US opts out of World-Bank led Peace Fund for Mindanao

The US has decided not to participate in the creation of the World Bank-led Multi-Donor Trust Fund otherwise known as the Peace Fund.

The Department of Finance (DOF) disclosed over the weekend that the US was not participating in the MDTF although it would continue to fund projects in Mindanao.

The US decision follows that of Japan which earlier decided it would not contribute to the MDTF since it already had significant and well-funded livelihood and development projects in Mindanao.

Finance Secretary Juanita Amatong told reporters that MDTF would continue to be led by the WB even without the participation of the US and Japan. She said other bilateral donors have already pledged to contribute.

The US Agency for International Development (USAID) had originally considered providing part of the initial funding for the $50-million grant facility intended for development projects in the war-torn areas of Mindanao.

The USAID already has a $20-million facility originally intended for the specific purpose of assisting the demobilization and reintegration of the MILF.

The US had earlier caused a stir after it was unintentionally left out of a press statement on the creation of the fund and officials said that at the time, the US wanted a prominent role in the undertaking.

Japan was the first major donor country to say that it would not participate in the MDTF although no official explanation was ever given. The only elaboration came from the DOF which earlier said that Japan’s preference was understandable because it was the dominant source of official development assistance (ODA) in Mindanao.

Amatong, however, only said that the US was no longer interested in the fund. "They’re already a big donor in Mindanao, so they’re sticking to what they’re already involved in over there," she said.

The US had originally wanted a high-profile role in the creation of the Peace Fund, a project that the Arroyo administration intended to dangle as an incentive for the Moro International Liberation Front (MILF) to sit on the negotiation table to continue discussing the possibility of the peace agreement.

According to sources, however, the US wanted a lead role in a project that it could easily control. Participating in the MDTF, the source said, would require a donor to operate by consensus.

On the other hand, diplomatic sources said the Arroyo administration had a lot to prove when it started soliciting help from bilateral donors who are being asked to contribute grant assistance to the Peace Fund.

"It’s a trust fund that we are trying to decide whether we could trust," said a diplomatic source. "We have to wait and see."

The Peace Fund is a pet project of former Finance Secretary Jose Isidro Camacho and it is being spearheaded by the World Bank which has already made a commitment to set aside some grant funds for the facility.

Finance officials said the initial response to the proposed Peace Fund had been encouraging enough to usher its inclusion in the agenda of the annual donors‚ consultative meeting in Cebu this November.

The World Bank had also agreed to provide a $2-million seed fund to trigger contributions to the Peace Fund and USAID had agreed to realign $10 million of its $20-million fund intended for the demobilization of the Moro Islamic Liberation Front (MILF).

The WB had agreed to administer the fund on behalf of the government and multilateral as well as bilateral donors would be asked to contribute.

According to Camacho, he has met finance officials from Bahrain, Kuwait, Kingdom of Saudi Arabia and the OPIC.