MITCHELL'S PLANS FOR THE GOVERNMENT OF GRENADA

C O N F I D E N T I A L BRIDGETOWN 000617

SIPDIS

SIPDIS

STATE FOR WHA/CAR
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 02/27/2017
TAGS: ELAB ECON PGOV GJ
SUBJECT: MITCHELL'S PLANS FOR THE GOVERNMENT OF GRENADA

REF: BRIDGETOWN 581

Classified By: DCM Mary Ellen T. Gilroy for reasons 1.4 (b) and (d).


1. (C) SUMMARY: At the May 6 New National Party (NNP)
rally, Grenada's Prime Minister Keith Mitchell announced a
cabinet reshuffle (reftel) and laid out plans to control
rising prices, provide assistance for poor Grenadians, and
conclude negotiations in the near term on salary increases
for public sector workers. Mitchell pushed back against the
opposition National Democratic Congress (NDC) allegations
about the so-called "briefcase affair" in which the PM is
reportedly caught on videotape accepting a bribe.
Separately, a meeting of the opposition Grenada United Labour
Party's (GULP) demonstrated further erosion of GULP's
influence and cohesion. END SUMMARY.


2. (SBU) As reported in reftel, Mitchell's cabinet reshuffle
announcement on May 6 surprised many observers, who had
expected Mitchell to call early elections. However, the
other themes in Mitchell's May 6 address were not
particularly surprising given Grenada's economic
difficulties. He announced that his first order of business
as the new head of the Finance Ministry would be to review
why prices have "gone crazy." While Mitchell pointed to
energy price increases as being partially responsible, he
sought to cast the blame in other directions as well. He
declared that businesses were "raising prices beyond what is
acceptable" and that he would expand the Finance Ministry's
Price Control Unit. He also plans to meet with Grenada's
business owners and "demand answers."


3. (SBU) Mitchell announced two proposals related to his
fight against inflation. He proposed government subsidies
for school transportation for children of poor families. He
also announced that his government was nearing an agreement
with the Public Workers Union (PWU) on salary increases for
public sector workers, who have been without a contract for
some time. However, on May 7, the PWU head, Donna Harford,
contradicted Mitchell, warning that his announcement was
premature because the PWU's membership had not yet voted on
the proposals.


4. (C) Mitchell also chose the May 6 speech to respond to
the opposition's accusations in the so-called "briefcase
affair." Mitchell has admitted in the past that he accepted
USD 15,000 as a reimbursement for travel expenses related to
a European trip. However, the NDC continues to allege that
Mitchell took USD 500,000 from Eric Resteiner, a former
economic citizen of Grenada. According to the NDC, Mitchell
was caught on videotape taking the money, but the videotape
has not yet been produced publicly. (Comment: Since it is
unclear whether the videotape exists and whether it shows
what the NDC alleges it shows, the video tape may in fact be
of greater political value to the NDC in absentia. End
comment.) During his May 6 address, Mitchell offered no new
information about the case, but sought to challenge the NDC
to prove its charges by saying: "The Cabinet made its
decision. The gentleman promised to pay my costs. He paid
me... It's me damn money! I had to take it! So bring on the
tape!"


5. (SBU) In a separate May 6 event, about 50 members of the
Grenada United Labour Party (GULP) attended the party's
General Council and Executive Council meeting. The meeting
generated confusion and bad blood even before it began
because not all members of the Executive Council were
invited. GULP, which was founded in 1950/51 by former Prime
Minister Eric Gairy, has been in gradual decline since the
1979 coup, which drove Gairy from office. The party's poor
showing in the 2003 elections, when GULP won only about 3.2
percent of the popular vote and no seats in Parliament,
reflects GULP's steady losses of members and popular appeal.
The May 6 episode will likely undermine GULP even further.
OURISMAN