US embassy cable - 05COLOMBO704

UNCLAS SECTION 01 OF 02 COLOMBO 000704 
 
SIPDIS 
 
DEPARTMENT FOR SA, SA/INS 
NSC FOR DORMANDY 
 
E.O. 12958: N/A 
TAGS: EAID, ECON, PREL, MV, Maldives, Tsunami 
SUBJECT: MALDIVES: GOVERNMENT FUND EFFECTIVE MECHANISM FOR 
USG TSUNAMI RELIEF ASSISTANCE 
 
REF: COLOMBO 677 
 
1.  Summary:  During Ambassador Lunstead's April 7 meetings 
with Maldivian officials, several details regarding tsunami 
assistance funding in Maldives emerged.  The government's 
National Fund and the UNDP are the two major funding 
mechanisms available for USG aid.  The National Fund appears 
well organized, with financial officials emphasizing their 
willingness to work with individual donors on specific 
conditionalities and monitoring requirements.  The UNDP also 
has well-developed rehabilitation plans and is working in 
conjunction with the government and the National Fund to 
ensure programs are fully funded and implemented.  After our 
discussions with the government, the National Fund looks to 
be an effective vehicle for USG assistance.  End Summary. 
 
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Limited assistance options 
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2.  In separate meetings with Government of Republic of 
Maldives (GORM) and UNDP officials, the following points 
regarding funding options for Maldives became clear: 
 
-- USG assistance can be directed to the GORM's National Fund 
(formerly Trust Fund), with earmarks and other conditions; 
-- USG assistance can be provided to UNDP/Maldives; 
-- Other UN agencies, e.g. UNICEF, and international Red 
Cross organizations and the International Federation of the 
Red Cross are oversubscribed; and 
-- No other international NGOs have long-term programs in 
Maldives. 
 
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Assistance through the government fund 
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3.  During his meeting with the Ambassador, Finance Minister 
Mohamed Jaleel underscored the flexibility and accountability 
aspects of the government's National Fund.  For example, 
Jaleel said, GORM officials worked with Japanese government 
officials to establish specific conditions and earmarks for a 
Japanese donation to GORM's fund.  He noted that the 
oversight board for the National Fund was not considered a 
"trustee," because board members would be in a supervisory 
position only, not authorized to make decisions on where or 
how the money is spent.  (Note:  The ADB is contributing its 
assistance through the GORM's National Fund, but it is not 
clear whether there will be earmarks or conditions on the 
donation.) 
 
4.  Although the GORM is only now finalizing a Public Finance 
Responsibility bill, Jaleel emphasized that the Fund was 
already operating under the guidelines the bill would 
recommend.  He also said that operating principles for the 
National Fund were in accord with UN standards for best 
practices and that the Fund would have both internal and 
external auditors. 
 
5.  Explaining that the government was also concerned with 
the equitable use of relief funds, Riluwan Shareef, Executive 
Director at the Finance Ministry, said that his colleagues 
regularly analyze matrices that illustrate relief financing 
and programs, by sector, to identify any gaps in aid 
distribution.  Shareef added he would engage with UNDP to 
increase government capacity for managing the relief work. 
 
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Assistance through UNDP 
----------------------- 
 
6.  Ambassador met with Patrice Coeur-Bizot, UNDP Resident 
Representative.  Coeur-Bizot said that separate from other UN 
agencies, which are oversubscribed for tsunami assistance, 
UNDP is pursuing five tsunami redevelopment programs, which 
are not yet fully funded.  As a stand-alone program, one is 
designed to provide coordination and support to enable 
Maldivian agencies to strengthen capacity in managing 
assistance funds and government redevelopment programs.  A 
second program is to help the GORM in the area of disaster 
risk management, including the development of an internal 
warning system. 
 
7.  The remaining three programs -- shelter, livelihood, and 
infrastructure -- have been combined under the "Adopt an 
Island" initiative.  The program is being marketed to both 
public and private sectors, with two funding modalities: 
through UNDP or directly as an earmark to the GORM's National 
Fund.  UNDP is working with two implementing methods, one in 
which UNDP subcontracts the work, the second in which the 
GORM identifies sites for a specific project.  UNDP officials 
are welcoming both cash and in-kind contributions for the 
Adopt an Island initiative.  For example, with one recent 
"adoption," the local Banyan Tree resort offered its workers 
and laborers to rebuild homes on a nearby inhabited island 
and UNDP provided the materials and regular monitoring of the 
site.  Ninety-five percent of the homes on the residential 
island have been rebuilt.  In a separate "adoption," the 
government of Turkey provided assistance to the National 
Fund, earmarked for a rebuilding project identified in 
conjunction with the GORM and UNDP. 
 
8.  Ambassador asked Coeur-Bizot if he was concerned about 
possible involuntary relocation, given the GORM's plan to 
relocate many residents to "safe islands."  Coeur-Bizot said 
that he was alert to the issue and was bringing in a 
relocation officer to deal specifically with that issue. 
 
9.  Coeur-Bizot said that a team of auditors from 
Deloitte-Touche was coming the following week to review the 
UN's operations and financial handling.  By default, this 
would also involve some review of GORM financial management, 
he added. 
 
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Comment 
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10.  After continuous and extensive discussions with the 
government, the National Fund looks to be an effective 
vehicle for additional USG assistance.  Government officials 
understand the high visibility of the Fund and the high 
importance of guaranteeing that the aid is managed in a 
transparent and accountable manner.  They are willing to work 
with donors like the U.S. to meet any particular needs they 
may have.  The government feels confident in its ability to 
make the fund successful in financing equitable 
redevelopment.  After discussions with government officials, 
from President Gayoom to the Finance Minister, the Embassy is 
also confident that USG supplemental tsunami reconstruction 
assistance can be directed to the Maldivian Government's 
National Fund.  End Comment. 
 
LUNSTEAD