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UNCLAS SECTION 01 OF 03 ISLAMABAD 002135 
 
SENSITIVE 
 
SIPDIS 
 
E.O.  12958:  N/A 
TAGS: PGOV EFIN ECON EINV PREL PK
SUBJECT: A WORLD BANK-LED CONSORTIUM FOR PAKISTAN'S AFGHAN BORDER 
REGION 
 
¶1. (U)  This is an action request, please see para 14. 
 
¶2. (SBU) Summary and Introduction:  Embassy recommends the 
establishment of a World Bank consortium to coordinate and expand 
donor activities focused on areas along Pakistan's border with 
Afghanistan.  Stabilization of this border area is vital to U.S. 
security interests in the region.  To state the obvious militants 
are launching cross-border attacks against U.S./Coalition forces in 
Afghanistan and fueling the growing "talibanization" of Pakistan. 
 
¶3. (SBU)  The needs of this isolated and developmentally neglected 
area are massive; it includes the Federally Administered Tribal 
Areas (FATA), the Northwest Frontier Province (NWFP) and Balochistan 
Province.  The U.S. has begun to implement a five year USD 750 
million development program for the FATA, but we cannot tackle the 
comprehensive challenges of this area alone. Our efforts at donor 
coordination have had, at best, minimal success. Existing donors 
note a need for increased resources, particularly for 
infrastructure.  Current government and NGO activities are 
unfocused, and security concerns make some potential donors 
reluctant to participate.  We need a mechanism to coordinate donor 
activities, including those of NATO, the UN and the G8.  We need to 
avoid duplicate activities, better elicit and leverage 
contributions, and give the Government of Pakistan a single outlet 
for donor coordination. 
 
¶4. (SBU)  Post believes that the World Bank is the most qualified 
institution to perform a donor coordination role, given its 
experience worldwide in managing donor coordination, as well as its 
staffing resources and project design expertise.  Post proposes that 
Washington approach the World Bank to request that it begin 
consultations to establish:  (1) a multi-donor consortium that would 
have dedicated staff to coordinate donor efforts and funding, and to 
encourage increased participation by donor countries; (2) a Project 
Unit (PU) with dedicated staff to identify, design and implement 
projects for the border areas as needed, with a particular focus on 
urgent priorities such as infrastructure; and (3) a mechanism such 
as a trust fund or other arrangement to allow donor countries who do 
not want to have a presence in the border region to contribute to 
the activities of the Project Unit.  End Summary and Introduction. 
 
UNCOORDINATED DONOR PROGRAMS 
---------------------------- 
 
¶5. (SBU) The region along Pakistan's border with Afghanistan 
provides safe haven for terrorists launching a growing number of 
cross-border attacks against U.S./coalition forces.  It also serves 
as a breeding ground for the spread of extremism and creeping 
"talibanization" of Pakistan's settled areas into the Northwest 
Frontier Province (NWFP) and Balochistan.  Success in countering 
terrorism and the insurgency in these border areas will require a 
long-term commitment and an infusion of resources, both monetary and 
staffing, to change the lives of Pakistani citizens and make the 
border areas inhospitable to terrorists. 
 
¶6. (SBU)  While the U.S., European Union, United Nations, NATO, G8 
and individual donor countries all want to achieve measurable 
results in the fight against extremism, none of us have succeeded in 
coordinating activities on the ground. Other donor countries want to 
contribute financially to these efforts but need a "cover" to do so 
since security concerns prevent many from deploying personnel in 
these precarious regions. 
 
¶7. (SBU)  Despite some coordination efforts, contributions to date 
remain unfocused.  The GOP held a border donor coordination meeting 
in Islamabad on the margins of the April 2007 Pakistan Development 
Forum and on the margins of the World Bank annual meetings in 
Singapore in 2006 and in Washington in 2007.  These meetings were 
largely held at U.S. insistence but resulted in neither GOP 
ownership of the issue nor greater donor synchronization. 
Pakistan's current fragile coalition government is incapable of 
undertaking this coordination effort.  As the militants steadily 
gain ground, we are losing precious time in this fight to win hearts 
and minds in the border areas. 
 
¶8. (SBU) The U.S. has made a down payment towards this fight with 
our five-year USD 750 million FATA Development Program (FDP), which 
focuses on increasing incomes, teaching employable skills, 
 
ISLAMABAD 00002135  002 OF 003 
 
 
revitalizing community infrastructure, supporting local commercial 
growth, and addressing critical primary health and basic education 
needs.  The FDP will address many of the soft economic needs of the 
border areas, particularly in the FATA, but it does not address the 
infrastructure or poverty alleviation needs of the broader border 
region, particularly the NWFP or Balochistan.  These areas also need 
soft assistance to provide livelihoods, skills development and 
literacy.  Only through the long-term process of improving the 
quality of life for residents of Pakistan's western frontier can we 
expect to stabilize the area. 
 
WORLD BANK DONOR CONSORTIUM 
--------------------------- 
 
¶9. (SBU) We need a mechanism to coordinate donor activities, 
including those of NATO, UN and the G8, to avoid duplicate 
activities, better leverage donor funds, and give the GOP a single 
outlet for donor coordination.  Given its staffing resources and 
project design expertise, Post believes that the World Bank is the 
most qualified institution to serve as the umbrella for coordinating 
the initiatives in Pakistan's border regions.  By serving as the 
principal liaison between the GOP and donors, the World Bank would 
ensure that contributions and program plans of the individual donors 
mesh.  The Consortium would be co-chaired by the World Bank and the 
Government of Pakistan. 
 
PROJECT UNIT 
------------ 
 
¶10. (SBU) The Bank could form and staff a project unit (PU) charged 
with developing, managing and implementing project designs for the 
border areas.  The PU would develop a regional strategy to guide its 
work, which would identify priorities for projects in the western 
border region.  We suggest that infrastructure would be one of the 
initial priorities of the PU because it is urgently required 
throughout the region.  Donors could choose to undertake project 
implementation themselves, or to provide funds to a joint funding 
mechanism (described below) for projects to be implemented through 
the PU. 
 
¶11. (SBU) Funding for the PU could be provided by each donor in the 
form of money and/or staff.  The PU would in turn be managed by a 
donor coordination group composed of representatives of the 
participating donors and the Government of Pakistan. 
 
MECHANISM FOR DONOR CONTRIBUTIONS 
---------------------------------- 
 
¶12. (SBU) The Bank's project design and coordination function should 
be complemented by a fund to capture donations from countries 
willing to contribute to jointly-funded projects for developing the 
border.  This could be modeled on a number of similar arrangements 
worldwide, including elements of the Afghan Reconstruction Trust 
Fund. 
 
¶13. (SBU) Funding priorities for activities would be decided by the 
World Bank with input from the GOP and donors, who would have the 
option to earmark funds for specific priority areas.  This 
initiative would strengthen overall coordination among donors and 
would address many donors' unwillingness to provide personnel or 
resources in a tentative security environment.  Having the World 
Bank administer the funding arrangement would also provide 
assurances to donors against corruption and mismanagement. 
 
¶14. (SBU) Action Request:  Post requests that Washington principals 
engage with counterparts at the World Bank to propose this concept. 
If there is sufficient interest, we can organize a follow-up donor 
meeting with the GOP.  Pakistani national and regional agencies have 
already conducted discussions about the need for enhanced investment 
in the area.  There also exist, in various stages of development, 
project proposals and feasibility studies that should be reviewed 
and evaluated for inclusion in the proposed plans of the 
coordinating mechanism.  End action request. 
 
¶15. (SBU) Comment:  During informal FATA donor meetings in 
Islamabad, the Japanese, UK and Canadian Missions have expressed 
interest in this concept.   Both the UK and the Canadians feel the 
Asian Development Bank is best situated to coordinate and manage the 
 
ISLAMABAD 00002135  003 OF 003 
 
 
effort.  However, given the experience of the World Bank in managing 
donor coordination, including their administration of the Afghan 
Reconstruction Trust Fund across the border, post believes the World 
Bank is best equipped to lead and manage this initiative. End 
comment. 
 
PATTERSON