JAMAICA: LOOKING AHEAD-- WHY THE POST-ELECTION

C O N F I D E N T I A L KINGSTON 000158 SIPDIS SIPDIS DEPT FOR WHA/CAR (RANDALL BUDDEN) DEPT PASS TO CENTRAL AMERICAN CARIBBEAN BASIN COLLECTIVE E.O. 12958: DECL: 01/27/2017 TAGS: PREL PGOV PINR SOCI EINV ENRG ECON EFIN PTER, PHUM, KCOR, CARICOM, JM, VZ, XL SUBJECT: JAMAICA: LOOKING AHEAD-- WHY THE POST-ELECTION PERIOD MAY PROVE PIVOTAL IN BILATERAL RELATIONS REF: A. KINGSTON 133 (NOTAL) ¶B. 06 KINGSTON 2189 (NOTAL) ¶C. KINGSTON 110 (NOTAL) ¶D. KINGSTON 89 (NOTAL) ¶E. 06 KINGSTON 2021 (NOTAL) ¶F. 06 KINGSTON 2150 (NOTAL) Classified By: AMB. BRENDA L. JOHNSON, REASONS 1.5 (B) AND (D) -------------- Summary and Analysis -------------- 1.(C) The national elections which Jamaica must hold within the next year promise to be a fiercely contested, down-to-the-wire affair. Regardless of their timing or outcome, the months immediately thereafter may prove pivotal in shaping bilateral relations for years to come. If the ruling People's National Party (PNP) retains power, charismatic Prime Minister Portia Simpson Miller will have obtained a clear mandate to reconfigure her cabinet and chart her own course-- perhaps in new directions. Conversely, after seventeen years in opposition, a victory by the Jamaica Labour Party (JLP) would represent a sea change in the country's political history; a newly elected JLP Government would look to the U.S. for advice and assistance in a variety of areas. End Summary and Analysis. 2.(C) Throughout Jamaica in recent weeks, speculation has been rife as to whether: (A) Prime Minister Portia Simpson Miller (PSM) might call national elections for February or wait until after the Cricket World Cup (CWC) series ending in late April (Reftel A); (B) the erosion of her popular support, and steady gain in the approval rating of Opposition Leader Bruce Golding, will continue or abate (Reftel B); (C) the upcoming campaign, which promises to be contested intensely, might unleash the kind of violence among politically-affiliated criminal elements which has marred previous Jamaican elections (Reftel C); (D) Venezuela's Hugo Chavez is providing $5 ) 6 million in cash to fund the reelection campaign of PSM's PNP, as alleged by Golding (Reftel D); (E) as he has hinted publicly, Golding will reveal further evidence of PNP skullduggery in the Trafigura affair (Reftel E) and/or other scandals; (F) an informant from within the inner circle of the PNP is passing information to the JLP regarding funding from Trafigura, Chavez, and other embarrassing imbroglios; (G) after seventeen years in opposition, the JLP at last may be poised for a return to power under Golding's highly adept, if uncharismatic, guidance. Post-election period to be pivotal -------------- 3.(C) In the run-up to elections, national attention will focus on the hotly contested &swing8 parliamentary seats, most of which are in the western parishes of Hanover, Westmoreland, St. James, St. Elizabeth, and Trelawny. Clearly, an intense political struggle looms; yet, regardless of the timing or outcome of elections, for a number of reasons the months immediately thereafter are likely to prove pivotal in bilateral relations between Jamaica and the U.S. Background: PNP united outwardly, but uneasily -------------- - 4.(C) PSM became PNP Leader and Prime Minister a year ago following a bitterly divisive struggle to succeed the retiring P.J. Patterson; Minister of National Security Peter Phillips and Minister of Finance Omar Davies, both respected and seasoned figures, were her principal opponents. To all outward appearances, she since has done a masterful job of mending fences and healing wounds within the Party. Nevertheless, widespread doubts persist about the true loyalties and ambitions of Phillips and, to a lesser degree, Davies, as well as the extent of PSM,s effective control of Government policy. Given her populist instincts and carefully cultivated image as a woman of the people, many observers believe that, had Davies not remained Finance Minister, PSM would not have exercised the kind of fiscal restraint the Government has managed thus far. If the PNP retains power: PSM to chart her own course, but in which direction? -------------- -------------- 5.(C) If the PNP wins the elections, for the first time PSM will have obtained a clear mandate from the people as a whole to reconfigure her cabinet and shape Government policy, domestic and foreign, as she sees fit. While nothing is certain, this could bring substantial changes. In perhaps the most optimistic scenario, PSM would make only minor adjustments to the cabinet, with Davies and Phillips keeping their respective portfolios at Finance and National Security. This would augur well for continued close bilateral cooperation in the areas of macroeconomic policy, security assistance, counter-narcotics, and criminal justice. However, the U.S. should expect PSM,s populist instincts, together with Jamaica's heavy debt burden (debt-to-GDP ratio of 133 percent),slow growth (2.7 percent),and high unemployment (11.3 percent),to lead to acceptance of further financial assistance from any quarter, in any form-- including Petrocaribe or cash from Venezuela's Hugo Chavez. In foreign policy, on a range of issues from Iraq and Venezuela to debt relief, deportees, trade liberalization, and nuclear disarmament, PSM and Foreign Minister Anthony Hylton may well become more outspoken in opposition to U.S. policies. And of course, possible forthcoming changes in Cuba also could complicate U.S.-Jamaican relations in unforeseeable ways. The Two Key Players: Davies and Phillips -------------- 6.(C) A more interesting-- and perhaps disturbing-- scenario would arise if PSM were to replace Phillips and/or Davies, or either or both were to step down. (A) PSM appreciates the value of Davies' fourteen years, experience as Finance Minister and the trust he has earned in international financial circles by reining in inflation and spending; in post's estimate, she would remove him only if she suspected he were plotting to challenge her authority. However, a more serious risk was foreshadowed several months ago when PSM planned to raid the national social security fund to finance job creation projects, and Davies reportedly threatened to resign in protest. On that occasion, PSM backed down; whether she would do so after having won elections is an open question. Davies almost certainly would leave Finance rather than blemish his excellent record as Minister. In the estimate of respected analyst Keith Collister, Jamaica's underlying economic fundamentals actually should justify a "B-plus" bond rating, and the current "B" rating is entirely attributable to political uncertainty: if Davies continues as Finance Minister, international lenders and investors may reward the Government; conversely, his departure could prove calamitous. (B) Phillips is another matter. Bitterly disappointed by his loss to PSM in the struggle to succeed P.J. Patterson, he is suspected by many of maneuvering behind the scenes to undermine her authority with the aim of eventually supplanting her as Party Leader-- even at the cost of the PNP's losing the upcoming election. If PSM remains in office, she may well consider Phillips expendable. Unfortunately, his successor almost certainly would be a lesser figure, and probably less trustworthy. For years, Phillips has cooperated closely with the U.S., U.K., and Canada in anti-crime, anti-corruption, and counter-narcotics efforts, and is widely perceived as among the cleanest of Jamaica's leaders. After seventeen years of power in a country in which corruption is endemic, the PNP has few, if any, comparable figures as possible successors; Phillips' departure thus would leave bilateral cooperation in the areas of security, anti-corruption, anti-crime, counter-narcotics, and counter-terrorism on a less solid footing. If the JLP Wins: How will the U.S. accommodate a closer relationship? -------------- -------------- 7.(C) A JLP victory would represent a sea change in Jamaica's political direction. As outlined Reftel (F), across a broad spectrum of issues-- from Venezuela and CUBA to trade liberalization, market-driven development, anti-corruption efforts, and Iraq-- the fundamental orientation of the JLP is more consonant with U.S. policies than that of the current Government. In private discussions with DCM and Emboff, Golding and other JLP officials have stated that, upon taking power, they will look to the U.S. for advice and assistance in areas as diverse as: -- harnessing remittances to boost economic development -- biofuels -- expansion of microfinance -- reform, clean-up, and training/equipping of the Jamaica Constabulary Force (JCF) -- financing infrastructure development. In short, the expectations of a newly-elected JLP Government would be high; the U.S. might well have difficulty meeting them. Washington should accommodate to the extent possible Golding's request for a visit (Reftel D) to discuss areas of potential cooperation, and begin thinking about what sort of response we would be able to make to a request for enhanced engagement by a more U.S.-oriented JLP Government, should that come to pass. JOHNSON