STP PRESIDENT TURNING TO EG

C O N F I D E N T I A L LIBREVILLE 000226

SIPDIS

SIPDIS

KINSHASA PASS BRAZZAVILLE, YAOUNDE PASS MALABO

E.O. 12958: DECL: 05/14/2017
TAGS: PGOV PREL GB EK
SUBJECT: STP PRESIDENT TURNING TO EG

REF: LIBREVILLE 0138

Classified By: Ambassador Barrie Walkley for reasons 1.4 b and d


1. (C) Sao Tome and Principe (STP) is one of the world's
poorest countries, with over sixty per cent of the budget
coming from foreign assistance. During the six years he has
been in office, Fradique de Menezes (STP's president) has
relied on off-budget or "backdoor" funding from Taiwan and
Nigeria whenever he has been faced with acute financial
needs. Having perhaps reached his limit with Taiwan and with
Obasanjo now out of the picture in Nigeria, de Menezes has
been seeking new sources of assistance/revenue and has
discovered Obiang Nguema of Equatorial Guinea.


2. (C) During a recent conversation with Ambassador Walkley,
de Menezes said that for several years he has been urging
Obiang to use Equatorial Guinea's substantial oil revenues
for the benefit of neighboring African countries,
particularly poor countries such as STP. De Menezes has been
seizing every opportunity to ingratiate himself with Obiang.
A year or so ago, he was the only head of state to accept
Obiang's invitation to visit Anabon Island (according to de
Menezes, while he and Obiang sat around waiting to see if any
others would show up, Obiang said: "Fradique, you are the
only friend I have in the region"). De Menezes also spent
four days recently touring Equatorial Guinea with Obiang.


3. (C) This attention is apparently starting to pay off.
During his visit to Principe (for "Principe Autonomy Day"),
De Menezes announced that Equatorial Guinea will be financing
and building a "logistics port" on the southern tip of
Principe and also will be building a new 2,500 meter runway
at the Principe airport. There are as yet no figures on the
costs involved, but a de Menezes advisor told Ambassador
Walkley that the port will cost at least 200 million dollars
and the airport runway more than 20 million dollars. The
purpose of the logistics port (which will be at the opposite
end of the island from Santo Antonio, Principe's only town)
will be to service and supply the oil platforms in the Gulf
of Guinea. Obras (the Equatorial Guinean construction
company financed by Obiang and directed by his son, Gabriel
Nguema Lima) will build the projects on a
"build/operate/transfer" basis with 25 year rights. FYI: The
port on Principe is a separate project from the deepwater
port on Sao Tome, subject of a 2005 USTDA-financed
feasibility study.


4. (C) On Sao Tome, Obras is resurfacing the island's main
highway (which was in terrible condition) from the town of
Sao Tome to Porto Alegre on the southern tip (approximately
90 kms). The work is being done on a rush basis (to be
finished in time for STP's July 12 independence day
celebrations, which this year are to take place in Porto
Alegre). According to de Menezes, this work is "a gift" from
Gabriel Nguema.


5. (C) COMMENT: Ambassador Walkley advised de Menezes to be
extremely careful in dealing with Obiang and with Gabriel
Nguema, to ensure that there is total transparency, and to
have the contracts examined by international experts. De
Menezes said that at the moment there are no contracts, only
"concept papers" which will lead to technical and financial
feasibility studies "by the end of the year." There are
already complaints about a lack of transparency in STP/EG
relations: the two countries signed a mutual defense
agreement last year which has never been made available to
STP's parliament, despite continued requests.


WALKLEY