MCC SIGNING CEREMONY'S REVEALING INSIGHTS

C O N F I D E N T I A L SECTION 01 OF 02 GEORGETOWN 000818 SIPDIS SENSITIVE SIPDIS E.O. 12958: DECL: 08/31/2017 TAGS: EAID EFIN PGOV PREL GY SUBJECT: MCC SIGNING CEREMONY'S REVEALING INSIGHTS Classified By: CHARGE D'AFFAIRES MICHAEL THOMAS FOR REASONS 1.4(B) AND (D) ¶1. (C) SUMMARY: On August 23rd, Millennium Challenge Corporation (MCC) Deputy Chairman Rodney Bent participated in a signing ceremony for the US$6.7 million two-year Guyana Threshold Program contract. The event was covered by all television and radio news programs and reported in each of the three main newspapers that day and several days following. The Threshold program seeks to help Guyana reduce its fiscal deficit by improving its ability to collect revenue and better manage its budget. Bent reassured chiefs of bi- and multi-lateral donor missions that the MCC understands the prospect of a multi-million dollar MCC Compact agreement is about the only incentive available to the donor community to encourage necessary governance reforms and arrest the slide towards democratically sanctioned autocracy. At events throughout the day, President Bharrat Jagdeo revealed interesting insights into his thinking on economic issues, as well as his personality and leadership style. His themes included: more bureaucracy is better and public (and parliamentary) opinion are irrelevant. A key measure of success for the Threshold Program will be whether Jagdeo's perspective changes over the coming months. Throughout the day, Bent successfully delivered messages on the U.S. perspective on fiscal reform. END SUMMARY. ¶2. (U) Before the signing ceremony, a seventy minute meeting between Jagdeo, the Charge d'Affaires Michael Thomas and USAID Mission Director Dr. Fenton Sands took place in the Office of the President. After the signing ceremony, a press conference was held where President Jagdeo fielded a few questions, then lunch with MCC representatives and the donor community followed. Wrapping up events were a meeting with the Minister of Finance, Dr. Ashni Singh, and a three-hour dinner at the State House with President Jagdeo and key cabinet members in attendance. The CDA, USAID Director and Bent attended all events (except CDA was unable to attend the Finance Ministry meeting). ¶3. (C) During a pre-signing morning meeting in his office, President Jagdeo told Bent and CDA that his number one priority was to rebuild the entrepreneurial class. Jagdeo praised USAID/GTIS's efforts to provide direct assistance to farmers and entrepreneurs who need help rather than simply studying issues and funding elite business associations. He blamed the small remaining entreprenurial class for the negative business climate in Guyana, saying that after 28 years of PNC state socialism, they want government to do everything for them. He went on to say that this small group deliberately chases away potential foreign investors by telling supposedly untrue tales of the difficulties of doing business in Guyana. ¶4. (C) As Jagdeo, Bent and CDA were reviewing MCC indicators for Guyana, Jagdeo pointed out the "days to start business" indicator and remarked that he could easily reduce the number from 46 days to 5, but that he intentionally kept the bureaucracy in place to protect "the little guy" who could be victimized if a lack of government vetting allowed unscrupulous people to start businesses. Jagdeo also complained about the Control of Corruption indicator noting that it measured perceptions of corruption rather than actual corruption. When Bent suggested that transparency and a reduction in regulation were common methods other developing nations used to combat corruption, Jagdeo countered that more and stronger bureaucracy and regulation were appropriate for Guyana. Jagdeo gave the example of a "deliberate decision" he had made to add layers of bureaucracy to the customs processes in order to increase the cost of bribery, which he believes will reduce corruption. Jagdeo also informed Bent that the GOG has an Auditor General whose function is to investigate and report any corruption that may occur in the GOG. (Note: Jagdeo neglected to mention that the last Auditor General, Anand Goolsarran, had been forced out of office in 2004 when he was investigating a Presidential Advisor who was illegally exporting endangered dolphins. The Auditor General position has been vacant ever since. End Note.) ¶5. (C) Also during the office meeting, Jagdeo highlighted a section of the Threshold contract which called for "public opinion polls on the fairness to society as a whole of the GOG's public investment and procurement actions." Jagdeo acknowledged the language, but said "I hope you are not really going to do that," explaining that since the public does not understand fiscal policy and government budget processes, with such a poll "you will only get opinions" rather than facts. He volunteered that even polling members of Parliament would be futile, in his opinion, as most MPs also do not understand fiscal policy and government budget processes. Jagdeo also volunteered to the group that his GEORGETOWN 00000818 002 OF 002 management style is that of "micromanaging and firefighting, because that is the only way to get things done." ¶6. (U) The official signing ceremony, during which the USAID Mission Director and the Minister of Finance signed the Threshold contract with Bent and Jagdeo officiating, and the subsequent press conference dominated the press that day and the following day. The press clearly understood the purpose of the MCC funds, with headlines such as "... funds to help strengthen tax administration, improve VAT implementation and create Intelligence Unit within GRA" (Guyana Revenue Authority) and "... programme to overhaul fiscal polices (sic) and create a more business-friendly environment." ¶7. (C) At the MCC-hosted lunch, the Chiefs of Guyana's traditional bilateral and multilateral donors gave Bent a significanly different view of Guyana and the difficulties the Threshold Program will have in engendering reforms. Bent reassured all in attendance that the MCC seeks strong partnerships with both donors and Guyanese civil society, and that the MCC understands that the potential of a multi-million dollar compact is just about the only incentive available to prod Guyana's government to move forward with goverance reforms which it has been resisting. ¶8. (C) That evening at a State House dinner in Bent's honor, Jagdeo spoke effusively about his experiences in the United States: New York diners open at 3:00 a.m., hitching a ride with a couple of African immigrants in Baltimore when an Amtrak derailment stranded him on the way to an IMF meeting, sittng on the floor in D.C. bookstores looking through their wares, and his dream of taking a week-long driving vacation through the farmlands of the American Midwest. ¶9. (C) COMMENT: The day's event provided a first-hand view of the President's leadership and personality traits that the business community, government officials, and PPP leaders are complaining about with increasing volume: Jagdeo blames others for all of Guyana's ills, does not value the opinions of the public, the business community or the political leaders, and believes he personally is the only person with the ability and aptitude to solve Guyana's problems. The single most difficult challenge of the Threshold Program will be to change Jagdeo's thinking, or, failing that, to convince Jagdeo that the potential of an MCC Compact is incentive enough to implement policy reforms he does not believe in. ¶10. (U) MCC Deputy CEO Rodney Bent did not clear this telegram. THOMAS