FIJI: BAINIMARAMA "DICTATES"; BUDGET TIGHT; CHINA

C O N F I D E N T I A L SECTION 01 OF 02 SUVA 000543

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/23/2017
TAGS: PREL PGOV MARR PHUM FJ
SUBJECT: FIJI: BAINIMARAMA "DICTATES"; BUDGET TIGHT; CHINA
MOU; CJ TRIBUNAL; CALLING ON "LABOR" CONNECTIONS IN
AUSTRALIA

REF: SUVA 536

Classified By: Amb. Dinger. Sec. 1.4 (B,D).

Summary
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1. (C) Fiji interim PM Bainimarama has reiterated that he,
and he alone, will "dictate" Fiji's future. The interim
government (IG) budget for 2008 is tight, reflecting an
economy that has shrunk by 3.9% in 2007. A budget
announcement that the Ministry of Fijian Affairs will be
downgraded to a Department was not received well by deposed
PM Qarase and Fijian nationalists. China has signed an MOU
with Bainimarama for a F$241 million infrastructure loan.
Ballu Khan, an alleged assassination conspirator who was
badly beaten when arrested, is suing the IG for $40 million.
The tribunal for suspended Chief Justice Fatiaki opened its
doors Nov. 26. The judges appear reputable, though the chief
staffer is closely aligned with the IG. Bainimarama and
interim Finance Minister Chaudhry hope Chaudhry's "labor"
political connections can bring a softening of Australian
policy toward Fiji under the new Rudd administration in
Canberra. End summary.

Bainimarama the only one to "dictate" future
--------------

2. (U) In a TV interview Nov. 22, interim PM Bainimarama
responded to deposed PM Qarase's proposals to engage in
dialogue and to reconvene Parliament long enough to permit a
legal call for elections. Bainimarama said Qarase will not
"dictate" terms for Fiji's future. Bainimarama added, "All
I'm going to say is we dictate the terms and no one is going
to tell us what to do." Bainimarama said he had tossed
Qarase's letter in the rubbish bin. Over the weekend, he
said he hadn't bothered to read the letter. (Note: at the
PIF Leaders Meeting in Tonga last month, Bainimarama
reportedly promised the other Pacific leaders that he would
engage in dialogue with Qarase.)

IG budget for 2008
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3. (C) Interim Finance Minister Chaudhry announced next
year's IG budget on Nov. 23. Chaudhry said the economy is
down 3.9% for 2007, a deeper drop than previously admitted.
The expectation is for 2% growth for 2008, predicated on a
hoped-for resurgence of tourism and sugar. With funding
tight, Chaudhry announced significant cuts to education and
health. Police and the military received small increases.
The budget allocates $3.5 million for 2008 preparations for
2009 elections (which are estimated to cost around $25
million) and $400,000 for the People's Charter (which is
estimated to cost $2.6 million). Chaudhry called for donors
to assist both endeavors. Comment: we know two
behind-the-scenes advisors on the People's Charter, both of
whom once worked for the Asian Development Bank, have been
lobbying the ADB to assist, so far with no success. End
comment.

Re-jiggering Cabinet - downgrading Fijian Affairs
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4. (U) Budget documents indicate a number of changes to IG
cabinet responsibilities. The most surprising is conversion
of "Fijian Affairs" from cabinet level to a directorate under
the PM's office. Current Fijian Affairs Minister Ganilau
told the media the decision was entirely Bainimarama's.
Deposed PM Qarase complained that the move is another snub to
ethnic-Fijian sensibilities, and noted that the move, by law,
requires approval by Parliament. Bainimarama labeled Qarase
a "radical racist" for such statements. Bainimarama said the
move is intended to help convert Fiji into an egalitarian
society. Former PM Rabuka endorsed the plan. Deposed Great
Council of Chiefs head Bokini and several other Fijian chiefs
have joined Qarase's opposition.

Major infrastructure loan from PRC
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5. (C) The IG announced late last week that Bainimarama has
signed an MOU with the PRC for a F$241 million (US$160
million) infrastructure loan. Details remain to be
negotiated. Given that Chaudhry said in his budget speech
that Fiji's debt burden is already too high, at over 50% of
GDP, the details of the new China loan will be important. A

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source at the MFA told us Chinese officials are in Suva at
the moment to discuss the loan and to work through aspects of
a new embassy compound China intends to construct here.

Ballu Khan - suing IG; EU and NZ HR messages
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6. (U) Ballu Khan, the Indo-Fijian now with New Zealand
citizenship who allegedly was conspiring to assassinate IG
leaders, has filed suit in Fiji court seeking F$40 million in
damages. The basis for the suit is the severe beating Khan
received from Fiji security officials when he was detained
Nov. 3, plus the fact that the IG has yet to charge him with
any crime, despite a 48-hour rule. The European Union
Presidency issued a statement via the British High Commission
in Suva on Nov. 21 expressing concern about the Khan beating.
Bainimarama responded that Khan has been "faking" the
seriousness of his injuries. New Zealand Deputy PM Cullen
joined the fray, saying, "I am sure the walls of the cell
attacked Mr. Khan viciously and he suffered as a consequence
of that. Mr. Bainimarama's claims in that regard don't seem
to be credible at all."

CJ Fatiaki case
--------------

7. (C) As reported reftel, the IG has appointed a tribunal of
three foreign jurists to decide whether suspended Chief
Justice Fatiaki should be removed permanently from office.
Several of the charges against Fatiaki relate to allegations
he under-reported and failed to pay tax on past income. The
Fiji Tax and Customs Authority (FIRCA) announced a tax
amnesty in October that is now running to Dec. 31. Given
allegations of past tax malfeasance against Interim Finance
Minister Chaudhry (FIRCA's boss),observers wondered if
Chaudhry used the amnesty to clear his slate. We hear
Fatiaki did so in his own case; however, the amnesty
reportedly only applies to penalties and fees. It does not
absolve the taxpayer from criminal, or presumably CJ-tribunal
charges. Observers were pleasantly surprised by the quality
of the jurists selected for the tribunal; however, they are
not impressed with the IG's appointment of New Zealand
Queen's Counsel Gerard McCoy to head the tribunal's staff.
McCoy has been a close advisor to Fatiaki's chief opponents,
Judges Gates and Shameem.

Australia's election and Fiji
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8. (U) The Australian Labor Party victory in last Saturday's
election has raised hopes within the IG that there will be a
re-evaluation of policy toward Fiji. Chaudhry, who heads the
Fiji Labor Party, said he hopes "labor" kinship will cause
new PM Rudd to see Fiji in a softer light. Bainimarama said
he would be happy to enter into dialogue with the new Aussie
government. Opponents of the coup have argued that surely
Rudd will reject just as strongly as did Howard the illegal
removal of a democratically elected government.
DINGER