SCENESETTER FOR SECRETARY PAULSON'S NOVEMBER 2007

UNCLAS SECTION 01 OF 04 DAR ES SALAAM 001483

SIPDIS

SENSITIVE
SIPDIS

DEPT AF/E FOR MBEYZEROV
TREASURY FOR V BRANDON, J RALYEA, A SAEED
MCC FOR K FICKENSCHER, M KAVANAGH
COMMERCE FOR B ERKUL

E.O. 12958: N/A
TAGS: OVIP PREL PGOV EAID ECON TZ
SUBJECT: SCENESETTER FOR SECRETARY PAULSON'S NOVEMBER 2007
VISIT TO TANZANIA

Summary
--------------

1. (SBU) The U.S.-Tanzanian bilateral relationship has
witnessed a sea change over the past two years. With the
election of a charismatic, pro-Western President, and
increasing levels of U.S. assistance, cooperation has
expanded in areas ranging from health and education to
counterterrorism and military affairs. As a nascent
democracy with an impressive record of peaceful political
transition, Tanzania is an anchor of stability in a turbulent
region. Despite daunting challenges -- HIV/AIDS, poor
infrastructure, corruption, and political stalemate in
Zanzibar -- the Government of Tanzania (GOT) is clearly
committed to furthering both economic development and
democracy. Providing more than USD 392 million in direct
assistance to the GOT, the Mission aims to advance several
strategic priorities such as enhancing Tanzania's
counterterrorism capability and strengthening the checks and
balances of Tanzania's democracy. In early 2008, we will
sign a USD 698 million MCC Compact; clouds are gathering,
however, as one corruption case after another is aired in the
press, without decisive action by President Kikwete. Major
donors have threatened to reduce "medium term" assistance
levels without greater transparency and accountability. End
Summary.

Political and Economic Background
--------------

2. (SBU) In 1992, Tanzania opened the door to multi-party
democracy, transitioning from a single party, socialist
state. Under the stewardship of former President Mkapa,
fundamental macro-reforms were introduced and Tanzania began
its transition toward free-market capitalism. With the
landslide election of President Kikwete in 2005, Tanzania
underwent its third peaceful transition to a new President.
Taken together, political and economic reforms introduced
since 1992 have made Tanzania an example of peace and
stability in the region.


3. (SBU) Formidable challenges remain. Located in a
turbulent neighborhood, Tanzania has eight porous borders and
a 1,500 kilometer coastline. Infrastructure remains
rudimentary, red tape and corruption impede private sector
development, and HIV/AIDs prevalence hovers around seven
percent. While elections on the Mainland have been free and
fair, Tanzania is still a state dominated by the executive
branch and the ruling Chama Cha Mapinduzi (CCM) party. In
Zanzibar, serious irregularities and sporadic violence marred
elections in 1995, 2000, and 2005.


4. (SBU) While Tanzania has achieved major macro-economic
reform over the past decade, macro stability has yet to
translate into significant gains at the micro level. More
than one third of Tanzanians live in abject poverty and per
capita GDP is USD 340. In 2006, the Tanzanian government had
to revise its growth forecasts downward (from 7.2 to 5.8
percent) due to a food shortage and an ongoing power crisis.
The lack of electricity, coupled with rising oil and food
prices, caused inflation to increase from approximately 4 to
7 percent. Tanzania's oil import bill quadrupled and its
business climate suffered set backs. In 2007, with good
rains and new leadership in the energy sector, economic
forecasts suggest a growth rate of 6 to 7 percent is
achievable.

U.S.-Tanzanian Bilateral Relationship
--------------

5. (SBU) With the election of President Kikwete in December
2005, U.S.-Tanzanian bilateral relations have warmed
significantly. President Kikwete's pro-Western stance,
coupled with an increasing level of U.S. assistance, has
precipitated this change, enhancing cooperation in sectors
ranging from health and education, to counterterrorism and
military affairs. President Kikwete has visited the U.S.
three times since taking office, meeting President Bush in
Washington D.C. (May 2006) and in New York (September 2006).
In September 2007, President Kikwete attended the UN General
Assembly in New York, met with Secretary of State Condoleezza
Rice in Washington D.C., and attended a dinner in Washington
D.C. hosted by the MCC CEO, Ambassador Danilovich.


6. (SBU) As a member of the UN Security Council (January
2005-December 2006),Tanzania supported key resolutions
sanctioning North Korea and Iran. Tanzania did not fully

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support the USG's effort to address Burma's human rights
situation in the Security Council, insisting the issue be
dealt with in the Human Rights Council instead. With respect
to country specific human rights resolutions in the Third
Committee, Tanzania was also not completely cooperative and
abstained from votes on several human rights resolutions
which the GOT believed should be handled by the Human Rights
Council.


7. (SBU) Tanzania has started to play an increasingly
prominent role in the region on issues ranging from Sudan to
Somalia. Standing up to Sudan, the Kikwete administration
was outspoken in its support of a UN peacekeeping mission to
take over the African Union (AU) mission in Darfur and
against Sudan assuming the AU Chairmanship. President
Kikwete has also pledged to send 1,000 peacekeeping troops to
Darfur. With the recent outbreak of violence in Somalia,
Tanzania has also been supportive. Tanzania joined the
Somalia Contact Group at the U.S.' behest and President
Kikwete swiftly voiced his support for Ethiopia, the need for
an African peacekeeping mission to be put in place, and
offered to train 1,000 Somali troops to help stabilize the
situation. Tanzania has long played a constructive role in
the Burundi peace process and recently, President Kikwete
assumed a lead role within SADC on Zimbabwe.

Strategic Priorities
--------------

8. (SBU) The Mission's strategic priorities in Tanzania are:
(i) building the GOT's counterterrorism (CT) capacity, with
specific focus on establishing a national CT Center; (ii)
improving health and education by combating HIV/AIDS and
malaria, and increasing access to school for underserved
children such as Muslim girls; (iii) strengthening Tanzania's
nascent democracy and anti-corruption efforts; (iv) promoting
regional stability by developing Tanzania's peacekeeping
capability and deepening military-to-military ties; (v)
spurring economic growth through policy reform and improved
natural resource management; and (vi) influencing public
opinion especially among Tanzania's Muslims who tend to view
U.S. policy as anti-Islam.


9. (SBU) We support these strategic priorities with active
diplomatic engagement and a generous foreign assistance
program. Although Tanzania enjoys the support of numerous
donor countries, the U.S. is one of the top donors in
Tanzania in dollar amounts. In FY08, foreign assistance from
USAID and State Department will reach approximately USD 38
million, while total USG assistance will amount to USD 392
million including presidential initiatives such as PEPFAR and
PMI. Taking into account the U.S. share of contributions
from multilateral donors such as the World Bank and African
Development Bank, U.S. assistance will total USD 648 million
in 2008. This does not include major private U.S.
benefactors such as the Gates Foundation. Other major
bilateral donors include the U.K., Norway, Sweden, and the
European Union.


10. (SBU) To ensure that corruption does not undermine
development efforts, the Mission is sharply focused on
supporting President Kikwete's anti-corruption campaign. The
Kikwete administration has taken several steps to combat
corruption, appointing a new Director General of the
Prevention and Combating of Corruption Bureau (PCCB) and
passing two new pieces of legislation: the Anti-Money
Laundering Bill and the Anti-Corruption Bill. While pleased
with passage of these bills, we are disappointed that the
Anti-Corruption Bill does not adequately safeguard the
independence of the PCCB. We are also extremely troubled by
the steady drum beat of corruption allegations featured in
the press involving many of Tanzania's senior leaders. Thus
far, these senior leaders have not felt compelled to counter
the allegations, nor have they been brought to justice for
their alleged actions. We and other donors increasingly
question whether there is the political will in State House
to tackle corruption at senior reaches of government.


11. (SBU) In the wake of the 1998 Embassy bombing, the
Mission is actively engaged in furthering counterterrorism
(CT) cooperation with the Tanzanian government. The Mission
has an integrated strategy involving modernization of
Tanzania's law enforcement as well as winning the hearts and
minds of the Tanzanian people. Our work in Pemba -- a Muslim
enclave along the Swahili coast -- exemplifies this strategy.

DAR ES SAL 00001483 003 OF 004


We have knit together cultural preservation projects to
repair mosques, self-help projects to improve rural
livelihoods, and a multitude of small USAID projects
including the donation of generators to provide electricity
to two hospitals. In addition, CDC is providing HIV
prevention and treatment services at the central hospital in
Pemba. USAID and the Combined Joint Task Force-Horn of
Africa (CJTF-HOA) have also partnered to build and furnish a
primary school and the Mission has plans to inaugurate an
American Corner to advance Islamic outreach efforts. Another
key component of the Mission's strategy is helping the
government establish its own national, interagency CT Center
to collect, share and analyze CT data.

Zanzibar's "Political Problem"
--------------

12. (SBU) In his December 2005 inaugural address, President
Kikwete pledged to address Zanzibar's "political problem," as
many call it, which involves the bitter divide between the
two political parties - CCM and the Civic United Front (CUF)
- and between Zanzibar's two islands - Unguja and Pemba. Like
the 1995 and 2000 elections, Zanzibar's 2005 elections were
marred by irregularities. A National Democratic Institute
observer team reported "serious problems in Zanzibar's urban
region where 40 percent of the registered voters reside."
However, 2005 did register important administrative
improvements and violence was contained. Nevertheless, the
elections ended in an impasse: CCM claimed victory (53
percent of the vote) and CUF contested the elections and
refused to recognize President Karume's government.


13. (SBU) Throughout 2006, neither party made any formal
reconciliation attempt. Among CUF members, there appeared to
be a divide between older members urging patience and time
for President Kikwete to address the problem, and the CUF
youth wing which was increasingly frustrated and impatient.
Within CCM there also appeared to be a divide between more
moderate members recognizing that06*'[ CSQ@Qoi]{YJJzQJQ%QQl reconciliation talks between the CCM
Secretary General, Yusuf Makamba, and CUF's three time

SIPDIS
presidential candidate, Maalim Seif Sharif Hamad. The
negotiations are ongoing, although little progress has been
made. CUF leaders have stressed that their bottom line is
the formation of a government of national unity in advance of
the 2010 elections. CCM, on the other hand, appears
unwilling to implement a power sharing agreement prior to the
2010 elections. CUF leaders have repeatedly emphasized that
without a government of national unity, the 2010 elections
will be neither free nor fair and have repeatedly warned that
their membership is becoming increasingly restless and
disillusioned with the democratic process.

Military-to-Military Relations
--------------

15. (SBU) Under the Kikwete administration, the GOT has
expressed its intent to begin participating in international
peacekeeping operations. In 2006, Tanzania became our newest
partner in the African Contingency Training and Assistance
(ACOTA) program. With Kikwete's offer to deploy a
peacekeeping brigade to Darfur under UN auspices, the
Mission's goal is to train three Tanzanian battalions by

2009. These battalions will not only contribute to UN
deployments but constitute part of an AU regional standby
brigade. (Note: Demonstrating its intent to become more
active in peacekeeping, Tanzania deployed 75 military police
to Lebanon in January 2007 to help secure the UNAFIL mission,
and as recently as October 2007 President Kikwete repeated
his pledge to deploy a battalion of peacekeepers to Darfur.)


16. (SBU) The Tanzanian government has also signaled its
desire to deepen military-to-military ties with the U.S. more
broadly. In December 2006, the GOT gave approval to CJTF-HOA
to establish a Civil Affairs presence on the Swahili Coast.
The Civil Affairs team has begun humanitarian projects and
will help build civil military operations capacity within the
Tanzania People's Defence Forces (TPDF). Among some members
of TPDF's old guard, however, there remains a residual
resistance to developing deeper ties with the U.S.


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17. (SBU) The Tanzanian government has repeatedly requested
military equipment from the U.S. but its failure to sign
Article 98 is an impediment. To respond to the GOT's
requests for increased training opportunities, the Mission
will use IMET funds to send promising officers from
Tanzania's army and navy to the U.S. for educational exchange
programs. We also use funds from a State Department source
(NADR-EXBS) to provide equipment to Tanzanian coastal
security forces to strengthen the country's maritime security
capacity. Finally, using DoD Section 1206 funding, we
provided nearly USD 1 million in FY07 to train Tanzania's
military in Special Forces Operations with an emphasis on
patrolling the country's borders.

Health Challenges: HIV/AIDS and Malaria
--------------

18. (SBU) Tanzania faces a mature generalized HIV epidemic,
with a prevalence rate of approximately 7 percent and 1.4
million people living with HIV/AIDS. In FY 2008, PEPFAR will
provide Tanzania with over USD 303 million to support
treatment, care, and prevention programs. The PEPFAR program
is on track to meet its final targets: 150,000 individuals on
anti-retroviral drugs; care for 750,000 individuals,
including orphans and vulnerable children; and prevention of
490,000 new HIV infections. Although the U.S. has fostered
positive relationships with the Tanzanian government in the
health sector, significant challenges remain including: poor
health infrastructure; a shortage of health care workers; a
weak procurement system; and occasional allegations of
corruption.


19. (SBU) Malaria is the number one killer of children in
Tanzania and continues to be a major cause of maternal
mortality. As a focus country under the President's Malaria
Initiative (PMI),Tanzania will receive up to USD 31 million
in FY08 to support the delivery of long-lasting, insecticide
treated bed-nets, indoor residual insecticide spraying, and
the use of Artemisinin-based Combined Therapy (ACT) as
treatment. Since 2006, USAID has focused its efforts in
Zanzibar, significantly reducing malaria cases, and will
expand its campaign to the Mainland with the goal of reducing
malaria deaths by 50 percent by 2010.

Millennium Challenge Corporation (MCC)
--------------

20. (SBU) In September 2007, the MCC Board approved Tanzania
for the largest MCC Compact to date, USD 698 million. The
Compact will strengthen Tanzania's infrastructure network in
three key areas: roads, water, and energy. Tanzania's
Compact is now on track for signature and funding in January

2008. However, with the rising tide of corruption
allegations leveled at the government, our message has been
that a Compact is an agreement of reciprocal
responsibilities, and to sustain it over five years, Tanzania
must pay heed to its corruption index and inject greater
transparency and accountability into governance.


21. (SBU) Tanzania also received MCC Threshold funds - USD
11.2 million from FY05-07 . The Threshold program, which is
aimed at good governance and anti-corruption projects,
consists of four components: (i) public procurement reform;
(ii) a rule of law initiative with focus on the Prevention of
Corruption Bureau; (iii) civil society strengthening; and
(iv) technical assistance to establish a Financial
Intelligence Unit.

Comment
--------------

22. (SBU) Secretary Paulson's visit comes at a time when the
U.S. is providing unprecedented support to Tanzania and when
there is a great deal of positive momentum in the
U.S.-Tanzanian bilateral relationship. While his visit,
therefore, will accentuate the positive, we will also ask him
to underline the critical importance of transparency and
accountability in government. Tanzania is poised for the
largest MCC Compact ever, at the very moment donors have
begun to question its commitment to clean government. More
broadly, Tanzania today is a model of stability, enjoying
peaceful transitions of power and promising economic growth.
It is in U.S. interests to strengthen and sustain this model
for the continent. A rising tide of unchecked corruption
puts it all at risk.
GREEN