Viewing cable 07THEHAGUE222
Title: DUTCH ON CLEARING LIBERIA'S ARREARS TO THE IFIS

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07THEHAGUE2222007-02-06 12:48:00 2011-08-30 01:44:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy The Hague
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DE RUEHTC #0222/01 0371248
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FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8107
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
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RUEHSW/AMEMBASSY BERN 4067
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RUCNDT/USMISSION USUN NEW YORK 4226
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
UNCLAS SECTION 01 OF 02 THE HAGUE 000222 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/IFD/OMA (ABESMER) 
STATE ALSO FOR EUR/UBI (RREITER) 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV PINR LI NL
SUBJECT: DUTCH ON CLEARING LIBERIA'S ARREARS TO THE IFIS 
 
REF: A. STATE 9925 
 
     ¶B. THE HAGUE 70 
 
THIS MESSAGE IS SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE 
ACCORDINGLY. 
 
¶1.  (U)  This is an action request; please see para 7. 
 
¶2.  (SBU)  SUMMARY.  The Dutch agree that a multilateral 
solution is needed to address Liberia's arrears to the IFIs 
but also stress the need to guard against negatively 
impacting the financial integrity of all the IFIs.  They 
worry that any exceptions made for Liberia will set a 
precedent for other countries.  They seek further 
clarifications on the details for clearing Liberian arrears 
to the World Bank and African Development Bank before 
addressing arrears at the IMF.  See request for further 
information.  END SUMMARY. 
 
ENSURING THE INTEGRITY OF ALL IFIS 
---------------------------------- 
 
¶3.  (SBU)  Econoffs discussed on February 1 ref A points and 
background with Dutch Finance Ministry officials Karen Rot, 
Senior Policy Advisor responsible for African Development 
Bank (AfDB) issues, and Martine Rutten, Policy Advisor 
responsible for World Bank issues, as well as Andre 
Westerink, Senior Policy Advisor in the UN and International 
Financial Institutions Department, Ministry of Foreign 
Affairs.  These officials said the GONL shared USG interests 
in finding a multilateral and comprehensive solution to the 
problem of clearing Liberia's arrears to the International 
Financial Institutions (IFIs).  Rutten said the GONL, 
however, was reluctant to consider a delinking of World Bank 
and AfDB arrears clearance processes with that of the IMF. 
She also questioned how such a delinking process would 
proceed.   She and Rot questioned the implications of such a 
move on the Heavily Indebted Poor Countries (HIPC) fund, 
which they noted was already in deficit.  They both stressed 
the need to ensure that any proposed solution did not 
negatively impact the financial integrity of all the IFIs. 
 
EXCEPTION FOR LIBERIA RISKS SETTING PRECEDENT 
--------------------------------------------- 
 
¶4.  (SBU)  These officials agreed that Liberia would benefit 
from increased engagement by the IFIs.  They also 
acknowledged that Sudan and Somalia might not be ready and 
have the capacity for an arrears clearance exercise. 
However, Rot said the same arguments used to justify actions 
directed at Liberia could be applied to other African 
countries.  Therefore, she argued, it was important to 
establish an overall framework for addressing arrears before 
moving forward with only one country.  Introducing exceptions 
for Liberia also risked setting a precedent for future cases, 
she added.  Rutten reiterated that the Netherlands had 
limited bilateral interests in Liberia and that the country 
was not on the GONL's official list of 43 development 
assistance partner countries (36 of which are in sub-Sahara 
Africa).  See ref B for earlier reporting. 
 
FURTHER CLARIFICATIONS NEEDED ON WB AND AFDB PROPOSALS 
--------------------------------------------- --------- 
 
¶5.  (SBU)  Rot said the GONL sought further details on the 
World Bank proposal to use a grant from the International 
Development Association (IDA) to clear Liberia's arrears, 
including the handling of commercial credits.  She also 
questioned whether the option of increased bilateral donor 
funds had been explored sufficiently. 
 
¶6.  (SBU)  While still considered "exceptionally high," Rot 
said the GONL might agree to funding 50 percent of Liberia's 
 
THE HAGUE 00000222  002 OF 002 
 
 
arrears through the AfDB's Post-Conflict Country Facility 
(PCCF).  Much would depend on the size of the gap left by any 
donor contribution shortfalls.  She said a target of 70 
percent was too high and also risked setting a precedent for 
other cases. Meanwhile, uncertainties remained about the 
contributions expected from donors under this plan and 
proposed timelines, she added. 
 
ACTION REQUESTED:  MORE INFORMATION NEEDED 
------------------------------------------ 
 
¶7.  (SBU)  These officials thanked econoffs for the 
background information provided.  They noted further 
information would be helpful on how the USG envisioned the 
proposed delinking process, the implications of such actions 
on the HIPC, and the handling of commercial credits under the 
World Bank proposal, especially as the GONL reviews its 
position on this issue.  They also welcomed any information 
on future USG donor contributions to offset Liberia's arrears 
and any funding through the PCCF.  Post would greatly 
appreciate any additional information Washington can provide. 
ARNALL