SCENE SETTER FOR CODEL KOLBE APRIL 17-19 VISIT TO

UNCLAS SECTION 01 OF 04 KINGSTON 001055

SIPDIS

STATE FOR WHA/CARR (WBENT)

MANAGUA PLEASE PASS CODEL KOLBE PRIOR TO DEPARTURE

E.O. 12958: N/A
TAGS: OREP PREL PGOV ETRD ECON SNAR EAID KJUS JM
SUBJECT: SCENE SETTER FOR CODEL KOLBE APRIL 17-19 VISIT TO
JAMAICA

REFS: (A) State 58409

(B) State 51183
(C) State 49138
(D) State 47047
(E) State 43573

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Summary
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1. Post welcomes the 17-19 April visit to Jamaica of CoDel Kolbe.
Jamaica, which has enjoyed a strong democratic tradition since
independence from Britain in 1962, is undergoing a significant
period of transition as longtime political leaders retire, or
prepare to do so. P.J. Patterson, Jamaica's longest serving
Prime Minister, is expected to step down within the next 12-18
months, and candidates within his ruling People's National Party
(PNP) are jockeying to succeed him. The opposition Jamaica Labor
Party (JLP) underwent the retirement earlier this year of Edward
Seaga, who had led his party for 30 years, eight of them as Prime
Minister; Bruce Golding is set to become Leader of the Opposition
on 21 April. Hurricane Ivan inflicted considerable damage on
Jamaica in September 2004 - particularly on infrastructure and
the agricultural sector. The USG provided USD 26.2 million in
hurricane relief assistance, most of which is being administered
by USAID. Although Jamaica and the U.S. generally enjoy cordial
relations, there have been political disagreements, including
over the war in Iraq and the situation in Haiti. The GOJ has
been reluctant to conclude an Article 98 Agreement. The U.S. is
Jamaica's primary trading partner, and tourism, bauxite/alumina
and remittances account for much of this country's foreign
exchange earnings. Jamaica faces challenges to its resource-
strapped educational sector, environmental degradation, and the
spread of HIV/AIDS. End Summary.

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Introduction
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2. Jamaica gained independence from Great Britain in 1962, and
it remains a member of the Commonwealth. The country is a
volcanic and coral limestone Caribbean island about the size of
Connecticut and located 550 miles from Miami. It has a
population of 2.6 million and a GDP of approximately USD 7.2
billion.


3. With its British political and cultural heritage, a
relatively educated and entrepreneurial population and uncommon
natural beauty, Jamaica nevertheless has weaknesses in key
institutions, a bloated bureaucracy, financial resource
constraints, and a lackluster economy. A high crime rate results
in considerable security costs that must be calculated into the
cost of doing business, particularly in Kingston.


4. Despite considerable historical ties to Britain, Jamaica
increasingly looks to the United States - U.S. influences
predominate in trade, popular culture, and immigration patterns.
An estimated one million or more Jamaicans live in the United
States, with approximately 400,000 in South Florida. (The
Government of Jamaica recently estimated the total number of
Jamaicans illegally in the U.S. at 200,000.) Virtually every
Jamaican has a family member in New York, Connecticut, New Jersey
or Florida.


5. United States interests in Jamaica largely relate to
security, as broadly defined, combating the flow of illegal
drugs, strengthening of democratic institutions, fostering
sustainable economic development, and protection of the
environment. Serving the hundreds of thousands of U.S. visitors
to the island is a primary U.S. Embassy concern. Resources are
also directed to encouraging U.S. exports and supporting U.S.
investors and businesses. The Government of Jamaica (GOJ) has
expressed support for the fight against terrorism, but strongly
opposed the U.S.-led coalition action in Iraq.

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Political Landscape
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6. Jamaica has a "Westminster model" parliament consisting of a
lower house, the House of Representatives comprised of 60
directly elected members, and an upper house, a Senate made up of
21 appointees. Power rests largely in the hands of the head of
government, the Prime Minister. He and his cabinet (Ministers
drawn from Members of Parliament and the Senate) decide
government policy. The British monarch, represented locally by
an appointed Governor General, is the largely ceremonial head of
state.


7. Prime Minister P.J. Patterson's People's National Party (PNP)
began an unprecedented fourth consecutive term in government in
October 2002, winning 34 of the 60 elected lower house seats.
The main opposition party, the Jamaica Labor Party (JLP),holds
26 seats. On 20 February, the JLP elected former Senator Bruce
Golding to the party leadership, replacing former Prime Minister
Edward Seaga, who stepped down after 30 years as JLP leader.
Golding was overwhelmingly elected to the House of
Representatives on 13 April, and will officially become Leader of
the Opposition on 21 April.

8. The Prime Minister is constitutionally required to call the
next general election before October 2007. With the recent
retirement of former JLP leader and prime minister Edward Seaga
from representational politics after 43 years, and with the
imminent retirement of PM Patterson after 16 years in power, the
upcoming election -- widely expected to be called in 2006 --
represents a significant change in Jamaica's political landscape.
The JLP, after more than a decade as the opposition party, was
vitalized by a sweep of the 2003 local government elections,
winning 11 of 13 parish councils. As the current PNP government
struggles with a record crime rate, a relatively weak economy,
and leadership candidates embroiled in a variety of corruption
scandals, the JLP feels confident under its new leadership to
wage a campaign to unseat the ruling party.


9. Jamaica seeks to leverage its small-nation influence through
multilateralism via CARICOM, the G77 and the Non-Aligned
Movement. The country maintains cordial relations with Cuba.
Jamaica sees itself as a spokesman for smaller economies,
particularly island states, and pushes for special and
differential treatment for small economies in the FTAA and the
WTO. As the most populous English-speaking CARICOM member (only
Haiti is larger),Jamaica also views itself as a CARICOM leader,
though Trinidad and Tobago's growing economic influence has
eroded Jamaica's claim to deference within CARICOM. Nonetheless,
this relatively small country wields significant international
influence and prestige, and enjoys a status beyond its size in
many international fora. On the bilateral front, conclusion of
an Article 98 agreement remains a U.S. priority.

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Economic Situation
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10. Jamaica's small, middle-income, trade-dependent economy is
emerging from difficult times. CY 2000 marked the first year of
positive growth since 1995 - a marginal 0.8 percent. Economic
growth improved in 2001 to 1.7 percent, and came in at 1.0
percent in 2002. Reported per capita GDP is about $2500 - making
Jamaica a lower middle-income country. A Planning Institute of
Jamaica survey showed that the informal sector equals
approximately 43 percent of the economy. Jamaica is one of the
most highly indebted countries in the world, with official debt
equal to approximately 1.6 times GDP. Jamaica has never,
however, defaulted on its foreign or domestic sovereign debt.


11. Jamaica's economy is heavily import-dependent (almost 50
percent of GDP),and its FY 2002/03 trade deficit was 7.7 percent
of GDP. Jamaica, a member of the WTO, has gradually been
liberalizing both its trade regime and domestic economy (e.g.,
telecommunications) in accordance with its WTO obligations.


12. The United States is Jamaica's primary trading partner. In
2001 total exports from the United States to Jamaica were about
USD 1.5 billion, representing 45 percent of Jamaica's total
imports. Some of the major import categories include petroleum,
grains, machinery and transport equipment. The United States has
been Jamaica's principal export market over the last two decades.
Jamaica exports mostly bauxite/alumina and food to the United
States.


13. Tourism, bauxite/alumina and remittances account for most of
the country's foreign exchange earnings. Tourism had reported
gross earnings of about USD 1.2 billion in 2002. Remittances
from Jamaican migrs (about USD 1.2 billion) are also a large
source of foreign exchange. Uncompetitive traditional
agricultural exports - bananas and sugar - face the impending end
of preferential regimes. The once flourishing apparel industry
has also been contracting dramatically for several years.


14. Jamaica is still recovering from a devastating financial
l
sector crisis. In the mid-1990s, a number of banks, insurance
companies and other financial institutions failed. The U.S.
Savings and Loan crisis amounted to about one percent of U.S.
GDP; the Jamaican Banking crisis amounted to 60 percent of GDP.
In late 2000, the GOJ secured a $325 million World Bank/Inter-
American Development Bank/Caribbean Development Bank financial
sector assistance loan to dig itself out of the bank debt. The
World Bank approved another $75 million financial sector loan in

2002. In order to secure the loans, the government presented an
economic reform plan to be monitored informally by the IMF. This
"Staff Monitored Program" (now concluded) called for lower
interest rates, single digit inflation, no real appreciation of
the Jamaican dollar, and budget deficit reduction. Jamaica
missed the fiscal, exchange rate and interest rate targets, but
has kept inflation in single digits.


15. Price and financial stability have come at a significant
cost to fiscal policy, with Central Government operations
generating a deficit of approximately 7 percent of GDP for
2002/03, well above the SMP target of 4.4 percent of GDP. The
deterioration in the fiscal deficit contributed to a crisis of
confidence, as demonstrated in the almost 40 percent depreciation
in the local currency between January and May 2003 before
recovery commenced. Rating Agency Moody's Investors Service also
downgraded Jamaica's foreign currency country ceiling in May

2003.

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Environment
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16. Jamaica's economy is heavily dependent on the island's
fragile natural resource base, given that tourism, bauxite and
alumina production, and agriculture provide the bulk of foreign
exchange earnings. Environmental degradation and resource
depletion are, therefore, important threats to sustainable
economic growth in Jamaica. The most pressing environmental
challenges affecting the island, in order of severity and
importance, are: coastal water quality (some estimate 80% of
coral reefs have perished); biodiversity and watershed
protection; and air quality around metropolitan Kingston.
Deforestation is also a critical concern, and the United States
Government has recently allocated $6.5 million in debt relief
under the Tropical Rain Forest Conservation Act for purposes of
conservation and reforestation.

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Transnational Crime and Narcotics
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17. Jamaica is a major transit point for South American cocaine
en route to the United States and also the largest Caribbean
producer and exporter of cannabis. The Government of Jamaica
(GOJ) has a National Drug Control Strategy in place that covers
both supply and demand reduction.

18. The GOJ has taken steps to protect itself against drug
trafficking and other organized crime, and has made significant
strides towards intensifying and focusing its law enforcement
efforts towards more effectively disrupting the trafficking of
large amounts of cocaine in Jamaica and throughout Jamaica's
territorial waters. The GOJ has further embraced and enhanced
efforts to improved its position on international cooperation by
fully cooperating in several major international narcotics law
enforcement initiatives, which resulted in the arrest of a number
of high profile Jamaican, Colombian, Bahamian, and Panamanian
narcotics traffickers responsible for the manufacture, trans-
shipment, and distribution of vast amounts of cocaine throughout
the Central Caribbean region. The Port Authority of Jamaica
(PAJ) procured and installed non-intrusive inspection equipment,
including mobile gamma imaging machines, x-ray machines for high-
density cargo, and pallet machine and closed-circuit television
surveillance systems for the Kingston and Montego Bay ports and
the Jamaica Constabulary Force (JCF) Narcotics Vetted Unit took
significant steps to increase its evidential intelligence
gathering capabilities in investigating major narcotics and
crimes figures. In addition, the GOJ agreed to the establishment
of an International Airport Interdiction Task Force comprised of
Jamaican, US, UK, and Canadian law enforcement elements which
will focus on narcotics trafficking and illegal migration at the
country's two major international airports.

19. Jamaica is a party to the 1961 UN Single Convention on
Narcotic Drugs, the 1972 Protocol amending the Single Convention,
the 1971 UN Convention on Psychotropic Substances, and the 1988
UN Drug Convention.
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Travel and Migration
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20. Facilitating legal migration and deterring illegal movement
are key missions for Embassy Kingston. Despite its small size,
Jamaica is a major source of legal and illegal immigrants to the
United States. Embassy Kingston is one of the busiest consular
posts in the world, ranking eighth in terms of visa workload.
The consular section issues 10,000 immigrant visas annually. The
Embassy also receives nearly 150,000 applications for non-
immigrant or "visitor" visas per year. Travel is not one-way.
Well over one million Americans visit Jamaica each year, most as
tourists. About ten thousand U.S. citizens are permanent
residents on the island.

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Education
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21. In the 1960s and 70s, Jamaican secondary education was
considered on par with the UK. The quality of schools has eroded
over the last two decades due to among other things the limited
resources available to maintain high quality education (teaching,
school administration and infrastructure maintenance) and the
"brain drain" associated with the migration of skilled workers -
for example teachers and nurses - to the US, UK and Canada.
University education is still world class, but under tremendous
pressure to successfully address the tertiary-level skills
required to keep Jamaica competitive in the global economy. The
University of the West Indies' campus at Mona on the outskirts of
Kingston is well regarded and home to the Joint Board for Teacher
Education, implementer of President Bush's Center for Excellence
in Teacher Training.

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HIV/AIDS
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22. The Caribbean region's seroprevalence rate of approximately
2.4 percent is second only to sub-Saharan Africa. In Jamaica,
about 1.55 percent of antenatal clinic attendees test positive
for HIV, according to GOJ statistics. Early sexual initiation
and multiple partners among adolescents and the stigma of
homosexuality in Jamaican culture contribute to the potential
risks for an accelerating epidemic in the Jamaican population, as
well as high levels of discrimination against those living with
HIV/AIDS regardless if they are men, women or children. Even if
the disease is successfully contained, HIV is having serious
economic consequences. Should escalation continue at its present
rate, the Planning Institute of Jamaica estimates the economic
cost in five years to equal 6.5 percent of GDP.

TIGHE