VZCZCXRO2654
PP RUEHLH RUEHPW
DE RUEHRO #0763 1811615
ZNR UUUUU ZZH
P 301615Z JUN 09
FM AMEMBASSY ROME
TO RUEHC/SECSTATE WASHDC PRIORITY 2327
INFO RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 0952
RUEHKP/AMCONSUL KARACHI PRIORITY 0100
RUEHLH/AMCONSUL LAHORE PRIORITY 0006
RUEHPW/AMCONSUL PESHAWAR PRIORITY 0254
RUEHBS/USEU BRUSSELS PRIORITY 4837

UNCLAS ROME 000763 
 
SENSITIVE 
SIPDIS 
 
SCA/P: SPENCER 
SRAP: GOODMAN 
EEB: LEATHMAN 
PRM/ECA: HASTINGS 
 
E.O. 12958: N/A 
TAGS: EAID EFIN PHUM PK
SUBJECT: ITALIAN IMPLEMENTATION OF PLEDGE FOR PAKISTAN 
 
REF: A. STATE 61218 
     ¶B. STATE 55536 
     ¶C. ROME 316 
 
¶1.    (SBU) Summary: On 22 June Econoff demarched MFA 
Counselor Valter Zucconi of the Directorate for Development 
Cooperation on the delivery of funds Italy had pledged for 
Pakistan at the 17 April Tokyo Donors' Conference.  According 
to Zucconi, Italy is in the process of disbursing 62 million 
Euros for Pakistan, most of which is in the form of soft 
loans targeted toward rural development in Baluchistan, the 
Northwest Frontier Province, and the Federally Administrated 
Tribal Areas.  Of this figure, Zucconi said that a structure 
for spending about 40 million Euros will probably be accepted 
by the Government of Pakistan (GOP) by the end of July, after 
which rural infrastructure and community mobilization 
projects could begin in as few as three weeks.  The GOP and 
GOI are not likely to finalize a structure for allocating 20 
million Euros in soft loans pledged for professional, 
technical and vocational training until November or December, 
so those funds will likely not be spent in this calendar 
year.  Finally, a grant of 2 million Euros for developing the 
Pakistani olive oil industry is likely to be approved in July 
and commence shortly thereafter.  End Summary. 
 
¶2.    (SBU) On 22 June Econoff delivered to MFA Counselor 
Valter Zucconi of the Directorate for Development Cooperation 
ref A demarche concerning funds that Italy had pledged for 
Pakistan at the 17 April Tokyo Donors' Conference.  Zucconi 
had recently returned from a visit to Pakistan during which 
his team held negotiations with the GOP Economic Affairs 
Division of the Ministry of the Economy and Statistics. Both 
sides agreed to coordinate the disbursement of 40 million 
Euros in soft loans that Italy had promised for the Pakistani 
provinces bordering Afghanistan.  This structure now awaits 
higher-level GOP approval.  Zucconi's team had also consulted 
with its local Pakistani implementing partner, the Pakistan 
Poverty Alleviation Fund (PPAF), about the loans.  In 1997 
the World Bank and GOP created the PPAF, which is now 
financed by the International Fund for Agricultural 
Development, the World Bank, and other multi-lateral 
development organizations.  By the end of the trip, Zucconi 
said his team had created an administrative system that would 
allow the PPAF to disburse the 40 million Euros in soft loans 
quickly, provided the GOP did not create last-minute 
"obstacles."  If the GOP elects to object to the GOI-proposed 
administrative system for extending the soft loans, then new 
negotiations with the PPAF would be required and disbursement 
of funds would be postponed until September at the earliest, 
according to Zucconi. 
 
¶3.    (SBU) Zucconi agreed with ref A points that it was 
imperative to spend funds quickly.  He said the PPAF had been 
chosen as an implementing partner because it had a proven 
track record.  "We did not want to create new structures." 
Once high-level GOP approval is received, projects could 
begin to be approved within three weeks, Zucconi said.  The 
other 20 million Euros in soft loans will not be disbursed 
soon, because an Italian technical delegation must visit 
Pakistan, then an agreement must be signed between the GOI, 
GOP, and an implementing partner.  Zucconi described a 
timeline for disbursing the remaining pledged funds as 
beginning with an agreement in November or December of this 
year, with professional, technical and vocational training 
commencing early in 2010. 
DIBBLE