SCENESETTER FOR ACTING ADMINISTRATOR FULGHAM's OCTOBER

UNCLAS SECTION 01 OF 03 STOCKHOLM 000660

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ETRD PREL IZ IR SW
SUBJECT: SCENESETTER FOR ACTING ADMINISTRATOR FULGHAM's OCTOBER
22-24 VISIT TO STOCKHOLM AND THE EUROPEAN DEVELOPMENT DAYS
TAGS: ETRD PREL IZ IR SW

STOCKHOLM 00000660 001.2 OF 003



1. (U) Summary and Introduction: The U.S. Embassy in Stockholm
warmly welcomes your visit to Sweden. The Government of Sweden is
focusing its EU Presidency on several global priorities, including
the financial crisis, climate change and development issues.
Bilateral US-Sweden relations are close and collaborative. Sweden
is the world's largest donor of development assistance measured as a
percentage of Gross National Income. Sweden devotes one percent of
its GNI to development cooperation, totaling $4.8 billion, of which
nearly $2 billion (45%) is devoted to Africa via multilateral
organization and Swedish bilateral aid program.


2. (SBU) In 2008, Sweden provided some $57.5 million to Afghanistan,
making the country the largest recipient of Swedish development
assistance in Asia. This number will increase by approximately 10%
each year through 2011. In addition, Sweden expects to provide
nearly $17.5 million in humanitarian assistance to Afghanistan in

2009. In your bilateral meetings with Aid Minister Carlsson and
SIDA Director General Nordstrom, we recommend you encourage Sweden
to expand its commitment to Afghanistan and consider doing more in
Pakistan. Your interlocutors are also likely to ask for greater
coordination between USG and GOS aid strategies. End Summary and
Introduction.

European Development Days
--------------


3. (U) Now in its fourth year, European Development Days (EDD) is
Europe's foremost annual platform for discussion in key areas of
governance, climate change, international finance, trade, food
security, water, energy, the role of the media and human and social
rights. Speakers this year include Fredrik Reinfeldt, Swedish Prime
Minister; Jos-Manuel Barroso, European Commission President; IMF
chief Dominique Strauss-Kahn; and leaders of the World Bank, Asian
Development Bank and African Development Bank. Amr Moussa,
Secretary General of the Arab League, will also be speaking, along
with UNDP administrator Hellen Clark, the Presidents of Liberia,
Sierra Leone, Maldives, Burkina Faso and Micronesia and the Prime
Ministers of Bangladesh, Kenya and Zimbabwe.

Swedish Development Assistance
--------------


4. (U) Sweden is the world's largest donor of development assistance
measured as a percentage of Gross National Income. Sweden devotes
one percent of its GNI to developing cooperation, totaling $4.8
billion, of which nearly $2 billion (45%) is devoted to Africa. In
addition, Sweden has one of the world's top ten aid programs in
terms of absolute numbers. In the 2010 budget bill, the GOS
proposes a budget for development assistance of continued one
percent of GNI in 2010. However, a reduction in real numbers of
Swedish development is expected as the downturn in the global
economy has had a negative impact on Swedish growth. As a result,
the development assistance budget will drop from $4.8 billion in
2009 to $4.5 billion in 2010.

Swedish Development Programs
--------------


5. (U) The Swedish International Development Cooperation Agency
(SIDA) is responsible for most of Sweden's development assistance.
SIDA reports to the Swedish Ministry for Foreign Affairs (MFA). The
Swedish Government sets the budget parameters for SIDA, but gives
the agency "free hands" to carry out its missions in accordance with
Swedish development policies. Of the $4.8 billion budgeted for
development cooperation, SIDA is responsible for approximately $2.4
billion. The rest is distributed through the Ministry for Foreign
Affairs via multilateral and bilateral programs.
Swedish Development Policies
--------------

6. (U) Swedish development policies are based on two pillars.
Firstly, that all policies should work toward the same goal of
sustainable development. Secondly, all development assistance should
work to create conditions for poor people to improve their living
conditions. Sweden has made clear that its overarching priorities
are democracy and human rights, environment and climate, and gender
equality and the role of women in development. Sweden is
prioritizing more tangible results in the cooperation assistance and
plans to bring to attention, and systemize the follow up of, results
against goals.


7. (U) Sweden believes that the recipient countries' own strategies
for reducing poverty should be the foundation for the efforts that
Sweden undertakes within the development cooperation area. Aid
should be governed by demand, and decisions on priorities and
efforts should, to a greater extent, be made in the poor countries
by the governments and the populations of the countries in question.


Geographic Distribution of Swedish Aid
--------------

STOCKHOLM 00000660 002.2 OF 003




8. (U) Most cooperation countries are located in Africa, south of
the Sahara, as this geographical area has the largest proportion of
poor people in the world. Moreover, the countries there are
furthest from reaching the Millennium goals. The top five African
recipients of Swedish aid in 2008 were; Tanzania ($105 million),
Mozambique ($102 million),Uganda ($54.6 million),Kenya ($53.6
million) and the Democratic Republic of Congo ($43.7 million).


9. (U) Sweden's military supports international efforts to stabilize
Africa. Until September 15 of this year, Sweden provided three Navy
vessels (two corvettes and a support ship) with a total of 152 crew
and maintenance personnel to protect ships carrying food and other
urgent supplies in the Gulf of Aden off Somalia. The EU recently
extended the mandate for Operation Atlanta until December 2010, and
Sweden is currently preparing legislation to extend its naval
mission there. Sweden has also increased its commitment to sending
support to conflict areas, where people are especially vulnerable.
Lack of democracy, human rights, peace and security make the
preconditions especially difficult for aid, but the need there is
also the greatest.

Afghanistan
--------------


10. (U) In 2008, Sweden provided some $57.5 million in bilateral
assistance to Afghanistan, making the country the largest recipient
of Swedish assistance in Asia and one of the largest in the world.
The most important sectors were as follows:
- Democracy, human rights and good governance,
- Education,
- Infrastructure (roads),health care, support for the physically
disabled and mine clearance,
- Humanitarian assistance. Sweden also provided an additional $22.5
million through grants to major international organizations, such as
the UN, EU and World Bank.


11. (U) Since the summer of 2007, Sweden has earmarked 15-20% of
total bilateral assistance funds to the four Northern provinces that
Sweden is responsible for (Balkh, Samangan, Jowzjan, Sar-e-Pul). In
the new Swedish strategy, this will increase to 20-25%, and the
number of civilian development advisers will rise from one to four.
In addition, in 2009 Sweden expects to provide nearly $17.5 million
in humanitarian assistance to Afghanistan.


12. (U) Aside from financial aid, Sweden assists Afghan efforts with
military assistance. There are currently about 450 troops in
Afghanistan and the forces are likely to increase to 500 by the end
of the year. The Swedes have donated a C-130 for use by ISAF HQ
command. Sweden has contributed two "Operation and Mentoring
Liaison Teams" (OMLTS),of which the second just arrived in
Afghanistan. The annual Afghanistan bill is currently making its
way through Parliament, and expectations are that Sweden will at
least maintain its current military commitment and increase its
development aid.


13. (SBU) In your bilateral meetings in Stockholm,, you may wish to
urge Sweden to consider expanding further its assistance activities
in Afghanistan and to broaden its miniscule program in Pakistan.
You may also wish to ask about what Sweden is doing as EU President
to guide EU efforts, including through its efforts to lead the 27
Member States in drafting a new Afghanistan-Pakistan strategy.

Recent Developments
--------------


14. (U) Sweden recently contributed $14.5 million to combat the food
crisis and the impact of the financial crisis in the poorest
countries. The GOS has given an additional grant to the
International Fund for Agricultural Development (IFAD),which is to
be used primarily to support small-scale agriculture in developing
countries. Up to 25% is to be used by IFAD, in cooperation with the
United Nations Food and Agriculture Organization (FAO),to pay for
technical expertise to support small-scale agricultural projects.


15. (U) Development Minister Carlsson recently told journalists she
was upset with the proposed voting changes in the World Bank. Sweden
is one of the largest contributors to the World Bank and is unhappy
to see its influence reduced. Carlsson has stated that someone
(Sweden) needs to be there to look after the poor countries of the
world.

Carlsson on Corruption in Aid Programs
--------------


16. (U) Earlier this year Carlsson approached Swedish media to speak
about the corruption scandal in Zambia. She did so, after being
concerned by the silence in Swedish media on the issue. At the
beginning of the summer, a corruption scandal was uncovered in the
Zambian Ministry of Health. An investigation carried out by the

STOCKHOLM 00000660 003.2 OF 003


Zambia Audit Office revealed that approximately $7.2 million had
been embezzled during the period January 2008 - 31 May 2009, $3.8
million of which had been embezzled from a "basket fund" to which
donors such as Holland, Canada and Sweden contribute. The remaining
money was embezzled from the Global Fund, and from funds in the
Zambian state budget. Sweden contributes to the Global Fund and the
state budget through its general budget support, thus Swedish funds
were also embezzled there. There are indications that
irregularities have existed since the early 2000s.


17. (U) The Zambian scandal caused Carlsson to rethink corruption
and aid in general, as she has been known for her "zero tolerance on
corruption." For example, Carlsson is not convinced that
development assistance per se never feeds corruption in the
environments in which it operates. She now believes that, in
today's world of development assistance, it is impossible to achieve
zero tolerance against corruption. The best we can do now, Carlsson
has said, is limit it.

Managing Corruption
--------------


18. (U) Sweden has now established processes for handling corruption
cases and set up an investigation team to look into any allegations
of corruption. SIDA's own anti-corruption regulation was revised in
December 2008 and is based on the approach to never accept, always
act and always inform when corruption is suspected. Early in 2007,
the Government had already tasked SIDA to report the measures taken
to prevent the occurrence of corruption in initiatives financed by
Swedish development assistance. In addition, the Swedish Agency for
Development Evaluation (Sadev) was instructed in July 2007 to carry
out an evaluation of the work done by the Ministry for Foreign
Affairs and SIDA to prevent corruption in connection with Swedish
funding in development cooperation.