RUSSIAN STEPS TO EXPAND ODA PROGRAMS

C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 002712 SIPDIS STATE FOR EUR/RUS AID FOR E&E, DCHA E.O. 12958: DECL: 11/01/2019 TAGS: EAID ECON EIND ELAB PGOV PREL RS SOCI SUBJECT: RUSSIAN STEPS TO EXPAND ODA PROGRAMS REF: A. 08 MOSCOW 266 ¶B. MOSCOW 1540 Classified By: EconMinCouns Matthias J. Mitman, Reasons 1.4 (b,d) ¶1. (U) This is an action request cable. Please see paragraph ¶12. -------------- SUMMARY -------------- ¶2. (C) In 2007, then-President Putin called for the expansion of the GOR's Official Development Assistance (ODA) system, including the development of bilateral assistance programming. Putin mandated the Ministry of Foreign Affairs (MFA) and the Ministry of Finance (MinFin) to coordinate on the development of the GOR's approach to assistance. However, coordination between the two ministries on this issue has been poor and, in the absence of a clear assistance policy and division of authority between MFA and MinFin, the latter moved quickly to demonstrate Russia's capacity as a donor through contributions to international financial institutions. Insufficient human resources and fiscal challenges brought on by the global financial crisis have impeded Russian ODA expansion. Currently, MinFin oversees the majority of foreign assistance, directing multilateral funding and expanding GOR development programs in sub-Saharan Africa and elsewhere outside the CIS. MFA collaborates primarily with UN agencies, generally within the CIS. Other ministries, including the Ministry of Health and Social Development (MoHSD) and the Ministry of Emergency Situations (EMERCOM),continue assistance activities within their sectors while also pursuing opportunities to increase cooperation with their U.S. partners. The GOR is planning a conference on emerging donors for February 2010 in which it would like U.S. development officials to take part. End Summary. -------------- -------------- INFANT ODA SYSTEM FACES HUMAN AND FINANCIAL CHALLENGES -------------- -------------- ¶3. (C) In 2007, then-President Putin signed the Concept of Russia's Participation in International Development Assistance, outlining the expansion of the GOR development assistance program of debt relief for poor countries and grants to multilateral institutions to include aid delivery on a bilateral basis (see reftel A). Putin charged MFA and MinFin with jointly coordinating the assistance initiative. In 2008, President Medvedev ordered the creation of �A;Rossotrudnichestvo (ROS) - the legal successor to Roszarubezhtsentr - within MFA and tasked it with the coordination of international humanitarian activities. (Note: While ROS has sought to redefine and possibly expand its role, to date its humanitarian activities have consisted of cultural and educational outreach programs. ROS does not undertake classic humanitarian or emergency relief activities, which remain in the purview of EMERCOM. End Note.) Andrey Bokarev, MinFin Deputy Director of the Department for International Financial Affairs, Sovereign Debt, and Assets, told us MFA and MinFin also plan to establish an interministerial committee to coordinate GOR assistance, in which other government agencies will take part as needed. MFA and ROS representatives echoed the same intent. ¶4. (C) The GOR lacks the human resources necessary to develop its assistance program fully. Over the past few years, the United Nations Development Program (UNDP) has provided training workshops and policy analysis to build ROS's institutional capacity. ROS has requested similar support from USAID Moscow, which continues to engage with the agency. However, Bokarev told us that while MinFin was not opposed to MFA's "dream" of a bilateral development agency, it would be at least two or three years before the GOR had cultivated a cadre of international development experts sufficient to staff it. MinFin and MFA are planning a series of international development courses at leading Moscow universities to train new development specialists but have not yet found enough experts to develop the courses. ¶5. (C) The GOR also faces significant fiscal challenges to expanding its foreign assistance program, although it is committed to fulfilling its current obligations. In 2007, Russian ODA totaled approximately 0.02 percent of GDP. The MOSCOW 00002712 002 OF 003 GOR committed to raise annual assistance levels to 0.7 percent of GDP in the long-term. In reference to a question regarding additional funding in the 2010 budget to expand ROS, Bokarev stated it would be difficult for the GOR to increase spending on foreign assistance given the financial crisis and current deficit. However, he noted that both President Medvedev and Finance Minister Kudrin had publicly announced that Russia would fulfill all its assistance obligations this year, predicting that GOR foreign assistance in 2009 would total USD 700-800 million. (Note: During multiple meetings with USAID, ROS officials stated they anticipated a significant increase in their agency's funding in the next GOR budget. End note.) ¶6. (C) In order to address these obstacles, the GOR has actively sought to increase its collaboration with established assistance agencies. Bokarev highlighted the experience gained by GOR experts through joint projects with development professionals from the World Bank (WB) and donor countries. In addition, the GOR is organizing a conference in February on the role of emerging donors in collaboration with other BRIC and OECD countries, in which it would like U.S. officials to take part. -------------- -------------- MULTILATERAL DEVELOPMENT FINANCE IS THE NAME OF THE GAME -------------- -------------- ¶7. (C) In the absence of an established policy on foreign assistance and division of responsibilities among the ministries involved, MinFin has assumed the lead role in Russian ODA. This is due in no small part to MinFin's longer history of involvement with multilateral organizations and financial authority. Bokarev stated that MinFin manages assistance channeled through the WB, International Monetary Fund, and regional development banks, while MFA collaborates with UN agencies. He also commented that it was quite clear most GOR assistance would go through multilateral channels. Both ministries have geographically prioritized the CIS, within which MFA primarily limits its efforts. However, Bokarev noted MinFin had also targeted sub-Saharan Africa and remained open to other potential areas of cooperation, including SE Asia. In general, MinFin oversees ODA for all countries outside the CIS. (Note: Last week, Dmitri Maksymichev, MFA Deputy Director of the Department for International Organizations, told us the MFA had targeted CIS countries and others with which Russia had historical ties, including Cuba, but that it was too early to make concrete statements about final priorities, target regions, or division of responsibilities. ROS Deputy Director Morozov separately commented that while ROS was focused on Moldova, Armenia, Kyrgyzstan, and Tajikistan, it was interested in non-CIS countries as well, including Afghanistan. End Note.) ¶8. (C) In the past two years, MinFin has made significant progress in developing its multilateral assistance programming in cooperation with established development agencies, including the WB and UKAid (formerly DfID). This summer, Klaus Rohland, WB Moscow Director, told us Russia had committed USD 32 million to improving the quality of basic education through a new five-year program targeting low-income countries. Russia also created a USD 15 million financial literacy program through the WB. These efforts have facilitated the expansion of GOR foreign assistance in Angola, Ethiopia, Mozambique, Zambia, Tajikistan, Kyrgyzstan, and Vietnam. Rohland commented that Russia did not seek to limit its assistance to individual trust funds and often participated in joint efforts with other countries. Although open to collaboration with all agencies, UKAid has also worked primarily with MinFin because it was one of the first GOR agencies to demonstrate interest in UKAid's initiatives. Current UK-GOR programs target public administration reform and building Russia's capacity as a donor. ¶9. (C) Despite the leading role played by MinFin, Deputy Foreign Minister Yakovlev directed several donors, including UNDP and USAID, to work with ROS as the GOR's vehicle for expanding bilateral assistance. UNDP committed USD 500,000 to develop ROS's ODA capacity. ROS will shortly sign an MOU with UNDP regarding this effort, which will also incorporate possible joint projects. -------------- -------------- HEALTH AND EMERGENCY MINISTRIES EFFECTIVE IN THEIR FIELDS -------------- -------------- MOSCOW 00002712 003 OF 003 ¶10. (C) MoHSD and EMERCOM continue to develop assistance programming within their individual sectors. Under the Presidential Bratislava Initiative, U.S.-GOR joint efforts to combat HIV/AIDS in Africa achieved notable success. In collaboration with UNDP, Rospotrebnadzor is undertaking a project to develop a regional HIV/AIDS response program in the CIS. EMERCOM, which conducted relief operations exceeding USD 100 million in Tajikistan, Armenia, Ethiopia, Kenya, Bangladesh, Somalia, Afghanistan, and China in 2008, also has agreements to provide the UN High Commission for Refugees with transportation services and to procure and transport food commodities for the World Food Program. During a March meeting of the U.S.-Russia Joint Committee on Cooperation in Emergency Management and Disaster Response, Yuri Brazhnikov, EMERCOM International Activities Department Head stated his interest in engaging with the United States on best practices, joint training, and improving coordination in third countries on disaster response and humanitarian activities (see reftel B). A planned joint USAID-FEMA conference to be held in Moscow in December will further EMERCOM's knowledge of best practices in international disaster response. -------------- COMMENT -------------- ¶11. (C) At this time, MinFin has more firmly established its role in the GOR's emerging ODA program, while MFA lacks both the resources and direction to pursue bilateral programming in the near future. MinFin's multilateral approach is also likely to maximize the outcomes of Russian foreign assistance for its beneficiaries and reduce the potential for corruption and misuse of funds inherent in any new GOR acquisition process. Although joint projects with ROS might be premature given its limited capacity, continued bilateral cooperation with individual ministries in their areas of expertise -- whether joint HIV/AIDS programming with MoHSD in the CIS or partnership with the Ministry of Transportation on infrastructure projects in Afghanistan -- presents an opportunity for building on existing cooperation in areas of mutual interest. End Comment. -------------- ACTION REQUEST -------------- ¶12. (C) USAID has been in dialogue with ROS regarding the development of a joint program both to develop its capacity as well as to identify areas where the two agencies might explore collaborative projects, along the lines of the UNDP program. It is not clear how serious ROS should be taken at this point given Bokarev's comments about the limited role he sees for ROS outside the CIS and general pessimism about any significant near-term growth in the GOR's ODA budget. ROS is focused on securing USAID support to facilitate visits to gain exposure to U.S. development programs. They have requested that USAID facilitate travel for ROS staff to USAID missions in Armenia and some Central Asian countries to understand better USAID's management structure and programming processes (see septel). USAID believes it is too early in terms of ROS's capacity to undertake serious assistance programs anywhere, but that there is a role for us to play in assisting them to develop the internal capacity to contribute to the donor community. The question is how far to take our nascent collaboration with GOR agencies that wish to explore or undertake assistance programs in CIS countries, given the obvious potential complications inherent in providing U.S. support for GOR objectives in the region. In Post's view, working closely with GOR to improve its ODA capacity is important and worthy of support. Collaboration in the CIS is more problematic and merits review on a case-by-case basis. Post seeks Washington's guidance on this issue. End Request. Beyrle