MCC - LEVERAGE ON GOVERNANCE IN PNG

C O N F I D E N T I A L PORT MORESBY 000126

SIPDIS

SIPDIS

FOR EAP/ANP

E.O. 12958: DECL: 3/22/2016
TAGS: PREL EAID PP
SUBJECT: MCC - LEVERAGE ON GOVERNANCE IN PNG

REF: PORT MORESBY 108

CLASSIFIED BY: Robert Fitts, Ambassador, AMB, STATE.
REASON: 1.4 (d)

CLASSIFIED BY: Robert Fitts, Ambassador, AMB, STATE.
REASON: 1.4 (d)

1.(C) SUMMARY: Following the briefing of PNG's economic
ministers on MCC (reftel),Ambassador met with the chief civil
servants of Economic Ministries to go over the qualification
process in detail. The meeting was candid and the officials'
were a bit taken aback that solemn promises to improve would not
cut it. Still, they are under a directive to investigate ways
of qualifying. Embassy proposes to work on MCC indicators where
lack of data may have undercut PNG's rating (trade),then use
the prospect of Threshold Status as a spur for GPNG action on
corruption. To this end, we would appreciate details of
corruption threshold programs that have been agreed thus far.
END SUMMARY

2.(U) At the March 8 meeting reported reftel, PNG's economic
cabinet expressed avid interest in an MCC program and devoted
several hours to our detailed briefing on the qualification
process. Afterwards, the Finance Minister tasked a working
group of senior civil servants to pursue the matter in detail.
Ambassador met March 15 with the Secretaries of the PM's
Department, Finance, Planning, Foreign Affairs, Mining,
Forestry, Transport and Public Service. These are the top civil
servants of each department (political appointees all) and must
vet all material going to the cabinet.

3.(C) Predictably, the meeting opened with a submission (from
Ambassador to the U.S. Paki) that PNG was already well qualified
and needed merely to get the good news out (i.e. on corruption)
so that the MCC would understand. Suffice it to say that view
did not withstand our detailed discussion of how the corruption
indicator is developed through reports by roughly 16 different
independent organizations. PNG would need to convince those
groups through action, not pledges.

4.(C) This set the working group aback. They were particularly
worried that the corruption ranking is computed by the World
Bank Institute. (Note: the World Bank bureaucracy is widely
viewed here as unfairly biased against PNG. The matter came to
a head last year when the Bank formalized a suspension of a
major Forestry policy loan over GPNG performance.) Nonetheless,
the group promised to consult their ministers and get back to
us. Ambassador has had individual discussions with two of the
attendees since as they sought clarification, indicating that
our case is still quite active.

5.(C) Embassy proposes to keep GPNG attention on MCC
qualification by working other indicators which may suffer from
lack of data. Trade Policy, for example, is not now rated.
However, PNG has numerous trade-opening steps in recent years
under the APEC process and might well come up favorably under
closer scrutiny. Immunization rates may also show movement. We
understand from WHO that a supplementary program last year
substantially expanded the coverage of previous immunization
efforts. A WHO census now underway should document the
improvement.

6.(C) COMMENT: The ultimate target is corruption. Claiming that
GPNG would clear the MCC corruption hurdle any time soon would
be a hip-dislocating stretch. This will be particularly true in
the run up to the May 2007 elections when politics will show its
ugly side. Many international observers have given PNG
deservedly low marks on governance for years and any turnaround
will take time. Moreover, PNG's leaders will need a long walk on
the road to Damascus before leaving their old insider world
behind. However, if the prospect of a threshold program will
tempt them into a little tidying up, it will be well worth the
effort.




WEINZ

FITTS