NIGERIA: VP ON POLITICS, PROSPECTS FOR REFORM

C O N F I D E N T I A L SECTION 01 OF 03 ABUJA 000905

SIPDIS


CAIRO FOR MAXSTADT


E.O.12958: DECL:1.6X6
TAGS: PGOV PREL MASS ETRD EPET EINV KDEM EAID NI
SUBJECT: NIGERIA: VP ON POLITICS, PROSPECTS FOR REFORM


REF: Abuja 727


Classified by Ambassador Howard F. Jeter. Reason:
1.5(d)



1. (C) Summary: DCM 8 May met with VP Atiku Abubakar
and others in Washington. Atiku sought continued USG
support for market-based economic reforms but
volunteered that President Obasanjo remained
uncomfortable about giving up State control. Atiku
hoped to make progress on AGOA and to lift fuel price
subsidies. He thought an Article 98 Agreement would
be signed soon. Nigeria's VP believed the election
tribunals would call for new polls in some areas but
that results would not change; he did not think there
would be enduring negative consequences from electoral
disputes because most people ultimately must line up
with the winners. Comment at para 14. End Summary.



2. (U) DCM 8 May called on Nigerian Vice President
Alhaji Atiku Abubakar at the Potomac, Maryland
residence he shares with an AmCit wife of Nigerian
origin, Jennifer (aka Jamila). Also present at
various points during the evening were former
Ambassador to the U.S., businessman Hassan Adamu,
ThisDay publisher Nduka Obaigbena, Nigerian Charge
Augustine Agada, and several members of Atiku's
personal staff.



3. (C) DCM arrived to find Obaigbena with the VP, and
the first half-hour of the conversation was
unremarkable, save for Obaigbena's observation that
the U.S. attitude toward Nigeria appeared to have
cooled since September of 2001. DCM replied that the
Administration had been compelled to confront the
threat of global terrorism and to focus on homeland
security. Atiku found this explanation reasonable.


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ENDING FUEL SUBSIDIES
--------------



4. (C) Once Obaigbena had left the room, DCM
congratulated Atiku on the effectiveness of the PDP
campaign and offered that signs pointed to Nigerians
fervently hoping for tangible betterment of their
circumstances. DCM remarked that his own man-in-the-
street interviews indicated that most people were not
impressed by the transparency of the recent elections
but were very pleased with their peaceful conduct (in
most areas) and continuing relative tranquillity.
Many of the motorists waiting for fuel with whom DCM
had spoken (reftel) said they were praying for
Nigeria's God-chosen leaders to better their lot.
While they wanted gasoline, people waiting at a clinic
might desire medicines, and parents might want
classrooms and books for their children.



5. (C) Atiku said the GON needed to take quickly a
number of the hard steps that had been deferred during
the first term. Had the motorists DCM had engaged
indicated readiness to pay more money for more
reliable fuel supplies? DCM said he had not asked
that question specifically, offering that the official
price was fiction in much of the country. The last
official price increase had reduced real prices in
much of the North; resistance would come from the
relatively few able to purchase at the official price.
Atiku emphatically agreed, saying that the President
had concurred in lifting fuel price subsidies o/a 1
June. Atiku added that meetings he and Obasanjo had
held with NLC President Adams Oshiomhole suggested
that organized labor would not resist strongly.
Implying that there existed a risk Obasanjo might
change his mind at the last minute, Atiku said his
fingers were crossed that the subsidies would, indeed,
be abolished as scheduled.


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OTHER ECONOMIC REFORMS
--------------



6. (C) Broader and deeper economic reforms would be
needed to get Nigeria's economy going again, Atiku
continued, but he was unsure how far President
Obasanjo was willing to go. The President was
uncomfortable with markets making decisions and
fundamentally preferred State control. DCM noted the
low price-to-dividend ratios of many public companies
listed in Nigeria and offered that Nigerian capital
markets appeared to have the potential to take off
once international investors became more comfortable
with Nigeria's economic prospects. Had the GON
thought of floating perhaps ten percent of NNPC on the
stock exchange? Atiku laughed and exclaimed, "Not
with this President. No way!" Atiku also held out
little hope for near-term reform of NNPC's major
downstream operations, noting that keeping the
refineries crippled provided irresistible
opportunities for well-connected rent-seekers.



7. (C) However, Atiku emphasized, reforms that
reoriented Nigeria's economy toward market-based
outcomes were essential, and USG partnership and
support would be required. The time had come to push
forward on AGOA, Atiku offered. An echoing sentiment
came from former Ambassador Adamu, who had just joined
the conversation. Atiku said all impetus had gone out
of Nigeria's AGOA-related efforts since the departure
of Mustapha Bello, the former Commerce Minister.
Nigeria needed to appoint an "AGOA Coordinator," Atiku
continued, someone who would make sure the necessary
steps were taken. DCM offered that Nigeria's failure
to take such steps meant it could not take advantage
of AGOA's textile provisions. Atiku said he would
ensure early National Assembly passage of the required
legislation and that he looked forward to working with
DCM to move the process forward.



8. (C) DCM cautioned that some tariffs and bans
Nigeria had put in place before the elections seemed
not consonant with WTO obligations and might affect
AGOA eligibility. DCM noted that bans obviously could
be revised or revoked. Atiku did not respond to the
implied question but remarked that the bans on
spaghetti and certain baked products had not taken
these items from supermarket shelves.


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SECTION 557, ARTICLE 98 AND LIBYA
--------------



9. (C) DCM noted that Minister of State for Foreign
Affairs Dubem Onyia's misrepresentation of the
circumstances that led to suspension of some aspects
of U.S. security assistance to Nigeria had indeed
irritated Washington. The beginning of a new
Administration in Nigeria offered an excellent
opportunity to restore some lost warmth to a
fundamentally sound bilateral relationship. Nigeria
could help us stop Libya's UNSC bid and look seriously
at concluding an Article 98 agreement. Atiku did not
commit on Libya but said he understood our interests.
The term "Article 98 Agreement" did not initially
register with him, but when DCM explained what it was,
Atiku said he thought an agreement was being prepared
for signature.



10. (C) COMMENT: Atiku plays a leading role in
economic affairs but does not normally engage on
politico-military issues with us. We take some heart
from his understanding of the Article 98 issue and its
importance to us, but we would not want to be unduly
optimistic without confirmation from another source.
END COMMENT.



11. (C) DCM clarified for Atiku and Adamu the
circumstances that led to Congress's decision to
insert Section 557, as well as the fact that it did
not preclude expenditure of prior-year FMF already in
the pipeline. Atiku wondered if the provision might
be lifted for FY 04. DCM replied that Congress could
take that step but that, as long as the concerns
remained, it likely would not happen. Atiku commented
that he had brokered a meeting between Obasanjo and
Tiv leaders and implied that the Zaki Biam massacre
was no longer an issue for most Tivs. It was his
perception that the "Tiv lobby in the U.S." wielded
considerable influence over a particular Hill staffer,
who in turn influenced her boss. DCM responded that
the Senator most concerned had long-standing concerns
about human rights in Nigeria and elsewhere and that
it would be too simplistic to attribute Section 557 to
the work of Tivs residing in the U.S.


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Elections Tribunals
--------------



12. (C) Atiku was adamant that opposition parties
would get little or nothing from appeals to the
elections tribunals. He thought tribunals would order
new elections in some areas but averred that the
ultimate result would be the same in every case --
victory for the ruling PDP. He did not rebut DCM's
assertion that elections had not even taken place in
some areas but stated that the results were an
accurate reflection of popular will; the PDP had met
with community leaders and obtained their support.
The people did not reject the results and would follow
their leaders' recommendations.



13. (C) Atiku did not anticipate significant unrest
as a result of eventual tribunal decisions that left
the opposition parties with no more National Assembly
seats and governorships than INEC awarded them
initially. "Incumbency confers great advantage in our
system and here in Africa. Not very many people want
to be in the opposition," he remarked.


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COMMENT
--------------



14. (C) We continue to believe that Nigerians'
quiescence represents acquiescence more than
acceptance. However, most Nigerians will accept the
second Obasanjo/Atiku Administration as long as their
lives improve materially. This happening will be the
key to enduring democracy in Nigeria. In this
respect, Atiku and his advisors may have a better idea
of how to proceed on a macro-economic level than does
Obasanjo, the man who created many of the publicly-
owned enterprises that now need to be dismantled. At
the same time, however, Obasanjo's approach to
economic reform (assuming he is serious) likely will
resonate more with Nigerians. The President would
prefer to fix what is broken (everything from Nigeria
Airways to the structures of State support to
agriculture) than to give the market much freer rein.
Atiku's approach might make more economic sense, but
it would prove more difficult politically to pursue
and implement than would Obasanjo's. An early test of
direction will be whether fuel costs go up just a
trifle on June 1 or are allowed to rise to near the
world market price. Atiku's frankly expressed
impatience with his boss indicates that tensions
between the two men continue little abated.
JETER