AMBASSADOR: TIE IDB DEBT FORGIVENESS, MCC TO REFORM

C O N F I D E N T I A L GEORGETOWN 000595

SIPDIS

SIPDIS

FROM THE AMBASSADOR FOR WHA A/S SHANNON

E.O. 12958: DECL: 06/20/2016
TAGS: PGOV PREL EAID EFIN KDEM KMCA GY
SUBJECT: AMBASSADOR: TIE IDB DEBT FORGIVENESS, MCC TO REFORM

REF: A. GEORGETOWN 546

B. GEORGETOWN 499

Classified By: Ambassador Roland W. Bullen for reason 1.4(d)


1. (C) I recently learned that the IDB is planning to forgive
the debt owed by its five poorest members -- including almost
a half billion dollars that Guyana owes. I cannot stress
enough the unique opportunity this gives us to induce
meaningful reform in a country that has obstinately resisted
it for years. A chance like this won't come around again
soon.


2. (C) For over three years my fellow chiefs of mission and I
have been forced to play the role of civil society because
the two main political parties -- the ruling PPP/C and
opposition PNC/R -- have discounted the role of Guyana's own
civil society. Yet as we approach elections, long overdue
constitutional and other governance reforms spelled out in
the 1998 Caricom-brokered Herdmanston Accord remain
incomplete. The parties have been unwilling to implement
these reforms, including a badly needed overhaul of the
divided structure of the Guyana Elections Commission (GECOM)
and a revival of local government elections.


3. (C) Guyana is anxious to secure debt relief from the IDB.
The outstanding debt portfolio is very significant -- US$470
million at year-end 2005 (about 50 percent of Guyana's annual
GDP) -- and by far the largest source of debt remaining on
Guyana's books. Guyana is also a Millennium Challenge
Corporation (MCC) threshold candidate. President Jagdeo
considers both IDB debt forgiveness and MCC funding
absolutely vital. We can use these as leverage to influence
Guyana's leaders, on both sides, to do what they should. I
believe that we should make these initiatives contingent upon
elections going forward and the parties implementing promised
reforms within an agreed timeframe.


4. (C) There is uncommonly close consensus within the donor
community here in Georgetown. The Commonwealth's Special
Envoy Sir Paul Reeves and OAS A/SYG Albert Ramdin are part of
this consensus; on recent visits they saw "no progress" in
the "depressing" political stalemate. We all agree that
meaningful political change in Guyana will only come about
through coordinated, concerted international pressure -- such
as what I am proposing -- on both the Government and the
PNC/R. We also agree that all donor agencies and
international stakeholders must deliver this message
simultaneously.


5. (C) If we fail to press home this issue now, our
successors will be back in the same place in five years when
the next election is due. Guyana will still be stuck in
neutral, or worse. Guyana's percentile rank across all six
World Bank Governance Indicators fell by 11 percent between
1998 and 2004. I fear this downward trend will continue if
we let this opportunity slip through our hands.

BULLEN