US embassy cable - 05RANGOON605

UNCLAS SECTION 01 OF 02 RANGOON 000605 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP AND INL; DEA FOR OF, OFF; 
USPACOM FOR FPA 
 
E.O. 12958: N/A 
TAGS: SNAR, KCRM, PREL, EAGR, BM 
SUBJECT: BURMA: UNODC CASH FLOW WOES 
 
REF: A. RANGOON 148 
     B. RANGOON 138 AND PREVIOUS 
 
1. (SBU) Summary: UNODC-Burma says it is strapped for funding 
and may need to reduce counterdrug activities as of August. 
Prospects for 2006 funding are solid, but UNODC is seeking an 
additional $400,000 for its next illicit crop survey.  We 
recommend support for several UNODC projects in FY2006 to 
address our counternarcotics objectives in Burma and to 
ensure continued U.S. influence in UNODC programming.  The 
UNODC's crop survey, in particular, has taken on added 
importance following the cancellation this year, and 
uncertainty for next year, of the annual joint U.S.-Burma 
opium yield survey.  End Summary. 
 
2. (U) Rangoon's mini-Dublin Group convened on May 12 to 
discuss the group's annual report as well as related 
counternarcotics activities.  Representatives from UNODC and 
from the embassies of Australia (current chair), France, 
Germany, Italy, Japan, the U.K., and the United States 
participated and several IO/NGO representatives made special 
presentations. 
 
BACK TO FULL STRENGTH IN WA TERRITORY.... 
 
3. (U) UNODC representative Jean-Luc Lemahieu gave an update 
on the nascent Kokang and Wa Initiative (KOWI) and observed 
that donor funding was "solid" for Phase I, primarily a food 
and humanitarian response for former poppy farmers.  He noted 
concerns that farmers could evolve from "poppy dependency to 
aid dependency" and UNODC therefore was focusing on 
developing Phases II and III which will place greater 
emphasis on sustainable alternative development. 
 
4. (U) Lemahieu recapped that, following the unsealing of 
U.S. federal court indictments against UWSA leadership, GOB 
officials had required that UNODC temporarily withdraw staff 
from Wa territory (ref B).  This resulted, he said, in a 
ten-day suspension in February of UNODC programs.  However, 
local-hire staff quickly returned and resumed programs.  The 
GOB permitted expatriate staff to return to Wa territory in 
early April and, he said, UNODC and its NGO partners are now 
"back to full strength" in the field. 
 
....BUT PERHAPS NOT FOR LONG 
 
5. (U) According to Lemahieu, UNODC is severely strapped for 
funding.  The Burma program, he said, will run out of "cash 
flow" in August and, in the absence of new funds to cover a 
$400,000 shortfall, UNODC will not be able to facilitate all 
of its field programs.  For the period August-December, 
Lemahieu said he would only be able to operate with a limited 
staff and greatly reduced activities. 
 
6. (U) Lemahieu added that the current UNODC poppy survey is 
not in jeopardy (although he needs $400,000 for next year) 
and that the overall funding prospects for 2006 "look much 
better," including potential Swedish support ($4.5 million) 
for a joint poverty reduction program with UNDP as well as UN 
security funds from Japan that would allow a continued UNODC 
presence in Wa territory beyond the UWSA's 2005 ban on poppy 
cultivation.  Lemahieu concluded that UNODC plans to 
transition out of its Wa programs in January 2008, handing 
over the leading UN role in the region to UNDP. 
 
7. (U) A WFP representative reviewed his organization's 
one-year emergency food program for former poppy farmers in 
northern Shan State.  He said that if the UNODC-led KOWI 
program succeeds, the food emergency should be less severe in 
coming years, but that food insecurity would continue.  In 
the face of GOB restrictions on the transport of rice into 
the region, and in the absence of serious economic reform, 
the market response to food needs remains highly inadequate. 
 
USG ADJUSTMENTS 
 
8. (U) Emboff described ongoing USG support for counter-drug 
programs and general U.S. recognition of the success of 
alternative developments projects.  He informed group members 
that, following the indictments of UWSA leaders, the U.S. had 
reprogrammed $432,685 from UNODC's Wa project to UNODC 
general purpose funds (ref A).  This action, he noted, was a 
conclusion that the indictments rendered financial support in 
the region untenable and was not a negative comment on UNODC 
programs.  In fact, the reprogrammed funds remained available 
for other UNODC programs in Burma and $133,700 had already 
been obligated to cover a shortfall in UNODC's illicit crop 
monitoring project. 
COMMENT: VALUE ADDED 
 
9. (SBU)  The withdrawal of U.S. support for the UNODC's Wa 
Project was appropriate; however, we believe there is high 
value in several of UNODC's other Burma programs.  U.S. 
support in FY2006 for UNODC's demand reduction project 
(MYA/E76) and illicit crop monitoring (MYA/G43) would in 
particular address our overall counternarcotics objectives in 
Burma and ensure that we continue to be a donor with 
substantial influence in UNODC programming.  The UNODC's crop 
monitoring project has taken on added importance following 
the cancellation this year of the joint U.S.-Burma opium 
yield survey (due to a lack of GOB cooperation).  The results 
of the 2006 UN poppy survey will be essential in evaluating 
the effectiveness of the Wa poppy ban, scheduled to go into 
effect next month.  End Comment. 
 
Martinez