VZCZCXRO8876
PP RUEHAP RUEHDBU RUEHDT RUEHKN RUEHKR RUEHMJ RUEHPB
DE RUEHC #1663/01 1142300
ZNR UUUUU ZZH
P 242241Z APR 09
FM SECSTATE WASHDC
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UNCLAS SECTION 01 OF 03 STATE 041663 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ETRD ECON EAID ADB
SUBJECT: DEMARCHE REQUEST: U.S. DEMONSTRATES SUPPORT FOR 
ASIA WITH ASIAN DEVELOPMENT BANK GENERAL CAPITAL INCREASE 
 
¶1.  (U) This is an action request.  Please see paragraph 7. 
 
SUMMARY 
 
¶2.  (U) The United States continues to cultivate strong and 
vibrant partnerships with countries in the Asia-Pacific 
region, and these partnerships are ever more important during 
the current global economic downturn.  One of the ways the 
United States has recently demonstrated its support for the 
region is through its endorsement of a General Capital 
Increase (GCI) for the Asian Development Bank (ADB).  The 
United States supports a 200% general capital increase for 
the Bank, contingent upon Bank management's adoption of 
reform measures and, second, Congressional support for the 
increase. The Board of the Asian Development Bank will be 
formally considering the general capital increase at the May 
4 - 5 Annual Meeting in Indonesia.  We urge host countries to 
support the general increase paired with reforms in order to 
ensure that the Bank continues to contribute most effectively 
to poverty reduction in the region.  End summary. 
 
U.S. COMMITMENT TO ASIA 
 
¶3.  (SBU) The United States continues to cultivate strong and 
vibrant partnerships with countries in the Asia-Pacific 
region.  Our partnerships with countries in this region are 
even more important during the current global economic 
downturn.  Economic engagement continues to be a core link, 
with the region accounting for one fourth of global economic 
output, five of our top ten trading partners, over a quarter 
of U.S. export sales, and a huge growth in energy demand. 
Despite this connection, many Asian countries see the U.S. as 
the main source of the current economic crisis and also 
believe that we did not do enough to help the region during 
its financial crisis in the late 1990s. 
 
¶4.  (U) The region served by the Asian Development Bank 
includes Afghanistan and Pakistan.  One of this 
Administration's highest foreign policy priorities is to 
address the dangerous instability there, with development 
assistance a key component of our strategy.  In 2008, the 
bank provided over $8 billion in loans, grants and technical 
assistance to countries throughout Asia, complementing U.S. 
bilateral assistance. 
 
ASIAN DEVELOPMENT BANK GENERAL CAPITAL INCREASE AT THE G20 
 
¶5. (U) In an Annex to the April 2 London Summit Communiqu 
entitled "Declaration on Delivering Resources Through the 
 
STATE 00041663  002 OF 003 
 
 
International Financial Institutions," G20 leaders agreed to 
make an additional $850 billion available through the 
International Monetary Fund (IMF) and the multilateral 
development banks (MDBs).  In regard to the Asian Development 
Bank, G-20 leaders supported "a 200 percent general capital 
increase at the Asian Development Bank and reviews of the 
need for capital increases at the Inter-American Development 
Bank, the African Development Bank and the European Bank for 
Reconstruction and Development."  Total capitalization of the 
ADB will increase by approximately $100 billion. 
 
REFORM AGENDA FOR THE ADB 
 
¶6.  (SBU) We urge host countries to support the ADB and its 
programs as well as necessary reforms of the ADB and all 
multilateral development banks to ensure they effectively 
contribute to poverty reduction.  U.S. support for the 
general capital increase is contingent upon the ADB's 
progress on reforms, to which the ADB has positively 
responded.  The Bank has agreed to revise its human resources 
policies, upgrade risk management functions, and review its 
current prohibition against publishing its list of sanctioned 
companies.  Another top priority is ensuring that the Bank's 
safeguard standards are sufficiently robust and provide 
adequate protection for the environment and people, while 
protecting borrowers from liability.  Full implementation of 
these commitments will be essential in order to maintain and 
build Congressional support for a capital infusion to the 
ADB.  ADB board members should be encouraging the Bank to 
operationalize its commitments to reform. 
 
ACTION REQUEST 
 
¶7.  (U) Department requests that Posts deliver the following 
points to foreign ministries of host countries, recognizing 
that the lead ministry (or ministries) with respect to 
multilateral development banks is likely the finance 
ministry. 
 
--  The Obama Administration recognizes the crucial role that 
Asia plays in the global economy and in creating a return to 
sustainable economic growth. 
 
--  Secretary Clinton has expressed America's commitment and 
eagerness to work with leaders of Asian nations to resolve 
the economic crisis that threatens many economies in Asia and 
other regions of the world. 
 
--  Support for Asian Development Bank (ADB) recapitalization 
is a signal of our commitment to the region at this time of 
severe global economic stress.  We ask for your support for 
the ADB and its programs. 
 
--  We also recognize the need for continued ADB reforms.  We 
 
STATE 00041663  003 OF 003 
 
 
ask for your support in encouraging the ADB to be diligent 
and implement reforms to which it has committed in its March 
16, 2009 working paper on the General Capital Increase (GCI). 
 Our priorities include stronger anti-corruption measures and 
safeguard standards.  Reforms in these areas will enhance the 
effectiveness and efficiency of the ADB's deployment of 
funds. 
 
--  U.S. contributions to the Bank will require Congressional 
approval.  Continuing U.S. support for the general capital 
increase will be contingent upon the ADB's progress on 
reforms. 
 
--  Some members of the U.S. Congress are concerned about the 
Bank's inadequate anti-corruption measures and are pressing 
for regular publication of the list of sanctioned companies. 
We understand that the ADB is prepared to initiate 
publication of such lists, and that it is determining the 
best way to do this without increasing the Bank's liability. 
We urge your representative to press the Bank to publish this 
list, as the World Bank and other regional development banks 
do. 
 
--  We seek your assistance in ensuring that the Bank 
fulfills all its reform commitments. 
 
--  We encourage other ADB members to adopt and implement 
strong domestic anti-corruption policies to ensure 
consistency with international best practices. 
 
¶8.  (U) Please provide a front-channel message with host 
government response to EAP/EP: Kathy Hadda and EEB/IFD/ODF: 
Rachel Leatham and Marguerite Siemer by May 1.  Department 
appreciates Posts' assistance with this request. 
CLINTON