FIJI UPDATE, FEBRUARY 14, 2007: EPG REPORT WILL

C O N F I D E N T I A L SECTION 01 OF 03 SUVA 000108

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/14/2017
TAGS: PREL PGOV EFIN MARR PHUM ASEC FJ
SUBJECT: FIJI UPDATE, FEBRUARY 14, 2007: EPG REPORT WILL
ASK BAINIMARAMA TO STEP DOWN; BAINIMARAMA DISINVITED FROM
MSG SIGNING CEREMONY; BROUHAHA OVER FIJI'S IMF STATUS

REF: SUVA 99

Classified By: Ambassador Dinger per 1.4 (B,D)

Summary
--------------

1. (C) PIF Secretary General Greg Urwin told us the EPG
report on Fiji will ask Bainimarama to step down as interim
PM. It will call for elections within 18-24 months, if not
sooner. Urwin said the hope is that members of the interim
government will convince Bainimarama to moderate his
heretofore hard-line stance and accept the EPG requests. We
understand that PNG President Somare has disinvited
Bainimarama from an upcoming Melanesian Spearhead Group (MSG)
signing ceremony. Bainimarama let Somare know of his
displeasure but apparently has chosen not to force the issue.
Interim Finance Minister Chaudhry accused Australia of
trying to force Fiji out of the IMF. Australian High
Commission contacts insist that is not true, but note that
Australia has pushed the IMF to refrain from business as
usual with the current regime. Australia successfully argued
for the postponement of a planned high-level IMF mission to
Fiji, but has no objection to a lower-level technical
assistance visit.

EPG Report Will Ask Bainimarama to Step Down,
Call for Elections in 15-24 Months
--------------

2. (C) Pacific Island Forum (PIF) Secretary General Greg
Urwin told the Ambassador February 14 that the Eminent
Persons Group (EPG) report on Fiji should be finalized by
2/15. A PIF ministerial meeting is to follow, though date
and place remain unclear. Urwin said the date appears to be
slipping to early March, with Australia or Vanuatu the
likeliest locations. Urwin said the EPG report will restate
the PIF position that the military takeover was
unconstitutional and will call for the following steps:

--Commander Bainimarama steps down from the role as interim
Prime Minister. The military removes itself from politics
and "goes back to the barracks."
--The interim government lifts the "State of Emergency";
--The interim government confines itself to actions
consistent with the 1997 Constitution, such as improving
education and public works;
--The human rights violations stop;
--The interim government commits to a roadmap wherein
elections are held in 18-24 months, if not sooner. On the
basis of such a commitment, the Forum would consider
providing support for a census and elections;
--There is a clear de-linking of the interim government's
"clean-up" campaign from preparation for new elections. If
this is the case, the Forum will consider helping set up the
proposed anti-corruption commission in Fiji.


3. (C) Urwin noted that while Bainimarama might not appear
to be very amenable to the steps listed above, it is the
EPG's impression that some members of the interim government
are willing to use their influence to attempt to moderate the
Commander's positions. Urwin noted that, in arranging the
EPG schedule in Fiji, the military sometimes took an initial
hard-line position but backed off when members of the interim
government intervened. The EPG trip to Lau to see deposed PM
Qarase is an example. After Urwin discussed the issue over a
period of 10 days with interim Foreign Minister Nailatikau,
Nailatikau eventually convinced the military that it was not
in Fiji's interest to block the meeting.

PNG Disinvites Bainimarama From MSG Signing Ceremony
-------------- --------------

4. (C) The PNG High Commissioner to Fiji told the
Ambassador February 14 that PM Somare directed a Foreign
Secretary to Foreign Secretary communication to disinvite

SIPDIS
Commodore Bainimarama from an upcoming signing ceremony for
an MOU on the structure and future role of the Melanesian
Spearhead Group. Somare made clear: "I don't want
Bainimarama there." Bainimarama reportedly replied directly
to Somare, stating he took offense that Somare had not
communicated the decision to him directly; but, Bainimarama
said, he would honor Somare's request not to attend. Interim
FM Nailatikau will do the signing.

Chaudhry Accuses Australia of Attempting

SUVA 00000108 002 OF 003


to Throw Fiji Out of the IMF
--------------

5. (U) On February 12, Interim Finance Minister Chaudhry
told the media that the Reserve Bank of Fiji had recently
informed him Australia had tried to have Fiji thrown out of
the IMF, but other nations wouldn't go along. Chaudhry said
the action by Australia "raised serious questions about
whether Australia is Fiji's friend or foe," and called it "an
attack on Fiji sovereignty." Chaudhry said suspension from
the IMF would have a drastic negative impact on Fiji's
economy by restricting its ability to borrow.


6. (C) Late last week, a Fiji Reserve Bank official
privately told us much the same story. The official said
contacts at the IMF told her Australia tried to remove Fiji
from the organization, but that the United States Executive
Director (ED) had blocked it. An official at the Pacific
Financial Assistance Center (PFTAC) an IMF-UNDP joint
venture, told us he also heard this account from the Reserve
Bank official. When he made a follow-up inquiry to IMF
headquarters, IMF colleagues told the PFTAC official that the
IMF legal department had looked into the issue of whether
Fiji's interim government is "legitimate" or not. The
impetus for the legal department's review, the IMF officials
said vaguely, "may have come from Australia." If the legal
department were to determine the Fiji interim government is
not legitimate, then suspension from the IMF would be an
option. The IMF reportedly determined, however, that the
majority of its membership had accepted the legitimacy of the
interim regime.

Australia Challenges an IMF Determination that the
Fiji Regime is Legitimate
-------------- --------------

7. (C) The Australian Deputy High Commissioner here told us
Australia never suggested Fiji should be suspended from the
IMF. Acting on instructions from Canberra, the Australia ED
to the IMF had argued that the IMF should not conduct
"business as usual" with the interim regime, and that a
planned Article IV IMF mission to Fiji should be postponed.
Australia also objected strenuously to an IMF staff
determination (apparently by the legal department as noted
above) that most IMF member countries had accepted the
interim regime as "legitimate." The Deputy HC told us IMF
staff had initially stated that only Australia and New
Zealand questioned the legitimacy of the regime. After the
Australian ED pointed out that the U.S., the UK, and the EU
had all made statements against the takeover, IMF staff
backtracked to the position that "the majority of IMF
members" accept the legitimacy of the regime. IMF staff then
agreed that the Article IV mission should not take place
until the situation in Fiji stabilizes. A planned technical
assistance mission to Fiji will go ahead as scheduled.
Australia has no objection to that visit.

Comment: Will Bainimarama Listen to the EPG?
U.S. Position Should be Made Clear to the IMF
--------------

8. (C) The 18-24 month timeframe for a new election strikes
us as far too long. The draft EPG paper also appears not to
address Fiji's "coup culture" problem. Nevertheless, the
draft, as described by Urwin, does hit important notes. It
remains to be seen what approach PIF ministers will take
toward their Fiji "brothers," though reports that both PNG
and Vanuatu have become disillusioned with the interim
government are somewhat encouraging. In any case, we remain
very skeptical about Bainimarama's willingness to listen to
international advice, even from within the Pacific region.
The EPG recommendations would go against Bainimarama's strong
desire not to have new elections, not to give up power, until
in his view he has transformed Fiji so dramatically that
Qarase and his SDL party could not win. We expect that even
if Bainimarama gives lip service to PIF judgments, he will
intend to drag out any timeline to fit his own comfort level.
The key potential levers on Bainimarama are internal to
Fiji, particularly the economy and intra-Fijian politics.


9. (C) We agree with the Australian position that
international organizations like the IMF should not conduct
business as usual with the interim regime. The postponement
of the Article IV Mission to Fiji sends, we believe, an
appropriate message. We do not oppose the technical
assistance mission. We are concerned, however, about the

SUVA 00000108 003 OF 003


IMF's characterization of the Fiji regime as "legitimate."
We suggest that Washington consider reminding the IMF of the
USG firm stance that the Bainimarama regime remains illegal
and illegitimate.
DINGER