SCENESETTER FOR BILATERAL CONSULTATIONS, COTONOU, BENIN,

1. (U) SUMMARY: Post warmly welcomes your participation in the March
9, 2007 USG/GOB bilateral consultations. Your visit follows the
November Gulf of Guinea Maritime Security Conference and the
December 2006 official US visit of pro-US President Boni Yayi,
second-round victor in widely acclaimed free, fair and transparent
March 2006 presidential elections. Benin is a strong US partner:
supportive of regional peacekeeping and anti-terrorism initiatives;
bilateral education and health efforts; solid on combating
corruption; and open to increasing US trade and investment. USG
engagement focuses on the new Millennium Challenge Compact (MCC)
that entered into force on October 9, 2006 and ongoing USAID, Peace
Corps, and DOD programs. Key GOB issues include ACOTA and on-going
support for education and health programs. The talks present an
excellent opportunity to press the GOB for a site to construct a new
embassy.



2. (U) Benin is also on track for the Women's Justice and
Empowerment Initiative (WJEI), a participant in the President's
Malaria Initiative (PMI), and a viable candidate for the World
Bank's Fast Track Program in education. We expect the MFA Secretary
General, just named as Benin's new Ambassador to Brazil on February
27, to head the GOB delegation. You will meet and greet Mission
staff, including a special session with JO and EL officers. Outreach
to Amcits continues. There is little anti-Americanism, and the USG
is very popular with the GOB, press, and general population.
However, petty crime is a problem. END SUMMARY.

//BILATERAL TALKS//



3. (U) Timing of the upcoming bilateral consultation coincides with
a particularly strong USG/GOB relationship - particularly on
political, military and developmental levels. Benin is a strong US
partner: supportive of regional peacekeeping and anti-terrorism
initiatives; open to cooperation in the education and health
sectors; solid on combating corruption; and supportive of efforts to
increase US trade and investment. USG engagement focuses on the new
Millennium Challenge Compact (MCC) that entered into force on
October 9, 2006 and ongoing USAID, Peace Corps, and DOD programs.
Key GOB interests are to enlarge the ACOTA and existing US education
and health programs. The talks present an excellent opportunity for
us to press the GOB for a site to construct a new embassy.



4. (U) This is a particularly challenging period for Benin.
Heightened security around the Presidency reflects Yayi's growing
concern in the wake of an armed robbery attack and subsequent
shoot-out last December at the presidential palaces gates (REF B).
Economic and structural reforms prove to be more difficult to
address in the short term, but encouraging signs of progress exist.
Recent appearance of "container" gas stations in Cotonou points to
progress in tackling the informal smuggling and trading of gasoline
from Nigeria. A successful sale of government bonds in December 2006
signaled an improved outlook for increasing government revenues.
Investors found the 6 percent interest rate attractive, and the
government surpassed its $80 million goal by over $20 million.
Customs receipts, a significant source of government revenue,
surpassed 2006 goals by 113 percent. The recent adoption of a new
law on land reform by the National Assembly is a significant step
toward improving the investment climate.

//KEY ISSUES: MAKING THE DEMOCRATIC DIVIDEND PAY//



5. (U) Benin President Boni Yayi assumed office with a strong
mandate, having won 75 percent of the run-off vote in this
politically stable country. The country has few natural advantages
or resources to spur growth or endow it with geo-political strategic
importance. Its GDP growth has slowed over the past three years,
falling to nearly half of the average 5-6 percent in the 1990s. Life
expectancy and literacy rates are low, and about a third of its
rapidly growing population lives below the poverty line. It is only
Benin's democratic tradition that has qualified Benin to feature on
almost every list of beneficiaries for various aid programs such as
Millennium Challenge, AGOA, HIPC debt relief, President Bush's
Women's Justice and Empowerment initiative, the EU's program of
direct budget support, and the World Bank's Education Fast-Track
Initiative.



6. (U) This "democratic dividend" is vital for Benin, but can only
spur real economic growth if it is combined with improved economic
governance. Botched privatizations of Benin's cotton and petroleum
parastatals, Benin's largest export and import items, respectively,
combined with difficult world market conditions for both products,
have weighed heavily on Benin's economy over the past three years.
Endemic corruption and inefficiencies in managing crucial
infrastructure such as the Port of Cotonou, also negatively affect
growth.


COTONOU 00000159 002.7 OF 004




7. (U) Yayi's top priorities include: ending corruption and
promoting ethical values and respect for the state; developing a
strong human resource base by improving education and health
services; and improving the business and investment climate and
investing in infrastructure, especially roads and the port. On
assuming office, Yayi launched the battle against corruption and
mismanagement by ordering comprehensive audits of all major ministry
and parastatal budgets. Results released in late 2006 revealed the
dismal state of government finances. Only $400,000 was left in the
government accounts when the new administration took office. Between
2001 and March 2006, over $400 million of improperly documented or
justified government payments were made. This amounts to roughly 10
percent of government spending.

//FIGHT AGAINST CORRUPTION//



8. (U) Government auditors and investigators are pursuing
reimbursements of improperly made payments. The government also has
cracked down on the use of ad hoc payment procedures. To promote
high standards of integrity and professionalism in the civil
service, Yayi resisted pressure from political parties supportive of
his candidacy to receive ministerial posts and appointed qualified
technocrats to all but four posts. He had ministers sign a Code of
Good Practice in May 2006 and has not hesitated to take stern
actions. Over the past year, he arrested two former government
ministers on charges related to abuse of office and public trust,
and three ministers were replaced when performance did not meet the
administration's standards. In a further boost to efforts to curb
smuggling and corruption, the GOB also cracked down on the black
market gasoline business and cancelled lucrative monopolies to
escort transit shipments of used vehicles from the port to
neighboring countries. These businesses are both major sources of
corruption in Benin. Concurrently, the new government has waged a
campaign to improve tax collection. Delinquent taxpayers clear their
debts or see their names published in local newspapers.

//MILLENNIUM CHALLENGE ACCOUNT, USAID AND PEACE CORPS//



9. (U) The United States is perfectly positioned to work with the
new government on these issues and participates in senior policy and
program discussions among heads of diplomatic missions and agencies
in a monthly donor coordination meeting. In February 2006, Benin
signed an MCA Compact, which entered into force on October 6.
President Yayi presided over an October 9 ceremony to mark the
occasion. He underscored his Government's commitment to maintaining
Benin's eligibility for the Compact program, notably by addressing
the problem of endemic corruption. The Compact includes a series of
strategic investments designed to address key physical and
institutional constraints to increasing investment and private
sector activity in four Access program areas: Justice, Financial
Services, Markets (which is predominately to improve the functioning
of the Port of Cotonou), and Land. The Compact, with USD 307.3
million in U.S. funding and a USD 10 million contribution from the
Government of Benin, is expected to impact 2.5 million Beninese,
lifting 250,000 of them out of poverty within five years.



10. (U) USAID and Peace Corps will continue their programs in key
social sectors. USAID supports a primary health care program
designed to increase access to and improve the quality of health
care. Our health assistance promotes childhood vaccinations, polio
eradication, family planning, malaria control, and HIV/AIDS
information and treatment. The USAID education program focuses on
primary education and provides support for Benin's primary education
reform, teacher training, improved school supervision, and increased
enrollment and retention of girls in primary school.



11. (U) Peace Corps will continue its programs focused on key social
and economic sectors such as education, health, environment, small
business and information technology respectively. Over 100
Volunteers are working within the local communities countrywide in
those programs. Peace Corps has enjoyed a successful relationship
with the GOB since 1968. In 2006, Peace Corps celebrated its 45th
Anniversary worldwide of which 38 years have been in the Republic of
Benin without interruption.

//REGIONAL STABILITY AND MILITARY COOPERATION//



12. (SBU) Entry into force in 2005 of an Article 98 agreement (which
the GOB prefers to call a "non-surrender" agreement) has permitted
us to significantly increase the tempo of military training and
cooperation with Beninese forces. Our IMET program restarted in FY06
and is focused on English-language training in addition to other
general courses. The GOB also has expressed interest in nominating
candidates for attendance at one or more of the war colleges.
Continued IMET funding is an issue.



13. (U) Benin is a beneficiary of the Africa Contingency Operations
Training Assistance (ACOTA) program and makes an important

COTONOU 00000159 003.8 OF 004


contribution to regional stability both through its example and
commitments. Benin currently has over 1,200 peacekeeping troops
deployed in the Democratic Republic of Congo (MONUC) and in Cote
d'Ivoire (UNOCI), as well as military and police observers in Darfur
and Haiti. To sustain these contributions, the GOB would require USG
support.



14. (SBU) The Beninese Naval Forces struggle to conduct operations
and, at present, consist of two Boston Whalers, one of which is
inoperative. Two patrol boats have not been seaworthy for the past
four years, although earlier this week one returned to operation
thanks to Chinese assistance. The other remains moored at the Port
of Cotonou. This is one reason Benin would be an attractive prospect
for FMF funding. The U.S. Coast Guard Cutter Legare will visit
Cotonou next week.



15. (U) The French and Belgians are actively cooperating with the
Beninese military, and a military delegation from China visited
Benin in August 2006. The French also have approximately 20 officers
who are seconded to the Beninese Armed Forces and wear Beninese
military uniforms. In September 1996, post hosted the successful
execution of the Benin portion of MEDFLAG '06, the USEUCOM-sponsored
ECOWAS military exercise. It involved the participation of nearly
60 U.S. military medical personnel and received broad press
coverage. In November 2006, Benin and the DOD hosted in Cotonou a
conference on Gulf of Guinea Maritime Security and Awareness.

//AMCIT SERVICES //



16. (U) In February, post hosted a town hall meeting organized by
the Consular Section for Amcits to reiterate basic precautions to
take against Avian Influenza and to discuss security, consular
section services, and African American History month. Avian
Influenza outbreaks in three neighboring countries make Benin a
probable site for future outbreaks. All birds tested for H5N1 in
Benin have been negative, but the GoB's surveillance system is
constrained by limited resources. Post has requested assistance to
support a public awareness campaign managed by UNICEF (REF C). The
consular section also has updated the warden system to make it more
effective in the event of an emergency.

//REGIONAL SECURITY//



17. (U) Benin is rated HIGH for crime and MEDIUM for transnational
terrorism. The community in general is affected most by street
crime in all parts of Benin. There has been a slight increase in
carjacking by Beninese gangs over the past two years. There are no
known terrorist organizations present in Benin, and the Beninese
Government supports the United States in the War Against Terrorism.
Embassy Benin enjoys a good working relationship with the local
police and gendarmes. Nigerian-style 419 fraud is prevalent in
Benin as well as the presence of counterfeit US currency and
counterfeit Franc CFA.

//DONOR, INVESTOR AND REGIONAL ECONOMIC SUPPORT//



18. (U) Donor and potential investor support is critical to Benin's
success. Thus, President Yayi's first year in office has included a
busy schedule of high-profile visits with donors and investor groups
in more than a dozen countries on four continents, including Africa,
Europe, North America and Asia - a prodigious travel schedule that
raised diplomatic eyebrows in Cotonou. President Yayi's visits to
the oil producing countries of Nigeria, Gabon, Libya, and Equatorial
Guinea helped to address the problem of gasoline shortages which had
plagued the country for almost a year. The visit to Libya resulted
in an agreement to provide 35 metric tons of refined gas oil and
electrical generators in the coming months and an offer of help in
the cotton sector.



19. (U) The visit to Nigeria was particularly important due to
Benin's role as a transportation and transit hub for Nigeria and
other neighboring countries. Economic and social developments in
Nigeria can significantly influence Benin's formal and informal
sectors. According to a 2004 IMF study, unofficial exports
contribute an estimated 6 percent of GDP and account for about
one-third of customs revenues. Reflecting improved relations between
Benin, Nigeria, and Togo, the three governments signed an MOU in
February 2007, which acknowledged that economic development in all
three countries will depend on their cooperation. In January 2007,
Post hosted with the Chamber of Commerce and Industry of Benin and
the Ministries of Finance and Foreign Affairs a seminar to promote
US/Benin trade and investment, supported by the USAID West African
Trade Hub and the FCS Commercial Attach, based in Accra and Dakar
respectively.

//A BRIEF HISTORY OF BENIN//



20. (U) Benin's status as one of the most peaceful and democratic

COTONOU 00000159 004.8 OF 004


countries in Africa is a real achievement. In fact, Benin was the
first African country to suffer from a military coup in the
post-colonial era, and from 1963 to 1972 Benin saw more coups and
changes of government than any other African state. From 1972 to
1989, under Mathieu Kerekou's "revolutionary" leadership, Benin
lived under a Marxist regime that quickly became unsustainable with
the end of the Cold War.



21. (U) Benin became a trailblazer in a more positive sense in 1990
when it was one of the first African countries to undergo a
democratic transition. A new constitution was adopted in December
1990, and, in elections in February 1991, Kerekou was defeated and
peacefully stepped aside for new President Nicephore Soglo. But in
1996 Kerekou resumed office after defeating Soglo in democratic
elections, and he won re-election in 2001 in a vote marred by
allegations of fraud. In the March 2006 presidential election,
Kerekou was barred from running by the Constitution's presidential
term limit, as well as a maximum age of 70. On April 6, 2006,
Kerekou became the first African leader in history to
constitutionally leave office twice as a result of democratic
elections.

//BIO NOTES//



22. (U) Boni Yayi, a Paris-educated economist who had never held
elected office and who had no political party affiliation,
skillfully crafted a campaign projecting himself as both an
economically literate technocrat, and the embodiment of change for
Benin. By voting for him in both rounds of the 2006 election,
Beninese voters opted decisively for change. President Yayi views
the United States as a key partner for his new government. An
evangelical Christian, he emphasizes that he shares "American
values" such as the importance of good governance and the promotion
of investment and economic growth. Both issues feature prominently
in his government's program.



23. (SBU) Post expects Ministry of Foreign Affairs Secretary General
Ambassador Isidore Monsi, named Benin's new Ambassador to Brazil
during the Council of Ministers meeting on February 27, to head
Benin's delegation to this year's bilateral consultations. Monsi is
a diplomat by profession and has held various positions at the
Ministry of Foreign Affairs where he started his diplomatic career
in 1983. Until his nomination on March 11, 2004 as Secretary General
of the Ministry with the rank of Ambassador, he served as Latin
America Division Chief, Planning and Research Bureau (1983-84);
North Africa Division Chief, Africa and Arabic Countries Bureau
(1986-87); Assistant to the Director of Financial and Administrative
Affairs (1987-88); Assistant to the Director General (1988-90);
Eastern European Chief of the European Bureau (1990-92); Assistant
to the Chief of Staff and Political Affairs Advisor (1992-93); and
concurrently as Director of Communications, Media and Ministry
Spokesman (2002-04) as well as Director of Administration (2003-04).
Ambassador Monsi was also Advisor to Benin's Permanent Mission to
UNESCO from 1993 to 2001 and acted as substitute for Benin's
Representative to UNESCO from 1993-1997 and 1999-2001. He has
participated in various seminars and colloquia in Benin and oversea.
Mr. Monsi earned a diploma in Diplomacy and International Relations
from Benin's National School of Law and Administration, a diploma in
International Relations and Economic Cooperation (Berlin), and a
Diploma from the International Institute of Public Administration
and from the UN Institute for Training and Research (Geneva). Mr.
Monsi was born in Benin; he is married with no children.

//COMMENT//



24. (U) Comment: Following the March 2006 elections that brought
President Boni Yayi to power, Benin's strong democracy remains on
track. Some had questioned its ability to continue as a model for
Africa since its transformation from dictatorship to democracy after
the 1990 National Conference. However, an empowered, engaged
electorate, determined to end deteriorating economic performance,
mismanagement, gas shortages, rising food prices, corruption, and
cronyism appears to be taken with President Yayi, an honest,
visionary technocrat - though political neophyte. Yayi's reform
agenda, strong anti-corruption measures and outreach to donors and
neighboring countries keep faith with his election promise of
"change" for the better. Benin is making significant but tortuous
political, social, economic and development strides. Upcoming March
25 legislative elections should provide feedback on whether or not
the Beninese population will remain patient during the long and
laborious reform period. They certainly are exercising a democratic
right to participate in the electoral process: 26 political parties
and unions of convenience are vying for 83 parliamentary seats.

BROWN