KINGSTON POL/ECON ROUNDUP: MAY 7 - JUNE 16, 2005

UNCLAS SECTION 01 OF 06 KINGSTON 001534

SIPDIS

SENSITIVE

STATE FOR WHA/CAR (BENT) AND WHA/PDA
STATE ALSO FOR INL/LP, EB/TPP, AND EB/IFD
STATE ALSO FOR CA/OCS/ACS/WHA (RUTH BRANSON)
STATE PASS OPIC FOR TABERNAKI
CUSTOMS MIAMI FOR LOWEN AND MAHABIR
SANTO DOMINGO FOR FCS, FAS, AND LEGATT
STATE PASS USTR FOR A. GASH-DURKIN
DOJ FOR OPDAT/ R LIPMAN
TREASURY FOR L LAMONICA

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ECON EINV JM SNAR KCOR KCRM ELAB CASC TIP
SUBJECT: KINGSTON POL/ECON ROUNDUP: MAY 7 - JUNE 16, 2005



1. This week's topics:

-- TIP: GOJ Responding to Threat of Sanctions
-- Foreign Carriers Yield After Call Blocking Crisis
-- Mayor of Spanish Town Resigns Following Arrest
-- Seaga Offers Advice on his 75th Birthday
-- Crime Statistics - Count Them Yourself
-- Tax Laws to Fight Crime
-- Prime Minister Fights Corruption
-- Four Arrested in Death of American Tourist
-- Local Citrus Threatened by U.S. Bacteria
-- GOJ Reacts to Inconclusive BSE Test Results
-- Delta Opens New Route to Jamaica
-- Inflation Soars
-- Growth In Local Film Industry Continues
-- Jamaican Invents Portable Clothes Dryer
-- Poverty Intensifies In Jamaica

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GOJ Responding to Threat of Sanctions
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2. The GOJ has responded vigorously to the June 3 release of
the Trafficking in Persons (TIP) Report, which downgraded
Jamaica to Tier 3 status and opened the door to the
possibility of sanctions by the USG. Senior GOJ officials,
including Prime Minister P.J. Patterson and the Leader of the
Opposition, have criticized the report for unfairly labeling
Jamaica, but have at the same time vowed to take action
against human trafficking to avoid sanctions. The Office of
the Prime Minister, the Ministry of Foreign Affairs and
Foreign Trade, and the Ministry of National Security, which
labeled the report "prejudicial," are reported to be
spearheading Jamaica's efforts to combat trafficking. Media
coverage of the TIP Report and of related issues, including
children's welfare, has been extensive in the two weeks since
the report was released. Reports are beginning to emerge of
planned concrete actions to combat TIP, including raids of
massage parlors in Kingston at the behest of Mayor Desmond
McKenzie (septel).

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Foreign Carriers Yield After Call Blocking Crisis
-------------- --------------


3. On June 1, by ministerial edict, Commerce Minister Phillip
Paulwell ordered Jamaica's three main local telephone
companies -) Cable & Wireless, Digicel, and MiPhone )- to
block the incoming signals of all foreign telecom carriers
that had not agreed to pay a new fee imposed on calls
terminating in Jamaica. The tax, amounting to USD 0.03 per
minute to landline networks and USD 0.02 per minute to
cellular networks, is called the Jamaican Universal Service
Fund, and was designed by Paulwell to raise J$ 1 million (USD
16,400) per year over the next three years to help develop
Jamaica's infrastructure. On June 6, Charge and Econoff met
with Paulwell to discuss the situation (Ref A). On June 8,
local media reported that all overseas carriers had agreed,
albeit reluctantly, to pay the fee, which represents an
increase in the price of some calls from the U.S. to Jamaica
of more than 80 percent.

--------------
Mayor of Spanish Town Arrested
--------------


4. Dr. Raymoth Notice, the mayor of Spanish Town, resigned on
June 16, one day after he was arrested and charged with five
counts of assault against his wife, Verna Notice. Although
his wife agreed to drop all charges if Notice agreed to
attend counseling, the former mayor told the media that he
has lost his moral authority to lead. Following a meeting
with senior officer of the Jamaica Labor Party (JLP),Notice
also announced his resignation as chairman of the St.
Catherine Parish Council. Senator Dwight Nelson, the JLP's
spokesman on information, told the media that the party would
not tolerate assault against women. In related news, police
investigations continue into allegations that a Suzuki Grand
Vitara automobile assigned to the former mayor was seen
leaving a crime scene in St. Catherine on June 3. Police
seized the car on June 15 (septel).

--------------
Seaga Offers Advice on his 75th Birthday
--------------


5. On May 27th, the eve of his 75th birthday, former prime
minister and opposition leader Edward Seaga was praised by
his friends and colleagues at a lavish testimonial banquet
held in his honor at the Jamaica Pegasus hotel in Kingston.
After more than five hours of thanks, compliments, good
wishes, and tributes to Saga's 45 years of government
service, the former Jamaica Labor Party leader shared his
advice on the future success of the country. First, Seaga
urged Finance Minister Omar Davies, who was in attendance
along with many other senior members of the ruling People's
National Party, to &fix the exchange rate.8 The move, he
insisted, would cause interest rates to fall quickly,
providing affordable financing for a variety of the
government's initiatives. These should include, Seaga said,
the merging of the Jamaica Defense Force (JDF) with the
Jamaica Constabulary Force (JCF),a move that would increase
the police force by nearly 50 percent. Third, Seaga urged
greater focus and increased spending on the country's
education system.

--------------
Crime Statistics - Count Them Yourself
--------------


6. On June 10, the Constabulary Communication Network (CCN),
the communications unit of the Jamaica Constabulary Force
(JCF),advised reporters that it would no longer provide
weekly crime statistics, and that interested organizations
would have to tally the numbers themselves. CCN
Superintendent Ionie Ramsay-Nelson said the decision was made
after the head of the statistical department suffered a heart
attack brought on by work pressure. She commented, "We have
contributed to the man's condition and I think we have a
responsibility to relieve the stress." The CCN compiles
statistics on murders and fatal shootings on a daily basis
and releases statistics on a weekly basis that include all
other crimes committed.


7. Derrick Smith, Opposition spokesman on national security,
demanded that the crime statistics continue to be made
available to the media and general public, saying "We refuse
to accept this whittling away of people's individual rights,
including the right of information on matters of national
concern." As of June 14, 781 individuals have been murdered
in Jamaica since January 1.

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Tax Laws to Fight Crime
--------------


8. On June 9, Prime Minister P.J. Patterson stated that he
wants tax laws to be used aggressively against drug dealers,
extortionists, and other leaders of organized crime against
whom the police have had difficulty building cases. While
recognizing that Jamaica does not have the equivalent of U.S.
racketeering laws, Patterson argued that income tax and other
tax laws could be useful weapons against persons who are
conspicuously wealthy without visible or obvious sources of
income. Patterson claimed that he was frustrated with the
lack of effort put forth to use tax laws as an anti-crime
tool. When asked why no one had been dismissed for inaction,
Patterson replied, "I can fire a minister. I can't fire the
Income Tax Department."

--------------
Prime Minister Fights Corruption
--------------


9. The Prime Minister on June 13 suggested several measures
to deal with the unethical behavior of public sector
officials: retirement of officials in the public interest;
amending the Public Bodies and the Corruption Prevention Acts
to strengthen penalties for unethical behavior; and reducing
the number of public officials monitored by the Corruption
Prevention Commission to allow a greater focus on officers
whose positions expose them to graft. An additional proposed
amendment would prevent officials guilty of unethical
behavior from migrating to other departments or agencies.

--------------
Four Arrested in Death of American Tourist
--------------


10. Natasha Timberlake, Dennis Morris, and Damion Miller were
arrested on June 13 for the murder of American tourist
Stephen King. Police stated that the investigation has
revealed that Timberlake was seen using King's credit card to
make purchases after the tourist was reported missing. On
May 22, King's body was found, burned, in a shallow grave in
the Flankers area of St. James.

--------------
Delta Opens New Route to Jamaica
--------------


11. On June 6, Econoff spoke with Benet J. Wilson, Senior
Manager for Media Relations at Delta Airlines, regarding the
newly established route between Cincinnati, Ohio, and Montego
Bay, Jamaica. Wilson said that the decision to begin service
to Montego Bay was made in September 2004, when Delta
Airlines made a strategic decision to add more international
routes, with a particular focus on the Latin American and
Caribbean markets. While Delta Airlines has a long history
of code sharing with Air Jamaica, Wilson said that the
decision to fly Delta-flagged airplanes to Montego Bay was
not a reaction to Air Jamaica's shaky financial situation.
She added that Delta took Air Jamaica's recent problems in to
consideration, but would have added the route even if Air
Jamaica were fully solvent. (Comment: If air Jamaica does
fail in the coming years, Delta now has an established
foothold from which to expand in the Jamaican market to avoid
losing its code-sharing clientele. End Comment).

--------------
Local Citrus Threatened by U.S. Bacteria
--------------


12. The GOJ has raised intense awareness within the country's
citrus industry of the imminent threat that the
identification of citrus canker in Florida and The Bahamas
pose to the local industry. Citrus canker is a highly
contagious disease of citrus crops caused by the bacterium
"Xanthomonas axonopodis." Minister of Agriculture Roger
Clark has pointed out that the Jamaican citrus industry,
which is currently struggling to cope with the devastating
effect of the tristeza virus, could easily be wiped out by
the citrus canker and its pathogen, "citri." In addition to
a public education campaign, the GOJ has commenced a
nationwide surveillance exercise and has strengthened its
quarantine capabilities to monitor imports of all species of
Rutaceae, which include the genus Citrus. The GOJ has not,
however, issued any WTO notifications of amendments to its
sanitary or phytosanitary regulations.

--------------
GOJ Reacts to Inconclusive BSE Test Results
--------------


13. GOJ Director of Veterinary Services, Dr. Headley Edwards,
has adopted an uncharacteristically consultative and
scientific approach to the announcement of a "reactive"
result from the retesting of cattle tissue in the United
States for Bovine Spongiform Encephalopathy, or BSE.
Subsequent to the announcement, Edwards contacted Post's
Agricultural Office to request additional information from
USDA on the U.S. surveillance and testing program. He
acknowledged the unique nature of the discrepancies in the
Immunohistochemistry (IHC) and Western Blot test results, and
said, in this regard, that changes to Jamaica's sanitary /
phytosanitary regulations will be informed by the results
from the Office of International Epizooties (OIE) reference
laboratory, and the soundness of the U.S. monitoring and
testing program.

--------------
Inflation Soars
--------------


14. Prices jumped by 2.2 percent during May, bringing
inflation for the first five months of 2005 to 5.7 percent,
or 2.7 percentage points higher than in the similar period of

2004. Inflationary impulses were driven by increases in
domestic food and drink. Jamaicans are also expected to face
higher electricity and bus fares this summer. While the
level of electricity increase is yet to be announced, the
Office of Utilities Regulation (OUR) has confirmed that the
adjustment is automatic and relates to the spike in oil
prices, the jump in local inflation, and rehabilitation costs
associated with Hurricane Ivan. With respect to bus fares,
the OUR is already analyzing the extent of the increase
required to reduce the public company's USD 10 million loss
last year. These adjustments, combined with spiraling
domestic food prices and tax increases, are expected to feed
inflation in the latter half of 2005.

--------------
Growth In Local Film Industry Continues
--------------


15. Jamaica's film industry earned a record USD 20 million
last year on the back of several foreign film projects shot
on the island. Based on figures published by Jamaica
Promotions Corporation (JAMPRO),earnings in 2004 were 40
percent higher than in 2003 and USD 14.3 million higher than
in 2002. Chief among the projects shot on location in 2004
was the reality TV series entitled "The Amazing Race." The
industry is expected to continue to remain buoyant in the
short to medium term, given the recent signing of a
co-production treaty with the UK to facilitate a sharing of
expertise and talent for film production.

--------------
Jamaican Invents Portable Clothes Dryer
--------------


16. Jamaican Halden Morris, a lecturer at the University of
the West Indies, has invented a portable clothes- and
hairdryer. The device, which works from electricity mains
and weighs about 20 pounds, is designed to fit in a suitcase.
Operated by a fan heater, the dryer can dry about two days
worth of clothes in about 30 minutes. In 1984, Halden also
devised a way to strengthen the font ball on IBM typewriters,
but did not patent his invention; several years later, his
invention was commercialized. Having learned from this
experience, Halden secured a U.S. patent for his current
invention in July 2004 and is now seeking a manufacturer to
produce the dryer for executive travelers. Jamaica's own
patent laws are outdated, forcing inventors like Halden to
seek patent protection in the U.S. The parliamentary council
has been given drafting instructions to revise local
intellectual property laws.

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Poverty Intensifies In Jamaica
--------------


17. Based on data published by the Planning Institute of
Jamaica, the number of Jamaicans living in poverty, as
measured by per capita consumption, jumped by almost four
percentage points to 19.7 percent between 1998 and 2002.
This is a turnaround from the results of the last survey,
which showed that poverty had declined from 35.2 percent of
the population to 15.9 percent between 1992 and 1998. At
that time, the reduction was attributed to, among other
things, the taming of inflation and liberalization.
According to the latest survey, the poverty line was based on
an annual per capita consumption level of USD 773 for an
individual, USD 608 below the nation average. The data also
showed that poverty had increased in 11 of the country's 14
parishes, with St. Ann replacing St. Mary as the poorest
parish. This is particularly interesting as St. Ann accounts
for a significant portion of the country's tourist arrivals.
The increased incidence of poverty in St. Ann was attributed
to the decline in visitor arrivals in the aftermath of the
September 11, 2001 terrorist attacks combined with prolonged
drought.


18. MINIMIZE CONSIDERED.
TIGHE