Identifier
Created
Classification
Origin
05ACCRA1051
2005-05-27 16:34:00
SECRET
Embassy Accra
Cable title:  

SCENESETTER FOR PRESIDENT KUFUOR'S MEETING WITH

Tags:  EAIR ECON EFIN ELAB GH KWMN PGOV PREL PTER MAS 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.


ACTION EB-00 

INFO LOG-00 NP-00 AF-00 AID-00 A-00 ACQ-00 CEA-01 
 CTME-00 INL-00 DODE-00 DOTE-00 PERC-00 DS-00 EAP-00 
 EXIM-01 OIGO-00 E-00 FAAE-00 VC-00 FRB-00 H-00 
 TEDE-00 INR-00 IO-00 ITC-01 LAB-01 L-00 CAC-00 
 VCE-00 M-00 AC-00 DCP-00 NSAE-00 OIC-00 OIG-00 
 OMB-00 NIMA-00 MCC-00 GIWI-00 ACE-00 SGAC-00 FMPC-00 
 SP-00 IRM-00 SSO-00 SS-00 STR-00 TRSE-00 EVR-00 
 BBG-00 R-00 EPAE-00 IIP-00 SCRS-00 DSCC-00 PRM-00 
 DRL-00 G-00 SAS-00 SWCI-00 /004W
 ------------------F69013 271638Z /38 
FM AMEMBASSY ACCRA
TO SECSTATE WASHDC IMMEDIATE 8640
INFO NSC WASHDC IMMEDIATE
DIA WASHDC IMMEDIATE
CIA WASHDC IMMEDIATE
CDR USEUCOM VAIHINGEN GE IMMEDIATE
USDOC WASHDC IMMEDIATE 0428
ECOWAS COLLECTIVE
S E C R E T ACCRA 001051 

SIPDIS


E.O. 12958: DECL: 05/27/2025
TAGS: EAIR ECON EFIN ELAB GH KWMN PGOV PREL PTER MAS
SUBJECT: SCENESETTER FOR PRESIDENT KUFUOR'S MEETING WITH
PRESIDENT BUSH

REF: A. ACCRA 892

B. ACCRA 658

Classified By: AMBASSADOR MARY C. YATES FOR REASONS 1.5 D AND E.

--------------------
Summary/Introduction
--------------------

S E C R E T ACCRA 001051

SIPDIS


E.O. 12958: DECL: 05/27/2025
TAGS: EAIR ECON EFIN ELAB GH KWMN PGOV PREL PTER MAS
SUBJECT: SCENESETTER FOR PRESIDENT KUFUOR'S MEETING WITH
PRESIDENT BUSH

REF: A. ACCRA 892

B. ACCRA 658

Classified By: AMBASSADOR MARY C. YATES FOR REASONS 1.5 D AND E.

--------------
Summary/Introduction
--------------


1. (C) Ghana is a democratic, market-oriented, pro-American
country in a region marked by conflict and authoritarian
rule. It has one of the best human rights records in Africa
and has made significant efforts to combat trafficking in
persons. President John Kufuor is five months into his
second term which has so far been marked by intra-party
tensions and sluggish decision making. Ghana exerts regional
leadership, strongly supports the Global War on Terrorism,
and is a committed, major contributor to UN peace keeping
operations. President Kufuor has met President Bush four
times and has positive views of the United States. Kufuor
understands that economic growth is critical to continued
political stability in Ghana. Despite some concerns that his
government has been slow to remove obstacles to foreign
investment, Kufuor's administration has done an admirable job
over the last four years of stabilizing the economy and
fostering an environment for stronger growth.


2. (C) This cable outlines U.S.-Ghana political, economic,
military, and security relations. It suggests issues that we
may raise with Kufuor and those that he may raise with us.
The Bush/Kufuor meeting may offer an opportunity to discuss
our concerns related to trafficking in persons and
corruption, and also congratulate Kufuor on excellent
counter-terrorism and military cooperation. Kufuor may raise
MCA, civil aviation concerns, problems with the IMF,
cocoa/child labor, and regional issues. End Summary

--------------
U.S.-Ghana Relations
--------------


3. (SBU) Ghana is a reliable, democratic partner for the U.S.

in peacekeeping, conflict resolution, counter-terrorism, and
economic development. U.S. interests center on support for
Ghana's fifteen-year-old democracy, promotion of open
markets, and the reduction of poverty. Key components of the
broad U.S.-Ghana relationship are:


4. (SBU) Democracy: Ghana's December 2004 parliamentary and
presidential election, the fourth election under the 1992
constitution, was seen as free, fair and generally peaceful.
Ghana has a free, lively media and civil society, a largely
independent judiciary and Electoral Commission, and an
apolitical military. It generally respects human rights and
rule of law. However, the long-term success of Ghana's
constitutional democracy is not guaranteed and democratic
institutions are weak. Corruption is a concern. We
supported the 2004 election with Mission observers and $1.3
million in election assistance. We have programs to
strengthen parliament, the judiciary, the police and the
media.


5. (SBU) Development Assistance and Trade: Annual USG
assistance to Ghana is approximately $75 million. This
includes one of USAID's largest programs in Sub-Saharan
Africa. Ghana receives approximately $55 million in USAID
grant assistance and food aid per year, with a focus on
education, health, HIV/AIDS, environment, trade and
investment, and democracy and governance. The U.S. and Ghana
have a relatively dynamic trade relationship. Ghana is the
fifth largest market in Africa for U.S. goods, and USTR
recently named Ghana a "pacesetter" country, due to its
relative success in taking advantage of AGOA.


6. (S) Security: Ghana provides us excellent cooperation in
counter-terrorism and counter-narcotics efforts.
Intelligence sharing is outstanding. We have a robust
mil-mil relationship, in part a recognition of Ghana's
outstanding contribution to peacekeeping (Ghana is the fourth
largest contributor to UN peacekeeping forces worldwide) and
to regional stability. Ghana was key to peace efforts in
Liberia and Cote d'Ivoire. During the recent Togo crisis,
Ghana played a constructive, low-key role, in support of the
Economic Community of West African States (ECOWAS). Kufuor
served as Chair of the ECOWAS for two terms, ending January

2005. The Executive Secretary of ECOWAS is Ghanaian
(Mohammed Ibn Chambas). Ghana has also been welcoming to


refugees and currently hosts 44,000 refugees, mostly
Liberian. We support Ghana's regional role through USAID's
West Africa Regional Program (WARP) and through our Refugee
Coordinator Office, both based in Accra.

--------------
Internal Political Situation
--------------


7. (SBU) President Kufuor of the New Patriotic Party (NPP)
won reelection for a second four-year term in the December
2004 election, defeating John Atta Mills of the National
Democratic Congress (NDC) party. The NPP has a strong
majority in parliament, but Kufuor's narrow (52%) victory in
the presidential race opened the door to substantial internal
party friction and an increasingly polarized political
environment.


8. (SBU) Kufuor began his second term with some positive
momentum. He clearly articulated three priorities: 1)
human resource development, 2) private sector development,
and 3) a continued emphasis on good governance. He launched
politically risky petroleum deregulation and selected a
Cabinet which drew heavily on experience and loyalty. He
presented and received parliamentary vetting and approval of
a solid budget.


9. (SBU) However, over the past few months, this momentum has
slowed and Kufuor has been on the defensive. In April, the
NPP lost a key parliamentary by-election in its heartland
Ashanti Region. The NPP has been distracted by intra-party
wrangling over the party's choice to succeed Kufuor in the
2008 election (eleven contenders, including many ministers,
are already reportedly in the running). The President called
an emergency meeting to sort out tensions in the party.


10. (C) The Kufuor government has also faced new charges of
corruption, highlighted by Ghana's free media. Energy
Commission Members were forced out under a cloud. The
Administration was attacked for alleged corruption in the
creation of Ghana International Airlines. Over the past
week, media allegations linked the President to a corrupt
hotel deal and an extra-marital affair with an
Iraqi-American. (Kufuor denies involvement in the hotel,
bought by his son, but the GOG has not commented on the other
allegation).


11. (C) Political decision making is sluggish in many areas.
Parliament is in its second session of 2005 but has yet to
pass one non-budget law. Kufuor has defended his decision on
petroleum deregulation but is reluctant to continue with the
petroleum sector reforms required by the IMF. The President
has been criticized for being slow in selecting District
Chief Executives and ambassadors. On the other hand, on May
20, Kufuor announced major changes in the top military
hierarchy, in an expected rotation.


12. (C) Continued, pointed verbal attacks between former
President Rawlings (of the NDC) and NPP leaders, while not
unusual in recent years, have further polarized Ghanaian
politics over the past few months. The opposition NDC has
led four demonstrations this year, the latest on May 26,
against recent petroleum price hikes. NDC leaders are bitter
about the recent election loss and perceived NPP
vindictiveness and heavy-handedness in parliament. While
hopeful that the NPP and Kufuor's current problems will help
the NDC in 2008 elections, the opposition has its own
internal friction and financial difficulties.

--------------
Security
--------------


13. (SBU) Ghana's 8,000 strong military is characterized by
its allegiance (at least over the past five years) to elected
civilian leadership, as well as a rich peacekeeping tradition
and a close relationship to the United States. Since 1960,
over 80,000 Ghanaian soldiers and police have participated in
peacekeeping missions worldwide, including currently in
Liberia, Sierra Leone and Cote d'Ivoire. We provide support
through our Excess Defense Articles (EDA) program,
International Military Exchange Training (IMET) training, and
African Contingency Operations Training and Assistance
(ACOTA) program. Ghana opened the Kofi Annan International
Peacekeeping Training Center in 2004, the only center of its
kind in West Africa.



14. (SBU) Our mil-mil relationship also includes West Africa
Training Cruises and Joint Combined Exchange Training. Ghana
is the newest member of the U.S. National Guard State
Partnership Program, with North Dakota (only the second in
Sub-Saharan Africa) which will further strengthen mil-mil and
civilian-military ties. Ghana participates as an African
Fuel Initiative Hub country. Ghanaians avidly participate in
DOD's counterterrorism Fellows programs. Military visits
over the past year included two ship visits, nine General
Officer or Flag Officer visits, and a regional coastal
security conference.


15. (S) Ghana is a strong ally in the Global War on
Terrorism. Ghana has signed all 12 UN terrorism conventions
and a Customs Mutual Assistance Agreement. We have excellent
police contacts and good cooperation with the police and
other security services, including the intelligence services,
on matters related to terrorism. We have also assisted
Ghana's police, customs, and counter-narcotics agencies.
RMAS and the Ghana Security Services cooperate closely on
counterterrorism.

--------------
State of the Economy
--------------


16. (SBU) In 2000, the Kufuor government inherited a
distressed economy: high debt levels, accelerating inflation
and interest rates, a plummeting currency (the "cedi"),all
exacerbated by declining world cocoa and gold prices (the
main foreign exchange earners),and rising crude oil prices.
Kufuor's government strengthened fiscal and monetary policies
considerably, reining in spending and borrowing, and cutting
subsidies by imposing badly needed energy and water price
increases.


17. (SBU) The improved policy performance along with higher
cocoa and gold prices since 2002 resulted in higher economic
growth, reaching 5.2% in 2003 and 5.8% in 2004. 2004
inflation fell to below 12%, interest rates to below 20%, and
the cedi is stable. Tight monetary policies have restored
confidence in the economy, and the IMF calls the government's
control of expenditures during the 2004 election year an
"historic achievement."

-------------- ---
Positive Economic Trends: MCA and Regional Role
-------------- ---


18. (SBU) Ghana is becoming a gateway to West Africa, due in
part to its political stability and economic reforms, but
also due to turmoil in the region. Trade and investment
flows to and through Ghana are increasing, and businesses,
Embassies, NGOs, and international organizations are
increasing their presence in Ghana, using it as a regional
hub.


19. (SBU) In May 2004, the Millennium Challenge Corporation
(MCC) designated Ghana eligible for Millennium Challenge
Account (MCA) funding. In July 2004, Ghana reached
Completion Point under the Heavily Indebted Poor Country
(HIPC) Initiative, resulting in $4.2 billion debt relief.
Ghana is also realizing large foreign remittance flows, as
well as increasing foreign investment, including from U.S.
companies such as Newmont and ALCOA. The government has
resolved many of the investment disputes that undermined
U.S.-Ghana relations in recent years.


20. (SBU) Ghana's impressive performance has not gone
unnoticed. Standard and Poor's assigned Ghana a relatively
high "B " sovereign credit rating. Fitch Rating Agency
upgraded Ghana to a "B " rating in March 2005, citing HIPC
Completion Point, improved economic indicators and fiscal
restraint through the election cycle.

-------------- --------------
Concerns: Energy, Business Climate, External Shocks
-------------- --------------


21. (SBU) The government faces major challenges in its effort
to reform the economy. Inefficiencies in the energy sector
could pose a risk to continued solid economic performance,
and Ghana is having trouble fulfilling its commitment to the
IMF to deregulate the petroleum market. Also, despite
Kufuor's promise of a "Golden Age of Business," Ghana remains
a difficult place to do business. Contract sanctity and
difficulty in obtaining clear land title are concerns.


Ghana's congested courts make it difficult to resolve
disputes. Due to excessive bureaucracy the average time to
start a business exceeds 60 days, high compared to Ghana's
peers. The delays associated with establishing a business
contribute to widespread corruption, as the heavy paperwork
and licensing requirements create incentives to bypass normal
channels. While the corruption damages Ghana's reputation,
it also scares away legitimate investors and diminishes the
potential impact of new investment on economic growth and
reducing poverty. Finally, Ghana's dependence on commodity
exports leaves it highly vulnerable to external shocks.

--------------
Economic Outlook
--------------


22. (SBU) Despite these concerns, the overall outlook is
positive. If Ghana maintains fiscal and monetary discipline,
world oil prices stabilize, and favorable external conditions
continue for gold and cocoa, the economy should remain stable
and possibly repeat or exceed the 5.8% 2004 growth level in

2005.

--------------
Issues We Could Raise with Kufuor
--------------


23. (C) President Bush or others interlocutors could include
the following issues in discussions with President Kufuor:

-- TIP: Ghana is a source, transit and destination country
for trafficked persons and has an internal trafficking
problem. The GOG has taken steps to educate the public
about trafficking and to provide assistance to victims and
their families. Nonetheless, Ghana received a Tier 2
placement in the 2005 Trafficking in Persons Report. This is
a drop from Ghana's status in 2004 as the only country in
Sub-Saharan Africa to be Tier 1. Ambassador Yates raised
with Kufuor on March 9 the need for Ghana to pass
anti-trafficking legislation or face a drop in Tier status.
In a May 27 meeting with the Ambassador, the Interior
Minister said a draft anti-trafficking bill had just been
passed by Cabinet and he was hopeful parliament would pass it
into law by the end of July. We should note to Kufuor that
we are disappointed by this drop in Ghana's status. We
recognize Ghana has a commitment to fighting trafficking in
persons, but needs to do more in protection, prosecution and
prevention ) particularly through passage of pending
anti-trafficking legislation.

-- Counterterrorism and Mil-Mil: We should commend Ghana for
its excellent cooperation in counter-terrorism and
intelligence sharing. We should also express our
appreciation to Ghana for the strong military-military
relationship, particularly Ghana's peacekeeping role, and
congratulate Kufuor on the National Guard State Partnership
Program with North Dakota.

-- Corruption: We might note growing concerns raised by
private business, NGOs, and others about corruption in Ghana.
Ambassador Yates raised this in a May 5 meeting (reftel).
We can emphasize that corruption hurts American companies,
undermines economic growth and development, and damages
Ghana's reputation.

--------------
Issues Kufuor Might Raise
--------------


24. (C) Kufuor Might Raise the following issues. We will
meet with MFA contacts over the next week to see if there are
other items the GOG expects to raise:

-- Status of Ghana's MCA Program: The MCC designated Ghana
eligible for MCA assistance in FY04 and FY05. The MCC and
Ghana hope to complete a compact by fourth quarter 2005.
Ghana's proposal is for approximately $290 million, and
focuses on accelerating agri-business development. Ghana's
difficulty in assembling a staffed and funded MCA team
delayed negotiations. After Ambassador Yates demarched
President Kufuor in March 2005 to speed up MCA preparations,
he established a core team with a $500,000 budget necessary
to hire technical consultants. Kufuor closely monitors the
talks and may raise MCA issues while in Washington. The MCC
will keep staff in Ghana over the next six months to ensure
they make sufficient progress to sign a compact in 2005.


-- FAA downgrade of Ghana to Category II: On April 29,
2005, FAA downgraded Ghana to Category II status due to air
safety oversight concerns, and barred Ghanaian airlines from
U.S. airspace. In response to this decision, President
Kufuor attached all civil aviation oversight to his office.
Given his keen interest in civil aviation, President Kufuor
may request assistance on regaining Category I. Embassy and
FAA have informed all appropriate government officials --
including President Kufuor -- of the measures needed to
regain Category I status, and the FAA has offered technical
assistance (for a fee) to assist the government to improve
its safety oversight.

-- Issues with the IMF: The IMF and World Bank approved HIPC
Completion Point in July 2004 following President Kufuor's
promise to deregulate the petroleum sector -- ending state
energy subsidies -- in February 2005. The government took
the difficult political decision to raise gasoline prices 50%
in February. However, it has delayed instituting an
automatic process to adjust domestic prices to reflect
changes in world petroleum prices, thus ensuring continuing
full cost recovery. The government must implement this
automatic mechanism and also pass a new petroleum law prior
to the next IMF Board meeting on June 13, or risk delays to
IMF and other donor disbursements. The government is
concerned that a further 20% price increase is warranted, due
to world price increases since February. Kufuor is reluctant
to increase prices again so soon, so may seek USG support to
convince the IMF Board to show leniency.

-- Cocoa and Child Labor: Senator Tom Harkin and Congressman
Elliot Engel are considering legislation to mandate that U.S.
chocolate manufacturers comply with a child-labor free
labeling requirement if cocoa cannot be certified as
child-labor free by July 1. Industry says such a requirement
would make it impossible for U.S. manufacturers to source
cocoa from the region, which accounts for 70% of the world's
supply. U.S. chocolate manufacturers have been in Ghana over
the past week to work with the GOG and local NGOs on this
issue.

-- Regional Issues: Kufuor might ask for U.S. views on
regional issues such as Liberia (especially Charles Taylor),
Togo, and Cote d'Ivoire.
YATES


NNNN