2001-10-16 10:29:00
Embassy Abuja
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C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 002645 


E.O. 12958: DECL: 10/16/2011

REF: (A) STATE 169975 (B) STATE 170551

Classified by Ambassador Howard F. Jeter for Reasons 1.5 (b)
and (d).

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 002645


E.O. 12958: DECL: 10/16/2011

REF: (A) STATE 169975 (B) STATE 170551

Classified by Ambassador Howard F. Jeter for Reasons 1.5 (b)
and (d).

1. (U) Summary. Ambassador Jeter met the President's Chief
Economic Advisor Magnus Kpakol October 11 to discuss a range
of bilateral economic issues, including the structure of the
successor to the Joint Economic Partnership Committee (JEPC)
and possible actions for Nigeria to crack-down on the
financial assets of terrorists. Kpakol committed to working
with the U.S. on the New Africa Initiative, the proposed
bilateral Economic Committee, and measures to stem terrorist
money laundering. The Chief Economic Advisor predicted a
positive outcome for the incoming IMF Mission. He also
stressed the need to increase bilateral trade and investment
in non-oil sectors. End Summary.

2. (U) On October 11, Ambassador Jeter called on the Chief
Economic Advisor to the President, Magnus Kpakol. USAID
Country Director Tom Hobgood, USAID EconOff and Embassy
EconOff (notetaker) also attended.

Anti-terrorism and Money Laundering

3. (SBU) Explaining FATF's designation of Nigeria as a
Non-Cooperative Country/Territory (NCCT),Ambassador Jeter
emphasized the importance of strengthening domestic controls
over money laundering and other financial crimes (per
reftels). The Ambassador suggested that this issue would be
a litmus test of Nigeria's commitment to combat terrorist
activities on all fronts. Nigeria needed to amend existing
regulations to increase banks' accountability to the GON,
widen the scope of anti-money laundering legislation, and
criminalize money laundering by terrorist groups and/or their
supporters. Nigeria would also need to establish a central
agency to coordinate the fight against financial crimes.
Kpakol took on board the Ambassador's observations, stating
that this issue has not only critical importance to the U.S.,
but also to Nigeria maintaining control over its economy.

New Africa Initiative

4. (U) Just returned with President Obasanjo from an
overnight trip to Brussels, Kpakol was pleased with the
European Union's interest, as expressed by the Belgian Prime
Minister, in the Africa Initiative and the new African Union
(AU). The five participating African Heads of State
(Obasanjo, Mbeki, Wade, Chiluba and Bouteflika) were well
received, as was their concept to integrate the Omega Plan
and Millennium Action Plan into the Africa Initiative to be
implemented under the aegis of the AU. Kpakol reported that
the Belgium PM and EU Secretariat hoped to establish a
permanent office at the AU and promised to raise the issue at
the next G-8 meeting. Kpakol endorsed Ambassador Jeter's
idea that the GON should brief G-8 Ambassadors in Nigeria on
the proposed Africa Initiative. The Initiative, Kpakol
extolled, was truly an African-driven program that would hold
member-states accountable for democratic governance and
conflict resolution. The Initiative also captured African
nations' desire to connect national transportation and energy
infrastructures. However, Kpakol commented, the Initiative
lacked sufficient resources; the AU would look to the EU and
G-8 for help, he said.

Increasing Bilateral Trade and Investment

5. (U) Kpakol hoped for progress in the U.S. - Nigeria
commercial relationship during his tenure as Chief Economic
Advisor. Strongly seconding his wish, Ambassador Jeter said
that, while in Washington, he discussed with the Corporate
Council on Africa avenues U.S. companies should pursue when
doing business in Nigeria. The Ambassador commented that
skepticism within the U.S. business community remained a
problem. Despite the success of U.S. oil and gas companies,
most non-oil sector companies want concrete non-oil success
stories before investing in Nigeria. Thus, they all are
waiting to see who goes first.

6. (U) Kpakol attributed the lack of success to two reasons.
First, the strength of the oil and gas industry had caused
the country to neglect non-oil sectors. Second, the U.S.
private sector needed to become more focussed and committed
in their interactions with Nigerians. Ambassador Jeter
concurred, recounting he had discussed this with U.S.
companies. The Ambassador had explained to them that the
Nigerian market was peculiar in that foreign companies cannot
merely submit bids for public contracts, then wait at home
for the award letter. American companies need to be visible
on the ground, preferably with a Nigerian partner, to spend
time discussing the project with officials at all levels of
government. Developing a relationship with their Nigerian
business partners, both public and private, will be critical
to the success of U.S. companies in Nigeria. Kpakol
commented that U.S. companies unfortunately perceive Africa
as distant and somewhat peripheral to U.S. interests whereas
European businesses have recognized the importance Africa can
play in the global economy. (They also recognize handsome
profits can be made when a company stays the course.)

-------------- --------------
Restructuring the Joint Economic Partnership Committee
-------------- --------------

7. (SBU) Ambassador Jeter explained that in discussions
earlier this year, both sides had expressed dissatisfaction
that JEPC had not produced concrete results. Consequently, a
U.S. interagency committee met to recommend how a "son of
JEPC" might be structured. The interagency committee had
recommended creation of three committees -- Economic, Defense
and Law Enforcement -- to be led by senior policymakers. The
Economic Committee would address agriculture, energy,
education, transportation, environment and other related
issues. The Committee would decide what sub-committee level
working groups to establish and provide them with concrete
objectives. The working groups would formulate action plans
with each side responsible for completing discreet steps
towards the agreed objectives. This system, the Ambassador
believed, would inject accountability and measurability into
the bilateral economic relationship. The Ambassador also
suggested that the working groups might include private
sector and state-level participants, contingent on the wishes
of the GON. Kpakol welcomed these recommendations,
suggesting his office would spearhead the Economic Committee

International Monetary Fund

8. (SB) Finally, the Ambassador asked about the IMF program.
Optimistic that meetings with the incoming IMF team would be
more productive than the last IMF visit, Kpakol said, "we
have a good understanding now." He noted two areas of
particular importance -- the exchange rate regime and
government spending -- that the two sides needed to work
closely. Expressing a common sentiment amongst GON
officials, Kpakol opined that the IMF originally had arrived
in Nigeria with unrealistic expectations. The IMF must
recognize that political exigencies often limit economic
decision-making. With elections looming over the horizon,
the IMF cannot expect the program to progress as earlier
envisioned. However, he said, the GON would be more capable
of implementing tough programs after the 2003 elections.

9. (C) Biographic Information. Kpakol took over the office
of Chief Economic Advisor in June 2001 after former CEA Chief
Philip Asiodu was retired. Kpakol spent the last 25 years in
Houston, Texas where he was a University professor. As such,
Kpakol is familiar with U.S. perceptions of Africa and with
U.S. idiosyncrasies; Post expects that he will be a helpful
interlocutor on all bilateral economic issues. End
Biographic Information.