US embassy cable - 05OTTAWA2363

C O N F I D E N T I A L OTTAWA 002363 
 
SIPDIS 
 
NOFORN 
 
DEPARTMENT FOR EB/IFD, EB/OMA, WHA/EPSC, AND WHA/CAN 
STATE PASS FEDERAL RESERVE BANK FOR CHUGH 
STATE PASS SEC FOR JACOBS 
TREASURY FOR DAVID NAGOSKI 
PARIS ALSO FOR USOECD 
 
E.O. 12958: DECL: 01/07/2015 
TAGS: EFIN, EAID, CA, UK 
SUBJECT: UK'S IMMUNIZATION FINANCE PROJECT:  VIEW FROM THE 
TRENCHES AT FINANCE CANADA 
 
REF: A. LONDON 6412 
 
     B. OTTAWA 324 
     C. OTTAWA 35 
 
Classified By: Classified by Wendy Moore, Economics Counselor, Ottawa. 
 Reason:  1.4(b) and (d). 
 
1. (C/noforn) An official at Finance Canada who works closely 
on international finance and development said he finds the 
UK's IFFm proposal "personally offensive" and the EuroStat 
finding does not change that view.  While admitting that 
there are niches within the GOC with different views, those 
at Finance who work on fiscal and development issues have 
serious problems with the inefficiencies and constraints 
inherent in the proposal.  Stating that if a program, such as 
immunization, is good, donors should target that program 
directly in current spending.  Bringing in private sector 
financial instituions just adds to the cost of financing 
projects (because governments can raise funds directly more 
cheaply than can the private sector).  The accounting sleight 
of hand involved in contorted fundraising and the constraints 
on future spending that result from "buy now, pay later" 
programs are a serious concern.  (Refs B and C described 
Canada's reservations about the International Finance 
Facility.) 
 
2.  (C/noforn)  Our contact, referring to the August 3 
Financial Times article (Novel UK funding for vaccines is 
approved) expressed surprise that Canada was grouped with 
Japan and Germany as having "deep reservations," rather than 
with the US in outright refusal to join the scheme.  He said 
that although opposition to the IFF is pretty solid at the 
working level, it may be diluted as position papers work 
their way up through the system.  He said he is very pleased 
that the U.S. takes a "common sense position," which makes it 
easier for Canada. 
 
3.  (C/noforn)  There are,however pockets of support for the 
IFF in the GOC.  A contact at the Canadian International 
Development Agency who has, in the past, expressed interest 
in and enthusiasm for the IFF, said most in the GOC were 
caught by surprise by Eurostat's quick action.   The GOC's 
official position remains that booking such commitments under 
accrual accounting is a real problem, but not impossible. She 
noted they will probably wait for a more substantive UK 
response (money on the table) before beginning serious work 
on a GOC response. 
 
4.  (SBU)  Comment:  Our sense is that the GOC is avoiding a 
public hardline position on IFF but that when financial 
commitments need to be made common sense and the economists 
at Finance will prevail.  End comment. 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
WILKINS