ENDING IRFFI: REPORT ON THE 8TH IRFFI DONORS

UNCLAS SECTION 01 OF 02 ROME 000302 SIPDIS PLEASE PASS TO USAID E.O. 12958: N/A TAGS: EAID ECON IT IZ DA PGOV PREL SUBJECT: ENDING IRFFI: REPORT ON THE 8TH IRFFI DONORS COMMITTEE MEETING, FEBRUARY 18, NAPLES REF: A. STATE 13703 ¶B. 08 BAGHDAD 2162 ROME 00000302 001.2 OF 002 ¶1. (U) Summary: The International Reconstruction Fund Facility for Iraq (IRFFI) Donors Committee discussed the closure of the donor facility and procedures for wrapping-up its project planning and commitment processes by the end of 2010 at its Eighth Donors Committee (DC) meeting that was held in Naples, February 18. The donors voted to extend the project completion and funds disbursement date that will terminate funding for IRFFI projects no later than December 31, 2013. An independent report of IRFFI's performance from 2004 to 2007 was delivered that outlined IRFFI's successes and failures during the time covered. This SCANTEAM report is an excellent lessons-learned resource for future multi-donor trust funds in post-conflict environments. Danish Ambassador to Baghdad Mikael Winther was elected the new IRFFI chair. End summary. ¶2. (U) The IRFFI is comprised of two Iraq Trust Funds (ITFs),which are managed respectively by the United Nations Development Group (UNDG) and the World Bank (WB). The UNDG ITF has received a total of USD 1.33 billion from donors and has accrued roughly USD 50 million in interest earnings. It has approved a total of 158 joint projects valued at USD 1.22 billion, leaving a total of about USD 160 million to be committed to new projects. The WB ITF has received a total of USD 494 million in deposits and USD 74 million in investment income for a total of about USD 569 million. The WB ITF has obligated a total of USD 481 million and is in discussions with Iraqi ministries to commit all but USD 18 million of what is currently uncommitted. The WB ITF is planning on using its accrued investment income to support successful projects that require additional funds and to potentially undertake small, technical assistance projects. ¶3. (U) Donor Committee members voted to change the termination date of the IRFFI. The cut-off dates for new donor contributions for the WB and UNDG respectively are December 31, 2008 and June 30, 2009. The ITFs will not approve any new projects more than 6 months after those dates. No new project commitments will be made after December 31, 2010. Any remaining funds will be set aside to pay for final close-out costs and possible small advisory contracts, administration fees, and small-scale support to projects that performed well. The WB will terminate its ITF on December 31, 2013 and return any remaining funds on a pro-rata basis to donors. Speaking on behalf of the WB, Jane Sansbury said that projects for banking reform, public financial management, and education sector reform, if approved in April, would require 4-4.5 years for full disbursement, necessitating an end date not earlier than December of 2013. Any remaining UN funds will be deposited in the UN's general Multilateral Donor Trust Fund and the United Nations Development Fund will become the administering agent for those funds. The utilization of remaining UN funds, if any, will be decided in consultation with Iraq and the other major donors and will support activities now overseen by the United Nations Assistance Mission to Iraq (UNAMI). ¶4. (U) The Donors Committee received a comprehensive report on the conduct of the IRFFI from 2004 to 2007, written by SCANTEAM, a Norwegian consulting firm that specializes in evaluating the performance of multi-donor trust funds. This independent assessment gave generally favorable ratings for the appropriateness, efficiency and effectiveness of the IRFFI, finding that the IRFFI projects contributed tangibly to improving the lives of the people of Iraq. Based on a representative sampling of projects SCANTEAM found no evidence of systematic corruption, but did cite "uneven" results on UN and WB projects. The report also outlined shortfalls and provides an excellent "lessons-learned" on administering multi-donor trust fund in post-conflict environments. ¶5. (U) The DC received a report prepared by the Executive Director of Iraq's Strategic Review Board (ISRB) which provided insights into the challenges of improving institutional capacity development and enhancing the role of the private sector. The DC did not address an agenda item about the International Compact with Iraq, prompting the Japanese representative, supported by others, to pointedly ask for a meeting of the ICI International Consultative Group to be held, as called for in prior ICI and IRFFI meetings. ¶6. (U) At the meeting's conclusion Denmark (Ambassador ROME 00000302 002.2 OF 002 Mikael Winther) was elected to replace Italy (Ambassador Gianludovico De Martino) as Chairman of the IRFFI Donors Committee. In a formal statement, Iraqi delegation Head Deputy Minister of Planning and Development Cooperation Dr. Mehdi Ismail Dr. Ismail advised that he would duly notify his government of this outcome. Minister of Planning and Development Cooperation Dr. Ali Baban cancelled his trip to Naples the morning before the Conference. ¶7. (U) The U.S. delegation was led by Ambassador Marc Wall, Coordinator for Economic Transition in Iraq, Embassy Baghdad. Embassy Baghdad has cleared on this message. DIBBLE