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