VZCZCXRO2354
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHTC #0313/01 1460720
ZNR UUUUU ZZH
R 260720Z MAY 09
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC 2855
INFO RUEHAT/AMCONSUL AMSTERDAM 4214
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHKH/AMEMBASSY KHARTOUM 0164
RUEHBUL/AMEMBASSY KABUL 0400
RUEHIL/AMEMBASSY ISLAMABAD 1056
RUEHJA/AMEMBASSY JAKARTA 0242
RUEHTV/AMEMBASSY TEL AVIV 2928
RUEHJM/AMCONSUL JERUSALEM 0830
RUCNDT/USMISSION USUN NEW YORK 4571
RUEHGV/USMISSION GENEVA 1429

UNCLAS SECTION 01 OF 04 THE HAGUE 000313 
 
SENSITIVE 
SIPDIS 
 
STATE PLEASE PASS TO USAID/OFFICE OF ACTING ADMINISTRATOR 
STATE FOR EUR/WE, EEB/IFD/ODF 
MCC FOR RMORFORD 
STATE PASS FEDERAL RESERVE BOARD - INTERNATIONAL DIVISION TREASURY 
FOR IMI/OASIA/VATUKORALA 
USDOC FOR 4212/USFCS/MAC/EURA/OWE/DCALVERT 
USEU FOR PLERNER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PREL EAID NL
SUBJECT: NETHERLANDS: REASSESSMENT OF DUTCH DEVELOPMENT COOPERATION 
 
Ref: (A) 07 THE HAGUE 1913, (B) THE HAGUE 221 
 
THE HAGUE 00000313  001.2 OF 004 
 
 
SENSITIVE BUT UNCLASSIFIED; PLEASE HANDLE ACCORDINGLY. 
 
¶1. (U) SUMMARY: Despite the economic crisis, the Netherlands 
continues to comply with the UN recommendation of spending 0.7 
percent of GDP on official development assistance (ODA) with an 
additional 0.1 percent for other overseas projects.  Faced with 
sharp criticism of Dutch aid policy's effectiveness and budgetary 
constraints, Development Minister Bert Koenders recently announced 
the details of revised policies with respect to NGOs and 
multilateral organizations.  Dutch bilateral aid focuses on 33 
partner countries, with significant support to Indonesia, Sudan, 
Afghanistan, Pakistan, and the Palestinian Authority.  Despite the 
difficult economic situation, Koenders is working to sustain Dutch 
leadership in international development.  END SUMMARY. 
 
---------------- 
Dutch ODA budget 
---------------- 
 
¶2. (U) The current government (a coalition of Christian 
Democrats/CDA, Labor/PvdA, and Christian Union/CU) agreed in 2007 to 
continue the policy of contributing 0.7 percent of Dutch GDP to ODA 
with an additional 0.1 percent for sustainable energy projects in 
developing countries.  As Dutch 2008 GDP was 600 billion euro, total 
ODA was approximately 5 billion euro: 
 
-- 1.3 billion euro in bilateral aid to 'partner countries' 
-- 3 billion euro to thematic areas such as safety and development; 
growth and equity; human rights and opportunities for women and 
girls; and sustainability, climate, and energy 
-- 0.7 billion euro to multilateral organizations. 
 
-------------------- 
ODA budget pressures 
-------------------- 
 
¶3. (SBU) Even though there are no plans to change the 0.8 percent 
policy, the ODA budget is facing cutbacks.  As GDP is forecast to 
drop by 3.5 percent this year and by 0.75 percent in 2010, the ODA 
budget will shrink proportionately.  Peter Schuurman, ODA Budget 
Coordinator at MFA, expects budget cuts of 400 million euro this 
year although the Government of the Netherlands (GONL) has not yet 
decided exactly which programs will be cut. 
 
--------------------------------------------- --------- 
Changes in NGO and multilateral organizations policies 
--------------------------------------------- --------- 
 
¶4. (SBU) On April 15, Koenders presented his revised policy with 
respect to NGOs.  The number of subsidized NGOs will be reduced from 
73 to 30 by 2010.  Koenders called on NGOs to show more "efficiency" 
and to "cooperate better."  Depending on how well NGO proposals 
reflect this advice, the current 525 million euro NGO budget will be 
cut by 25-100 million euro.  As part of the new policy, 
organizations must generate at least 25 percent of their budget from 
private donations and cannot use ministry subsidies for fundraising 
campaigns.  Koenders also called on Dutch NGOs to listen more to 
local NGOs in developing countries.  Further, he will free up more 
money for embassies to finance local NGOs directly.  Schuurman told 
Qmoney for embassies to finance local NGOs directly.  Schuurman told 
EconOffs that even though modernizing the NGO policy was previously 
announced in 2007, the reduced budget for NGOs would count towards 
the cutbacks that Koenders must make. 
 
¶5. (U) On April 23, Koenders published a new policy blueprint 
"Working together on global challenges: the Netherlands and 
multilateral cooperation."  As with NGOs, he called on multilateral 
institutions to work together more effectively, make results visible 
and align policies more closely with the needs of the developing 
countries.  His goal is to end the fragmentation of Dutch 
assistance.  In 2008 approximately 26 percent of the ODA budget went 
to multilateral organizations: 
 
 
THE HAGUE 00000313  002.2 OF 004 
 
 
-- EU development aid (9 percent) 
-- UN institutions (7 percent) 
-- International Financial Institutions (7 percent) 
-- Global funds, such as the Global Environmental Facility (3 
percent). 
 
¶6. (U) Koenders has said the GONL would contribute more to 
multilateral organizations if they modernize.  Specifically, he has 
called on them to: 
 
-- improve cooperation and better divide their tasks 
-- improve the connection with national policy plans and systems 
-- further decentralize (local offices should have more authority) 
-- improve their personnel policy 
-- make concrete results visible 
-- increase representation of developing and emerging countries 
-- improve financing behavior of their bilateral donors 
-- increase social involvement with all stakeholders (i.e., local 
governments, NGOs, private sector). 
 
---------------------------------- 
Bilateral aid to partner countries 
---------------------------------- 
 
¶7. (SBU) Koenders announced in 2007 the GONL would drop seven of its 
40 "partner counties" (Bosnia Herzegovina, Eritrea, Sri Lanka, 
Albania, Armenia, Cape Verde, and FYR Macedonia) by 2011 (Ref A). 
Schuurman mentioned this process could be accelerated as part of the 
budget cutbacks.  Aid to the remaining 33 countries could also face 
cutbacks.  Partner countries are divided into three groups: 
 
-- accelerated achievement of MDGs (the poorest countries) 
-- security and development: high priority fragile states 
(Afghanistan, Burundi, Colombia, Congo, Kosovo, Pakistan, 
Palestinian Territories, and Sudan) which are not likely to face 
cutbacks 
-- broad-based relationship (middle income countries). 
 
¶8. (U) The top ten recipients of Dutch bilateral ODA in 2008 were 
(these figures exclude aid via multilateral organizations and 
NGOs): 
 
-- Indonesia (104 million euro) 
-- Sudan (75) 
-- Mozambique (71) 
-- Tanzania (69) 
-- Burkina Faso (62) 
-- Ghana (61.9) 
-- Afghanistan (58) 
-- Zambia (58) 
-- Bangladesh (58) 
-- Uganda (57) 
 
--------------------------------------------- 
Dutch multilateral and bilateral ODA to Sudan 
--------------------------------------------- 
 
¶9. (U) For several years, Sudan has been a priority of the Dutch 
'fragile states' policy.  The vast majority of funding goes to 
regional stability and crisis management projects, with smaller 
amounts to address poverty and human rights.  The GONL's primary 
focus is to support the peace process between northern and southern 
Sudan through implementation of the Comprehensive Peace Agreement 
(CPA).  Via the Assessment and Evaluation Commission (AEC), the 
Netherlands plays a role in bringing together the NCP and SPLM with 
the aim of working out deals on issues that frustrate CPA 
implementation.  The GONL is planning to support the 2010 election 
process if it is credible and the Sudanese people will be able to 
decide their own future.  The Netherlands also contributes to the 
reconstruction effort and the buildup of capabilities in southern 
Sudan, and it is focused on creating stability in the transition 
QSudan, and it is focused on creating stability in the transition 
areas of Abyei, South Kordofan, and Blue Nile through interventions 
in the area of reconstruction, defining borders and security. 
 
 
THE HAGUE 00000313  003.2 OF 004 
 
 
¶10. (U) The GONL is also trying to assist in bringing about a peace 
settlement in Darfur.  It provides humanitarian assistance through 
channels still available in Darfur and is prepared to contribute to 
bringing about a cease-fire and a peace accord there and to enhance 
the effectiveness of UNAMID.  The GONL maintains close contact with 
AU/UN chief negotiator Bassol and his team.  Insofar as possible, 
the Netherlands will take the lead in the area of small-scale 
reconstruction. 
 
--------------------------------------------- ------ 
Dutch multilateral and bilateral ODA to Afghanistan 
--------------------------------------------- ------ 
 
¶11. (U) In 2008 the Netherlands donated through bilateral and 
multilateral channels 83.4 million euro in development aid to 
Afghanistan as part of a 2006-2008 commitment of 223.8 million euro. 
 The Dutch bilateral efforts focus on Uruzgan Province, where Dutch 
troops lead the ISAF mission. This assistance went to: 
 
-- education (16.8 million euro) including 15 schools already opened 
and 24 under construction in Uruzgan 
-- health (3.6 million euro)including renovation of a district 
hospital and regional health center in Tarin Kowt 
-- rural development, economic development, and infrastructure (66.1 
million euro) including replacing poppy plantations with saffron 
production and construction and rehabilitation of roads, bridges, 
irrigation channels and wells 
-- security (7.3 million euro)including development of the police 
force (The GONL announced in mid-May 2009 the successful completion 
by the first graduates of its 13-week  district development police 
training course) 
-- institutional capacity development (1.6 million euro) including 
support to strengthen local governance at national and provincial 
level. 
 
--------------------------------------------- --- 
Dutch multilateral and bilateral ODA to Pakistan 
--------------------------------------------- --- 
 
¶12. (U) Koenders announced at the Pakistan donor conference in Tokyo 
on April 17 that the Netherlands officially joined the Friends of 
Democratic Pakistan.  The Netherlands suspended development aid to 
Pakistan in November 2007 after Musharraf declared a state of 
emergency.  Koenders has earmarked 20 million euro for Pakistan in 
2009, saying the GONL "will renew development relations with 
Pakistan cautiously, first concentrating on regional water projects 
with Afghanistan (Kabul river management) and the peace jirga." 
 
¶13. (U) Koenders recently condemned the introduction of sharia law 
in the Swat valley in northwest Pakistan as a "capitulation to the 
Taliban and a severe blow to women's rights."  A top Dutch priority 
is public education, especially for girls, and as an alternative to 
madrassas.  The Netherlands will also become actively involved in 
the areas of good governance, human rights, poverty reduction, and 
the environment.  But he warned the GONL "will not expand aid until 
democracy develops further." 
 
---------------------------------------- 
Q---------------------------------------- 
Dutch ODA to the Palestinian Territories 
---------------------------------------- 
 
¶14. (U) The Dutch have a longstanding development cooperation 
program in the Palestinian Territories.  Total 2008 Dutch aid was 72 
million (mainly through multilateral channels such as the EU's 
PEGASE mechanism, but also bilaterally), focused on: 
 
-- strengthening the Palestinian Authority to provide basic services 
to the Palestinian population 
-- promoting good governance, socio-economic development, and 
supporting institutions building and rule of law in the framework of 
a Palestinian reform agenda 
-- providing humanitarian relief to the most vulnerable in 
Palestinian society 
-- promoting respect for human rights and democratic practice and 
 
THE HAGUE 00000313  004.2 OF 004 
 
 
values. 
 
------- 
COMMENT 
------- 
 
¶15. (SBU) Koenders faces two sources of pressure to revise Dutch aid 
policy.  First, critics argue that Dutch aid is fragmented and 
inefficient, and the spending poorly controlled.  Their arguments 
are gaining traction as a result of the current economic downturn 
with greater scrutiny of government expenditures.  The recent 
disclosure that the GONL spends 60 million euro from the development 
budget to generate public support in the Netherlands was an 
embarrassing episode.  Second, the aid budget will undergo cutbacks 
as it is linked to falling GDP.  Nonetheless, when the GONL recently 
decided on a stimulus and savings package in response to the 
economic crisis (Ref B), it emphatically refused to give in to 
opposition calls to depart from the 0.8 percent principle and reduce 
aid. 
 
¶16. (SBU) Koenders will fight to preserve the GONL's status as an 
important global donor, holding the line on Dutch calls to cut aid 
expenditures and championing a new approach to development 
assistance.  Calling on multilateral organizations to "modernize" or 
face possible financial consequences strengthens his hand at home. 
It also makes him a potential ally given U.S. priorities for UN 
reform.  During his April visit to Washington, Koenders expressed 
eagerness to cooperate more closely with the United States on 
foreign assistance.  He was also recently named a UN special envoy 
for reform of the international financial architecture, in which 
capacity he will work with the Stiglitz Committee to explore ways to 
minimize the impact of the economic crisis on the "most vulnerable" 
of the developing countries.  END COMMENT. 
 
GALLAGHER