

UNITED NATIONS POPULATION FUND. Represented by Ms. Kiyoko
Ikegami, Director, Tokyo office. Observer only.

UNITED NATIONS INTERNATIONAL CHILDREN'S FUND (UNICEF).
Represented by Ms. Junko Kunigi, Director, Tokyo office.
Observer only.

UNITED NATIONS DEVELOPMENT PROGRAM. Represented by Mr.
Fikret Akcura, UN Resident Coordinator in Pakistan. Observer
only.

UNITED NATIONS HIGH COMMISSIONER FOR REFUGEES (UNHCR).
Represented by Dr. Johan Cels, Representative in Japan.
Observer only.

UNITED NATIONS OFFICE ON DRUGS AND CRIME (UNOCR).
Represented by Mr. Bernard Frahi, Deputy Director, Division
for Operations. Observer only.

WORLD FUND PROGRAM. Represented by Mr. Anthony Banbury,
Regional Director/Asia Bureau. Observer only.

WORLD BANK. Represented by Ms. Isabel Guerrero, Vice
President, South Asia Region and Mr. Yusupha Crookes, Country
Director in Pakistan. Announced a new pledge of $300 million
in the form of an International Bank for Reconstruction and
Development loan, conditional upon Pakistan's continued
stabilization and credit worthiness. Reaffirmed $1.4 billion
of total assistance to be disbursed to Pakistan by the end of
June 2009.

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OTHER ITEMS
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8. (SBU) The April 13 announcement of the decision to impose
Sharia law in the SWAT valley of Pakistan prompted statements
by the French, Germans, Netherlands, Sweden, and the Czechs
(as president of the European Commission) calling for
improved governance and the establishment of the rule of law.
Foreign Minister Quereshi noted that he felt there was a
"general misunderstanding of the Sharia policy" and invited

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the Special Representatives to Islamabad to participate in a
briefing on the legal developments in the SWAT valley. Other
reoccurring themes which were repeated by several delegations
included the need to develop effective donor coordination,
promote regional trade by improving bilateral
Pakistan-Afghanistan transit trade, and a re-convening of the
Pakistan Development Forum soon.

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COMMENT
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9. Comment. The success of the donors' conference
exceeded expectations. Of particular importance was the $1
billion contribution from the Gulf States -- Saudi Arabia
($700 million) and the United Arab Emirates ($300 million).
The World Bank's decision to limit the final pledge figure to
new assistance totaling $5.2 billion was helpful in adding
some rigor to the pledging process. Donors' statements of
conditioned assistance was strategically important to
encourage further Pakistani progress on needed economic
reforms. These reforms, more than donor assistance, will
ultimately determine Pakistan's financial stability. The
combined total of existing and new assistance announced at
the conference was more than $13.6 billion USD. The next
step will be to ensure that donors follow through on their
pledges to meet Pakistan's most urgent social, economic, and
welfare needs. End Comment.
FEIERSTEIN