AIDS Funds Frozen for China in Grant Dispute

Hundreds of millions of dollars in donation to China has been frozen by the Global Fund to Fight Tuburculosis, AIDS and Malaria, because of disputes over fund management. From the NYTimes:

At stake are hundreds of millions of dollars for programs to reduce the incidence of tuberculosis, prevent and treat H.I.V. infections and wipe out malaria. China has received $539 million from the Global Fund since 2003, according to the fund’s Web site. An additional $295 million is in the pipeline, making China the fund’s fourth largest recipient behind Ethiopia, India and Tanzania, one global health expert said.

A decision by the Global Fund to pull out of China would be hugely embarrassing for the Chinese government because it would suggest that China was unable to meet the standards of an international organization that dispersed funds to far less sophisticated governments. The fund can terminate grants that have been mismanaged or short of that,  formally suspend them. Suspension is a harsher step than halting payments and sets up a series of major obstacles to the release of additional funds.

Those more punitive measures seemed to have been averted Friday after two days of tense meetings between officials from the fund and the government. Jon Liden , a spokesman for the Global Fund, said China agreed Friday to a number of stipulations on how money would be used and monitored. “We came to a point where we needed to make clear signals to China,” he said. “We seem to share an understanding of the way forward.” This week, sources familiar with the negotiations said China pledged to the Global Fund that it would repay any funds that were misspent. But some fear that the inclusion of civil society groups in the health effort may still be an issue.

he Hebei Province director of an AIDS support group, Shen Zhiqi, said that he supported the fund’s decision to withhold funds, because “I really don’t want to see something as well-intentioned as the Global Fund be sucked into the black hole of corruption.” But he said he did not endorse totally withdrawing financing because it would hurt grass-roots groups.

The Chinese government has been wary of such groups for years. One prominent official gave a taste of the government’s thinking earlier this week. In Qiushi, a Communist Party journal, Zhou Benshun, the secretary general of the party’s political and legislative affairs commission, wrote that China must “guard against being misled to the point of falling into the trap of so-called ‘civil society’ devised by certain Western countries.”

The Chinese government has often been suspicious of charities and many charities in China are struggling financially. From BBC:

Charities were marginalised – a situation that still exists today. Meng Weina, the woman who set up Huiling, blames the government for the difficult financial position faced by charities like hers.

“The Chinese government doesn’t like – and even obstructs – charities. It doesn’t want to give them money because that will give them strength and power,” she said. “That makes the Chinese government nervous because it could threaten its ability to rule,” added Ms Meng, who oversees centres in 10 cities across China.

She said this attitude had also helped shape many people’s poor opinion of charities.

“The notion of what is the role of government verses philanthropy is still being developed.”

That change is not coming fast enough for Huiling’s Meng Weina, who constantly has to move her Beijing centre to smaller and smaller locations because of rising rents. She said the key to change was the forcing the government to admit that charities have a role in providing services. She does not think that will happen soon.

Here is more detailed information on The Global Fund’s Grant Portfolio on China.

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