UNCLAS SECTION 01 OF 02 YAOUNDE 000386

SIPDIS

SENSITIVE
SIPDIS

DEPT ALSO FOR AF/C AND EB
LONDON AND PARIS FOR AFRICA ACTION OFFICERS
EUCOM FOR J5-A AFRICA DIVISION AND POLAD YATES

E.O. 12958: N/A
TAGS: KCOR EPET EFIN ECON CM
SUBJECT: EITI: CAMEROON'S OIL REVENUES COME OUT OF THE
DARKNESS

REF: YAOUNDE 382

YAOUNDE 00000386 001.3 OF 002


SENSITIVE BUT UNCLASSIFIED. NOT FOR DISTRBUTION OUTSIDE USG
CHANNELS.


1. (SBU) Summary. Cameroon's participation in the
Extractive Industries Transparency Initiative (EITI) process
has meant unprecedented transparency into the accounts of the
National Hydrocarbon Company (SNH) -- worth as much as $1.4
billion annually--but important short-comings remain. After
sometimes heated discussions with representatives from civil
society and the World Bank, the Government of Cameroon (GRC)
has agreed to provide more detailed information in future
reports. We already know that the FY05 reconciliation report
(due to be released on March 23) will have some limitations
and that the FY06 report (due in 2008) will reveal at least
$48 million in extra-budgetary spending (reftel), but the
EITI process has thus far provided critical leverage for
domestic and international advocates of improved allocation
of Cameroon's natural resource wealth. End summary.


2. (SBU) Poloffs met during the week of March 19 with
representatives from the World Bank and the Publish What You
Pay (PWYP) coalition of civil society organizations and with
Alfred Bagueka Assobo, the head of the GRC's EITI working
group, to solicit views on Cameroon's implementation of the
EITI process. All sides agreed that Cameroon's participation
thus far represents a significant departure from the
traditional secrecy that cloaked the handling of oil
revenues. Nevertheless, the release of the FY04 reconciled
accounts in December 2006 unleashed a heated debate among the
GRC, the IFIs, and civil society, with the PWYP coalition
releasing a January 10, 2007 statement criticizing the GRC's
participation as below the standard set by many other African
countries.


3. (SBU) The various parties exchanged views during a March
3-5 conference arranged by PWYP, resulting in the GRC's
commitment to broaden and deepen the information provided in
future reports. Specifically, the GRC promised to
disaggregate the payments made to the GRC on a
company-by-company basis, to increase the number of companies
required to report their information (to include signing and
exploratory payments), to include the numbers from SONARA,
the national oil refinery, and to engage in a publicity
campaign to stimulate discussion and debate of the EITI
process outside of expert circles. The GRC has further
committed to PWYP and the World Bank to better manage the
involvement of civil society, including such mundane but
critical factors as the timely provision of meeting materials
and reports to ensure an informed participation from all
stake-holders. According to Bagueka Assobo, some of PWYP's
demands -- for more accountability from the general treasury,
for example -- might be salutary in principle, but fall
outside the scope of EITI.


4. (SBU) Comment. Cameroon's oil sector has traditionally
been so opaque that even a whiff of accountability is
noteworthy. Until about 2003 it was generally understood
that SNH funds belong not to the treasury, but to the
Presidency. The problem has not been so much with SNH
itself--in fact we receive frequent glowing reports of SNH's
professionalism from American firms--but with the manner in
which the Presidency treated SNH as a discretional slush
fund. The PWYP coalition is right to demand increased
transparency and more robust compliance with the letter and
spirit of the GRC's EITI commitments. The pressure from PWYP
and the international community (especially in the run-up to
HIPC process completion point) was the driving force behind
the GRC's participation in EITI, and there can be little
doubt that the Presidency will again treat SNH as a personal
kitty if domestic and international pressure slackens. We
will continue to seek ways to support civil society and other
agents who agitate for increased transparency and
accountability in the disposition of national oil receipts,
but we should also not shy away from saluting the progress

YAOUNDE 00000386 002.3 OF 002


already made. End comment.
MARQUARDT