US embassy cable - 05PRETORIA4358

UNCLAS SECTION 01 OF 02 PRETORIA 004358 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR AF/S (MTABLER-STONE) 
DEPT PLEASE PASS TO USAID (AFR/SA/LDOBBINS AND ELOKEN) 
 
E.O. 12958: N/A 
TAGS: EAID, EFIN, EINV, ECON, PREL, PGOV, SNAR, SF 
SUBJECT:  SOUTH AFRICA: SAG ENCOURAGES MORE COLLABORATION 
ON USG ASSISTANCE 
 
(U) This cable is Sensitive But Unclassified.  Not for 
Internet distribution. 
 
1. (SBU) Summary. South Africa's National Treasury 
conducted a review of U.S. assistance to ensure that all 
development assistance is South African-led and fully 
aligned with its development priorities.  In checking its 
findings with U.S. agencies at post, National Treasury 
officials appreciated discovering the depth of U.S. 
development assistance to South Africa beyond that of 
USAID.  The officials recommended continuing a dialogue 
with U.S. agencies that would include working with USAID 
on a revised joint strategy and including other U.S. 
agencies in National Treasury's annual discussions with 
USAID.  End summary. 
 
Context of the Meeting 
---------------------- 
 
2. (U) In response to a request from the South African 
National Treasury, CDA Teitelbaum hosted a meeting for 
National Treasury's Directorate of the International 
Development Co-operation (IDC) at Embassy Pretoria on 
September 16.  National Treasury wanted to check its 
findings from a recent review of U.S. assistance.  USAID 
organized the meeting and invited all U.S. agencies who 
provide assistance to South Africa.  Leading the SAG 
delegation was National Treasury's Chief Director for 
International Development Cooperation (IDC) Shaheed 
Rajie.  Accompanying him were IDC Director Elaine Venter, 
IDC Program Manager Paula van Dyk, and Department of 
Foreign Affairs USA Directorate officials Angus September 
and Thebe Rammutle. 
 
3. (U) According to material provided by National 
Treasury officials, the IDC Directorate was responsible 
for assuring the "efficient and effective management" of 
Official Development Assistance (ODA) and mobilizing all 
possible development assistance resources in pursuit of 
South African Government (SAG) priorities.  These 
priorities included alleviating poverty, accelerating 
economic growth, creating jobs, strengthening human 
resources, ensuring the security of its citizens, 
transforming government to reflect the people-centered 
nature of its democracy, and improving regional 
cooperation.  The IDC applied a broader definition of ODA 
than did the OECD; included were grants, technical 
cooperation, concessional loans, and official assistance 
to non-state actors (e.g., credit guarantees to the South 
Africa Department of Trade and Industry). 
 
South Africa's Review 
--------------------- 
 
4. (SBU) The primary strategic objective of National 
Treasury's review was to ensure that all development 
assistance was South African-led and fully aligned with 
SAG development priorities.  Essential elements of 
National Treasury's review consisted of assessing the 
absolute level of ODA provided, any conditions that were 
tied to the release of ODA, the long-term effect of short- 
term ODA, and "power imbalances" that might exist between 
the donors and recipients.  Rajie explained that the 
goals of South African-led development partnerships were 
to ensure that development assistance was predictable, 
transparent, and adhered to strong criteria to ensure its 
optimal use.  According to Rajie, an example of a good 
partnership was the "trilateral cooperation" among South 
Africa the United States in assisting the DRC, Burundi, 
Sudan, and Ivory Coast. 
 
5. (SBU) Noting South Africa's new found Upper Middle 
Income Status (2006 World Bank Development Report), Rajie 
wondered whether USAID planned to exit the country, 
despite the continuing challenges that South Africa faced 
in overcoming a legacy of social inequality.  He also 
noted that the U.S. budget process did not allow for long- 
term commitments without, as he put it, "the catch 
phrase: subject to availability of funds." 
 
6. (SBU) To ensure that U.S. assistance was in line with 
SAG objectives, IDC Director Venter stressed that 
National Treasury needed to know how and where the money 
was spent.  This would allow National Treasury to fully 
account for U.S. assistance and fully recognize the U.S. 
contribution.  Currently, IDC could only account for $69 
million of the $136 million in U.S. ODA estimated for FY 
2005. [Note: Post estimates that USG ODA to South Africa 
was closer to $187 million for FY2005.  IDC appears to 
have excluded $50 million in PEPFAR funds.  End Note.] 
Venter said that the SAG wanted to draft a broad 
bilateral strategy document that incorporated all U.S. 
assistance for CY2006. 
 
Our Response 
------------ 
 
7. (SBU) In response, CDA Teitelbaum characterized the 
uniqueness of the U.S. economy and international 
cooperation.  He pointed out that U.S. assistance was far 
greater than the numbers captured by ODA, which usually 
referred only to specific USAID programs.  U.S. 
assistance also included other USG agency programs (not 
classified as ODA under OECD definitions), and private 
sector contributions to non-profit organizations.  He 
elaborated on the global benefits of U.S. trade and 
investment, individual remittances, as well as trade 
preference programs such as the African Growth and 
Opportunity Act. 
 
Results and Next Steps 
---------------------- 
 
8. (SBU) Rajie and his team appreciated discovering the 
depth of U.S. development assistance to South Africa 
beyond that of USAID.  While at the beginning of the 
meeting Rajie noted that U.S. ODA fell far short of the 
"internationally-agreed" level of 0.7% of GDP, at the end 
he agreed that the United States provided far more 
development assistance than would be categorized under 
the OECD's definition of ODA.  Rajie recommended that the 
United States and South Africa continue to discuss 
development assistance programs and that the IDC continue 
working with USAID on a revised joint strategy to be 
completed by December 2005.  He also recommended that 
other U.S. agencies participate in annual USAID 
discussions with the IDC to ensure that the SAG grasped 
the extent of USG contributions to South African 
development. 
 
TEITELBAUM