LIBERIA: ITALY EAGER TO HELP, BUT STILL CONCERNED

UNCLAS ROME 000264

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/IFD/ODF EMILY WAECHTER,
EB/IFD/OMA AUDU BESMER

E.O. 12958: N/A
TAGS: EAID ECON EFIN PREL LI IT
SUBJECT: LIBERIA: ITALY EAGER TO HELP, BUT STILL CONCERNED
ABOUT FUTURE DEVELOPMENT ASSISTANCE FOR SOMALIA AND SUDAN

REF: STATE 9925


1. (SBU) Summary. The Ministry of Finance (MOF) reports
Italy wants to be helpful on the question of clearing
Italy,s World Bank (WB) arrears using internal resources,
but Italy still seeks a "framework" solution to include
Liberia, Somalia, and Sudan. Italy is concerned that using
internal WB resources to pay off Liberian arrears would
deplete WB resources and make it difficult to offer a similar
generous solution to Somalia, when Somalia was ready for IFI
assistance. End summary.


2. (U) Acting EcMin met with Francesca Manno, MOF
Development Banking Director, February 7 to discuss reftel
points. A/ECMIN opened to say that Liberia presented the
world with a historic opportunity to help a struggling
African country, whose leader, in a short time, has started
to turn Liberia,s economy around dramatically. In view of
the need for the international community to support Liberia
at this historic moment, she asked Manno whether the GOI
could support arrears clearance at the WB.


3. (SBU) Manno stated that the GOI does not now intend to
"link" clearance of Liberia's arrears to future clearance of
arrears for Somalia and Sudan. However, the GOI is
nonetheless concerned that using internal World Bank (IDA)
resources to clear Liberia,s substantial WB arrears could
affect WB solvency and, thus, the prospects for possible
future arrears clearance for Somalia and Sudan. In
particular, the GOI wants to ensure there are enough IFI
resources to assist Somalia because Italy will play a leading
role in any financial workout for Somalia, and Italy,s
foreign assistance budget is very tight.


4. (SBU) Manno continued that although Italy does not link
the arrears clearance of Liberia, Somalia, and Sudan, the GOI
nonetheless strongly believes in the need for a long-term IFI
framework to address arrears clearance and additional
assistance for all three countries and to avoid giving
"special consideration" to any one country. That said, Manno
stated the GOI will do everything possible to work with the
USG and other donor nations to assist Liberia now.


5. (SBU) On the February 13-14 Liberia Partners, Forum,
Manno and her colleagues were to eager to know what the
United States would pledge to set the standard for other
donors. Manno wanted to use this information to inform MFA
and MOF senior levels and, she implied, to affect positively
the Italian pledge.


6. (SBU) She also said she was not certain who would
represent the GOI at the February 13-14 meetings, as the
World Bank/Liberia invitations had not yet arrived at the
MOF. (Note. Our contacts at the Italian MFA did receive an
invitation from the World Bank, but not from the Government
of Liberia. End note.)


7. (SBU) Comment. Italy,s new government has made African
foreign assistance a priority. However, we are not sure
whether Manno,s statement that Italy is seeking a
"framework" to address Liberia-Somalia-Sudan arrears is any
different than Italy,s previous statements that it wanted to
"link" a Liberian solution to one for Somalia and Sudan. We
take the new Italian government's stated objective to focus
on African foreign assistance issues and Manno,s
word-smithing as an indication that Italy would like to be
helpful. At this late date, and in view of the apparent
confusion over the invitation to the Liberia Partners Forum,
we would suggest that the Department contact Italy,s embassy
to determine that Italy will be represented at this important
meeting. End comment.
SPOGLI