FY 2004 ESF REQUEST

UNCLAS SECTION 01 OF 02 LILONGWE 000165

SIPDIS

USAID FOR AFR/SA

E.O. 12958: N/A
TAGS: EAID PREL PHUM PGOV KCOR ECON PTER MI
SUBJECT: FY 2004 ESF REQUEST

REF: STATE 33230


1. SUMMARY. Post welcomes the opportunity to submit proposals
for funding under ESF's Africa Regional Fund. Our four
proposals are directly linked to MPP goals related to
counterterrorism, the environment and economic development,
and democracy and governance.


2. Proposals follow:


A. Anti-Money Laundering
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The GOM's lead agency for combating money laundering, the
Reserve Bank of Malawi (RBM),has shown the will to identify,
investigate, and interdict money laundering activities and
has scored some modest successes over the past two years.
The banking system's relative underdevelopment, lack of
expertise in forensic accounting, and resource constraints,
however, have kept the RBM from identifying and shutting down
operations suspected of transferring illicit money into and
out of Malawi. ESF funds could be well-used to increase the
RBM's skills at investigating suspicious transactions and
monitoring external financial flows by establishing an
investigation that would eventually become a Financial
Intelligence and Surveillance Team (FIST). Most likely, the
unit would be a small group that would connect the work of
RBM's Bank Supervision and International Operations
Departments. Liaison between the Departments already occurs,
but having a team of dedicated and well-trained professionals
to monitor suspicious transactions would raise the profile of
anti-money laundering activities.

The main components of an ESF project would be one-time costs
to equip the FIST, such as computers and training for the
team members. Training would be most beneficial if conducted
in Malawi with an experienced investigator in the country for
at least 60 days and further available for follow-up.
Experts could be brought in from South Africa, where the head
SADC regional trainer for money laundering prevention and
compliance is located, or from the U.S.

Estimated cost: $100,000

MPP linkage: This project strengthens the Mission's ability
to support increased GOM participation in the fight against
terrorism, particularly in the regional context. MPP Goal
Paper 2, "Democratic System and Practices", Strategy 3
supports increased Malawian participation in the regional
fight against terrorism. A likely impact of this proposal
would be in the first performance indicator, "Increased
Support for International and Regional Counterterrorism
Initiatives".


B. Counter-Terrorism Legislation
--------------
Since the terrorist attacks in the U.S. in 2001, the GOM has
condemned acts of terrorism strongly, publicly, and
frequently. In June of 2003 the GOM matched these words with
action by detaining and deporting five expatriate Muslims
believed to be linked to Al Qaeda. While this operation was
generally successful, one weakness revealed was the complete
lack of counterterrorism legislation within the country.
Though the GOM has ratified eleven of the twelve UN
Conventions on counterterrorism, such legislation remains
absent domestically. The GOM has expressed interest in
drafting such legislation, and has directly asked the USG for
assistance.

Post proposes that sufficient ESF funds be allocated to allow
USG subject matter experts from DoJ to travel to Lilongwe in
order to work with counterparts at Malawi's interministerial
Counterterrorism Task Force in drafting counterterrorism
legislation appropriate for the country's legal system.
Additionally, the GOM would have a Washington D.C. point of
contact to consult with on a regular (and as-needed) basis to
consult with regarding the implementation of and legal
interpretation of such laws.

Estimated cost: $35,000

MPP linkage: This project supports the Mission's goal of
increasing support for international and regional
counterterrorism initiatives. Malawi has shown its
willingness to succeed in preventing terrorist activities,
and with some assistance in capacity building could play a
constructive role in regional efforts to combat terrorism.
Strategy 3 of MPP Goal Paper 2, "Democratic System and
Practices", supports increased Malawian participation in the
regional fight against terrorism. A likely impact of this
proposal would be in the first performance indicator,
"Increased Support for International and Regional
Counterterrorism Initiatives".


C. Environment
--------------
Malawi's ability to supply enough hydro-electric power to its
people depends heavily on two things: the Liwonde Barrage,
which retains and releases the waters of Lake Malawi and the
Shire River; and the string of Nkhula power stations, all of
which are located down-stream of the barrage on the lower
Shire River. A growing encroachment of aquatic weeds around
the Liwonde Barrage and the in the river has contributed to
electricity supply problems, which have worsened to the point
of hindering economic development. The Electricity Supply
Company of Malawi (ESCOM) has said the weeds and increasing
siltation in the river basin have severely hampered power
generation. Aquatic weeds clogging the aging Liwonde Barrage
and Nkhula power stations worsen in the rainy season as heavy
rains flood the riverbanks and send mats of thick reeds
adrift. Suspension of power generation, necessary to remove
weed build up and flush filtration systems, in turn prevents
businesses, medical facilities, and government services form
operating. One report noted growing sanitation problems in
Blantyre because the Water Board did not have adequate
electricity to properly manage the water systems.

Post proposes that ESF funds be provided to allow
subject-matter experts to conduct an engineering assessment
and architectural refurbishment of the Liwonde Barrage. Such
work would help better regulate water flow and control
aquatic weed levels in the Lower Shire River where the
hydroelectric plants are located.

Estimated cost: $300,000

MPP linkage: This project supports MPP Goal Paper 1 in
fostering economic growth and development. Advances made in
this sector will contribute to the country's ability to
stabilize its fragile economy, contribute to political
stability, and encourage sustainable environmental
management.


D. Controlling Corruption
--------------
Malawi's Anti-Corruption Bureau (ACB) has encountered
significant obstacles in its efforts to carry-out is mandate
as a watchdog of corruption. Stalled legislation, lack of
civic awareness, and a lack of understanding of the results
of corruption combined with a weak political will, have all
contributed to the problem. While certain civil-society
groups are attempting to push for appropriate corruption
controls, the voice is weak and lacks the more compelling
support of informed public consensus. To reinvigorate past
and ongoing efforts, and to build upon the opportunity for
broad public debate which arises after national elections,
the U.S. Mission would support a broad-based civic education
drive. Activities would focus on concrete examples of how
corruption impacts the lives of ordinary people and stimulate
involvement at the civic level, educating citizens about the
need to combat corruption at all levels of government.

The project would likely be implemented using an existing
USAID central mechanism combined with an innovative approach.
In concert with Transparency International, this project
would engage civic leaders, government officials, and local
advocacy groups.

Estimated cost: $300,000

MPP linkage: Control of corruption is a key element in
strengthening democratic institutions in Malawi. In goal
paper 2, Democratic System and Practices, the second
performance indicator measures success with Transparency
International's Corruption Perception Index. This project
would likely improve Malawi's standing on this index, pushing
the country closer to Millennium Challenge Account
eligibility.


BROWNING