NIGERIA: WEEKLY NEWS REVIEW #2

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 000787

SIPDIS


E.O. 12958: DECL: 02/28/2007
TAGS: PGOV ECON EFIN ECPS KCRM NI
SUBJECT: NIGERIA: WEEKLY NEWS REVIEW #2


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



1. (U) This is the second edition of what will be a weekly
roundup of significant developments in Nigeria.


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BENUE COMMISSION OF INQUIRY FINALLY ESTABLISHED
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1. (U) On March 6 President Obasanjo inaugurated a 10-person
Judicial Commission of Inquiry to review communal violence in
Benue, Nassarawa, Plateau and Taraba states. The Commission
will be chaired by Justice Okechukwe Opene, and includes
Alhaji Mohammed Liman, Micleans Dikwal, Daniel Agogo, Alhaji
Haruna Ahmadu, Ambassador Yahaya Abdullahi, Alhaji Yahaya
Hamza, Chief Patrick Okon, Ruth Akafa and Dr. Sani Suji. As
part of its mandate, the commission will investigate the
October 2001 execution of 19 soldiers by Tiv militiamen and
the reprisal attacks by angered soldiers that killed over 200
Tiv villagers.



2. (U) According to media reports, the committee's terms of
reference are: 1) Examine the proximate causes of the
conflicts; 2) Identifying the basic issues underlying tension
between communities and providing strategies for peace; 3)
Identify groups and individuals involved in the crises; 4)
Recommend appropriate sanctions; 5) Examine the roles of
states and local governments and traditional authorities; 6)
Provide recommendations to improve existing security
arrangements; and 7) Provide recommendations on other
measures to secure peace and facilitate reconciliation
between communities.


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NITEL Privatization Rocky
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3. (U) This is the third week of a six-week extension
provided International Investors Limited (IIL),the winning
bidder for 51 percent shares of NITEL. The extension was
granted to give IIL time to raise the USD 1.3 billion due to
complete the bid. However, IIL seems no closer to finding
the needed capital. Observers speculate that the extension
was granted not so much for IIL but to give GON time to
figure out an alternate course given the possibility of IIL
falling on its face.



4. (U) IIL may be forced to drop its NITEL bid, despite the
non-refundable USD 132 million paid to Bureau of Public
Enterprise (BPE),because the financial markets lack stomach
for the deal and will not provide the cash. If IIL fails to
raise the funds by March 26, the consortium must be
disqualified and the sale reopened to the alternate bidders.
The second bidder Telnet, which offered only USD 7 million
less than IIL, has lost interest in the deal. However, the
third bidder Newtel, at USD 1.017 billion, has expressed
continued interest.


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IMF Mission Concludes No Formal Program Possible
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5. (U) The IMF mission to Nigeria departed March 7 after
concluding that Nigeria's macroeconomy faced too many
uncertainties to establish a formal IMF program at this time.
Despite fourth quarter 2001 progress reducing GON spending,
slowing money supply growth, stabilizing inflation and
raising petroleum prices, agreed targets in the informal
program were not met. In the absence of a finalized 2002
budget and the lack of political commitment to hold spending
below 2001 levels, the IMF and GON concluded that an IMF
program in 2002 was unsustainable. The IMF, however, will
retain staff in Nigeria and will provide technical assistance
and capacity-building, as the GON requests.



6. (C) The GON wanted an IMF program but one with much less
belt tightening. Trying to turn this economic failure into
political victory, the GON publicized "its decision" to
forego an IMF program before the IMF itself could announce
that Nigeria had failed to conclude an agreement.
Administration critics have complained that Obasanjo has been
too eager to follow IMF's strictures and has been too
insensitive to the hardship imposed on the average Nigerian
by IMF economic remedies. By ending the formal tie with the
IMF, Obasanjo hopes to strike a populist chord and pick up
some electoral support because he stood up to the IMF.


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POLICE CHIEF FIRED/ POLICE STRIKE STILL ON?
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7. (U) Ineffectual Police Inspector General Musilu Smith
was sacked on March 7. Smith had been in trouble after
incorrectly telling the President that the Police would not
strike in January over their salary and allowance arrearages.
The January strike ended only after Government jailed its
leaders while promising to pay the arrearages. However, the
money has not been dispersed and many officers feel they have
been duped. Strike threats have resurfaced with March 11 seen
as a possible strike date. Our Police sources say that Police
support for a renewed strike is divided. Roughly half the
officers are sympathetic to a strike but it is unclear how
many will actually answer the call.

8. (C) Comment: To a certain degree, Smith has been made a
scapegoat. The allowance arrears are not entirely his fault.
Nonetheless, the Administration probably reasoned that
jettisoning Smith now would douse support for a strike. Since
Smith lacked a political base and because his generally
lackluster performance made him expendable, the decision to
remove him was inevitable. End comment.
Jeter