MCC STATUS AND MINISTER OF FINANCE

C O N F I D E N T I A L SECTION 01 OF 02 MASERU 000544

SIPDIS

SIPDIS

FOR AF/S

E.O. 12958: DECL: 10/31/2016
TAGS: EAID PGOV PREL LT
SUBJECT: MCC STATUS AND MINISTER OF FINANCE

REF: MASERU 435

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CLASSIFIED BY: June Carter Perry, Ambassador, EXEC , STATE.
REASON: 1.4 (b),(d)



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Summary
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1. (C) In a nearly two (2) hour session with Minister of
Finance Thahane October 27, Ambassador reiterated the key points
that Lesotho had to address before the visit of Millennium
Challenge Corporation (MCC) Vice President for Operations John
Hewko and needed before reaching an MCC compact between the U.S.
and the Government of Lesotho. Ambassador Perry opened the
meeting congratulating the GOL on its FY 2007 MCC performance.
(Lesotho ties with Mongolia and Moldova as the best performing
country in the Lower Income Category.) Thahane was delighted
and pleased that the GOL had been able to improve the number of
days it took to start a business. The AMB reviewed the points
brought up by MCC Ambassador Danilovitch, CEO, as well as other
factors/points in his letter on gender information as well as
the matter of private sector development and health care, land
reform and GOL's progress on the Metolong Dam project. Thahane
asserted that the Government of Lesotho had already had the
first meeting with Parliament concerning the gender issue and
would meet with Cabinet and Parliament in the coming days; had
begun work on the Project Implementing Unit (PIU); and looked
forward to the November visit of the various MCC team members
concerning the issue of land reform among others. Also, there
will be a European Union/SADC Summit which Minister Thahane must
chair in mid-November. He confirmed to the AMB on October 30,
that he would indeed welcome an in-depth one-on-one discussion
with MCC Vice President Hewko during the November 15-16
timeframe. Thahane emphasized that translating his
presentations into Sesotho in order to be certain that all
members of Parliament, including traditional leaders, would
understand concepts that while common in international parlance,
are unique in Lesotho culture and language. He believed
Parliament would complete work needed on legislation regarding
women before its session ends and other elements such as a PIU
would be handled in an expeditious manner. End Summary.

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Gender Issues
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2. (C) In order to ascertain exactly where the Government of
Lesotho is at this moment in time concerning the various points
raised by MCC, the AMB called on Thahane to review the entire
list of issues under consideration, specifically, Ambassador
Danilovitch's letter on the points regarding women's equity. On
this topic, Thahane said he had met that very day, October 27,
with the Prime Minister to go over the points and reinforce
their importance in our continued work towards a compact. In
terms of timing, he again emphasized his interest in concluding
sooner rather than later. We did indicate and emphasize that as
soon as the GOL completed its obligations and our technical team
had completed their studies, we would be ready to move forward.
Therefore, our philosophies in this regard were not
inconsistent. Thahane went into a long discussion of the gender
issue and stated that he believed Parliament would understand
more fully, as it had previously, the importance of the
elimination of discrimination and assurance of women's equity in
Lesotho. He also told the Ambassador that he was briefing the
Cabinet again on the MCC with particular focus on the gender
issue in order to be certain that there was clear understanding
of the points that MCC has emphasized. From his discussion,
firm ground work has been laid as reported by Ambassador to MCC
CEO Danilovitch in Washington recently; the time frame for
passage of the law remains early December according to the
Minister.

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Metalong Dam
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3. (C) We then moved on to discuss the Metolong Dam project
and the need to have a Project Implementation Unit (PIU),since
not only the MCC, but the World Bank and the Government of
Kuwait are working in partnership to finance this dam. Before
the Ambassador could complete the points Thahane interjected
with enthusiasm that he had already met with members of the
intraministerial committee and that he had begun work on the PIU
which he expected to be in be by the month of November. He
seemed very confident that this aspect would be fully addressed
by the time of the November 20 Donor Roundtable he is hosting.

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MASERU 00000544 002.2 OF 002


MCC Pending Visits
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4. (C) The Ambassador took the opportunity to brief Minister
Thahane on the November 4-21 visit of the various members of the
MCC team (including individuals who will offer further details
to the GOL technical team on aspects of the land reform bill) as
well as the November 15-16 visit of MCC Vice President of
Operations John Hewko and the desire to have an in-depth
conversation with him to hash out any remaining details.
Although he will be chairing the EU/SADC Troika meeting in
Maseru at that time, Thahane was eager to meet with the MCC Vice
President of Operations and asked if it might be possible for
him to arrive on November 14. The Ambassador apprised Minister
Thahane that due to his travel schedule, Mr. Hewko could not be
in Lesotho on the 14th, but that he would be in Lesotho on the
15-16. In an October 30 conversation, Minister Thahane
confirmed that although Mr. Hewko's arrival would coincide with
the Minister's chairing of the SADC meeting, he would be more
than happy to have the in-depth one-on-one desired in terms of
the overall schedule of the MCC, during Vice President Hewko's
visit. Thahane was very supportive of our recommendation that
the key ministers involved have the opportunity to talk with Mr.
Hewko and applauded our recommendation that the MCC executive
make a presentation to the wider Basotho community, business,
health and civil society, in particular, as well as the media.

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Comment
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5. (C) Thahane confirmed also on October 30 that he had held a
meeting a few days ago with members of Parliament and Cabinet
and believed he was making significant progress on final passage
of the marriage equity bill. He is forecasting continued
discussion of all the issues addressed and clearly looks forward
to concluding this process as soon as possible for a variety of
reasons. Among those reasons, of course, are the upcoming 2007
parliamentary elections which will issue in a new government.
In that regard, Thahane stated that in fact the Prime Minister
could call elections at any time, even today, but the Minister
suggested they would probably happen in February or March as
oppose to the expected May timeframe. Because of that factor,
the GOL is planning an early presentation of the budget in
January, a month earlier than normal, and, with Parliament's
early recess in 2007, the Minister wants to resolve all issues
around the MCC as soon as possible with all of the major
"underbrush" being dealt with between now and the end of
November. Because of his chairmanship of SADC and the many
requirements on his key team members, such as the Principal
Secretary and the Director of Private Sector Development,

SIPDIS
Minister Thahane will have to work even more diligently and
quickly to achieve the desired results. He believes this can be
done. We have assured him that the MCC will provide the
technical teams necessary to interact with his ministries' core
team and to offer as much support as possible. End Comment.
PERRY