BENIN PROPOSES TO INSTALL PORT SCANNER OUTSIDE MCC COMPACT,

UNCLAS COTONOU 000448 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR AF, AF/W, AF/EPS PLEASE PASS MCC FOR JONATHAN BLUME TAGS: EWWT PREL PGOV EAID EFIN MCC BN SUBJECT: BENIN PROPOSES TO INSTALL PORT SCANNER OUTSIDE MCC COMPACT, CITING SECURITY CONCERNS ¶1. This is an action message requesting input. Please see para 8 below. ¶2. SUMMARY: President Boni Yayi told the Ambassador on June 20 that Benin plans to purchase and install scanners at the Port of Cotonou, Cotonou International Airport and other land border posts for reasons of security. This could violate the conditions precedent of Benin's Millennium Challenge Corporation (MCC) Compact and therefore trigger funding delays in the Access to Market program. Post seeks Washington concurrence to relay to the President that such independent action could jeopardize continued funding under the Compact, and propose that he delay any such action until an MCC-funded study of the scanner proposal can produce conclusions on a scanner's effectiveness. END SUMMARY. ¶3. During a June 20 meeting with the Ambassador, President Yayi indicated plans to purchase and install X-ray container scanning systems at the Port of Cotonou, the Cotonou airport, and at least two terrestrial border crossings. President Boni's stated purpose for the scanning systems related to security and the need to impede the flow of weapons and arms across Beninese territory, some of which, he claimed, were being smuggled into or through Benin buried in containers of loose grains, such as wheat. ¶4. The installation of a scanner system at the Port of Cotonou raises concerns for the US because it is contrary to a condition precedent to disbursement for the Access to Markets project in the MCC's Disbursement Agreement with Benin, one of several documents that defines the scope of MCC program activities and their sequence of implementation. Specifically, the condition reads as follows: "The Government complies with agreement not to institute a container scanning system at the Port (1) until after a study of the effectiveness of such a scanning system has been completed pursuant to Section 2(a)(ii); or (2) in the event that MCC determines that the Government proposed scanning system would be detrimental to the effectiveness of MCC investments and activities at the Port." ¶5. As such, should President Yayi implement the scanner system at the Port as he has stated, the MCC Access to Markets program in its entirety, $169M, could be stopped. ¶6. The MCC included this condition precedent in the disbursement agreement to ensure the USG's $169M investment in Cotonou's port infrastructure would lead to the intended goals of the project, namely increased efficiency and capacity at the port and greater revenue for the government of Benin. At present, the Port is plagued by monumental operational problems that result in reduced efficiency, vehicular congestion, and dramatic economic losses through lost business, corruption, and reduced volume of merchandise passing through the port. Due diligence by MCC and collaborative efforts with other agencies, such as the United States Coast Guard, have provided abundant evidence that operational improvements must occur prior to the implementation of a scanner system at the Port. ¶7. The MCC has included an analysis of X-ray container scanning in its Customs Efficiency Study component of year one activities. That study is currently expected to begin by mid-July; the consultant is expected to deliver a comparative analysis of scanning systems in other ports after three weeks and a report on appropriate scanning solutions for the Port of Cotonou after eight weeks. If these reports identify an appropriate mechanism for introducing container scanning at the Port of Cotonou the USG could proceed with the MCC program confident that its investment will not be made less effective by the President's initiative. ¶8. ACTION REQUESTED: It is recommended that the Department instruct Post to remind the President of the condition precedent to continued disbursement of MCC funds for Access to Markets in the MCC Compact and encourage him to delay purchase of the subject Port scanner until the results of the study expected in mid-July. ¶9. COMMENT: There is abundant evidence worldwide that the addition of a scanner before most of these operational problems have been addressed will worsen, not improve, these problems and will thus negate or reduce the impact of the USG' MCC investment. Regardless of the security benefits of scanning containers, the introduction of an X-ray scanner risks reducing container and goods processing speeds, decreasing the customs revenue that both MCC and the Government of Benin wish to increase. In addition, an X-ray scanner in the prior to MCC-financed institutional reforms introduces a new avenue for corruption. Both the risk of lost revenue and increased corruption work against President Yayi's stated focus on improving the port and reducing corruption and thus support the USG's decision to insist on the successful conclusion of the MCC Customs study before permitting the scanner system at the Port of Cotonou. END COMMENT. BROWN