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