NETHERLANDS: STATUS OF ASSISTANCE TO PAKISTAN

C O N F I D E N T I A L SECTION 01 OF 02 THE HAGUE 000357 SIPDIS E.O. 12958: DECL: 06/19/2019 TAGS: EAID EFIN PHUM PREF PK NL SUBJECT: NETHERLANDS: STATUS OF ASSISTANCE TO PAKISTAN REF: A. (A) STATE 61213 ¶B. (B) STATE 57298 ¶C. (C) THE HAGUE 313 Classified By: Economic Deputy Shawn K. Gray for reasons 1.5(b,d) ¶1. (SBU) Summary: The Dutch Ministry of Foreign Affairs (MFA) confirmed that the Government of the Netherlands (GONL) pledged 86.7 million euro (USD 120 million) at the April 17 Tokyo Donor Conference, all of which will be channeled through the Dutch Embassy in Islamabad. The GONL has also pledged a total of 3.5 million euro (USD 4.8 million) since December 2008 to UNHCR and/or the International Red Cross as part of the UN,s Pakistan Humanitarian Response Plan. The GONL does not provide budgetary or other support directly to the Government of Pakistan, and the MFA maintains a low profile regarding its assistance programs there. End summary. -------------- TOKYO PLEDGE -------------- ¶2. (SBU) Emboffs met June 18 with Mr. Hidde Baars, Senior Pakistan Policy Officer at the Dutch MFA, to discuss the status of Dutch assistance to Pakistan. Regarding the 86.7 million euro pledge in Tokyo, Baars explained that this assistance is for the period 2009-2011, and all of these funds will be channeled through the Dutch Embassy in Islamabad. (Note: The bulk of Dutch development assistance is administered through their embassies, which contract with local NGOs on education, health, human rights, and other projects that meet the GONL,s assistance goals. See Ref C for additional detail on how the GONL structures its foreign assistance. End note.) ¶3. (SBU) The GONL originally had budgeted 112 million euro for Pakistan assistance from 2009-2011 but had to reduce that amount by about one-quarter (to 86.7 million euro) due to the economic slowdown and recession in the Netherlands. The current coalition government has continued the GONL practice of allocating 0.8 percent of Dutch GDP to foreign assistance, which normally amounts to about 5 billion euro (USD 7 billion) annually. However, as GDP has begun to shrink with the onset of the recession in 2009, so too has the foreign assistance budget, which the MFA expects to cut by about 400 million euro (USD 555 million) this year (ref C). The MFA has not made final decisions about where these cuts will be made, but the Dutch consider Pakistan to be a priority country for security and humanitarian assistance, and to date the MFA has no plans to target its Pakistan programs for budget cuts. ¶4. (SBU) Minister for Development Cooperation Bert Koenders has identified human rights, water, and education as key areas of focus for Dutch assistance to Pakistan; these are areas where Koenders believes the Netherlands, as a small country, can add real value among the myriad of donor activities in-country. Baars noted that the Dutch Embassy in Islamabad had been focusing on education projects in the Northwest Frontier Province (NWFP),including a joint project with the British and Australian governments. However, once the agreement to implement sharia law in the region came into effect, the GONL deemed it too risky to continue its education projects there. It is now revamping its plans, including possible new education programs in the camps throughout Pakistan for internally displaced persons (IDPs). ¶5. (SBU) Baars noted the difficulties faced by the Dutch Embassy in Islamabad: The GONL is providing a substantial fund from which to draw, but it is difficult for the small embassy -- with only 17 Dutch officials -- to vet local NGOs, identify worthwhile projects, and supervise their execution. Qidentify worthwhile projects, and supervise their execution. Moreover, NGOs now find it almost impossible to operate in the NWFP, where the Government of Pakistan has virtually no influence and conditions are highly unsafe. Baars added that the Dutch embassy is beginning its summer transfer season, which will further impede project selection and implementation. Given these circumstances, Baars expressed concern that the GONL would actually be able to spend its entire Tokyo pledge by 2011. He noted that the GONL was interested in the idea expressed at the Tokyo Donor Conference of a World Bank "trust fund" into which donors could place their unused pledge funds, as the bank might be more successful than individual donors at managing a wide range of assistance projects on the ground. ¶6. (SBU) In addition to its bilateral assistance to Pakistan, the GONL contributes 40 million euro (USD 55 million) annually to the UN,s Central Emergency Response Fund to provide emergency relief to areas deemed by the UN to be in critical need. Baars noted that about 16 million euro (USD THE HAGUE 00000357 002 OF 002 22 million) of the GONL,s 2008 contribution in 2008 went to UNHCR for projects in Pakistan. -------------- PHRP PLEDGE -------------- ¶7. (SBU) The GONL has pledged a total of 3.5 million euro (USD 4.8 million) since December 2008 to UNHCR and/or the International Red Cross (IRC) as part of the UN,s Pakistan Humanitarian Response Plan (PHRP). Baars explained that in response to the PHRP,s calls for donations, the GONL pledged 1.5 million euro (USD 2 million) in December 2008 and 1.0 million euro (USD 1.4 million) in May 2009. When the PHRP issued a revised call for donations in response to the deteriorating situation in the NWFP, Minister Koenders pledged another 1.0 million euro on June 12, 2009. According to Baars, the first two donations in December and May were directed to both UNHCR and the IRC; the third donation in June was directed only to the IRC for the express purpose of providing relief to the IDPs from the NWFP. -------------- -------------- DUTCH SENSITIVITIES REGARDING DEVELOPMENT ASSISTANCE -------------- -------------- ¶8. (C) The GONL must contend with both internal and external sensitivities regarding aid to Pakistan. Externally, the GONL remains loathe to provide budgetary support or other types of monetary assistance directly to the Government of Pakistan; Baars cited concerns about the GOP,s ability to provide proper oversight of the funds, as well as its effective absence from the NWFP where the GONL would like to focus more of its resources. The GONL suspended all Dutch assistance to Pakistan and withdrew its Islamabad embassy staff in November 2007 after then-President Musharraf declared a state of emergency. By February 2008, the GONL had decided to reinstate its core human rights and good governance projects; it slowly reintroduced other programs throughout the year, including the pledges to the PHRP beginning in late 2008. However, none of this assistance is channeled through the GOP. Instead, the GONL, like many donors, provides its assistance through the UN, IRC, and other international organizations, as well as bilaterally through its embassy to local NGOs. ¶9. (C) Internally, Baars explained that Minister Koenders chooses to keep a low profile regarding GONL assistance to Pakistan. With the onset of the recession in 2009, bank bailouts, and stimulus packages, the GONL,s budget is under increasing pressure. Some opposition leaders have demanded that the current coalition government find ways to cut spending now, asserting that foreign development assistance is a good place to start. However, the Dutch coalition government thus far has resisted calls to cut ODA (ref C). With the advent of sharia law, radical madrassas, Taliban resurgence, and collapse of security in the NWFP, however, critics have tougher questions for the GONL about the utility of continued investment into this and other regions of Pakistan. Minister Koenders has therefore chosen not to focus substantial public attention on the GONL,s Pakistan program, preferring instead a quieter approach that is less likely to subject the program to criticism from skeptical opposition members. That said, the minister and the GONL more broadly remain committed to bolstering security, human rights, and education in Pakistan, and the GONL currently has no plans to scale back its assistance in-country. GALLAGHER