NIGERIA: YAR'ADUA GOVERNMENT'S REPORT CARD AT ONE

S E C R E T SECTION 01 OF 10 ABUJA 000962

C O R R E C T E D COPY -- CORRECTED GRADES

SIPDIS

STATE FOR AF/W, INR/AA, INR/B
ENERGY FOR G PERSON
STATE PLEASE PASS USTR-AGAMA

E.O. 12958: DECL: 05/28/2028
TAGS: PGOV PINR KCOR PREL ECON NI
SUBJECT: NIGERIA: YAR'ADUA GOVERNMENT'S REPORT CARD AT ONE
YEAR AND A LOOK AHEAD

REF: A. ABUJA 345

B. ABUJA 833 AND PREVIOUS

C. ABUJA 946

D. ABUJA 473

E. ABUJA 364

F. ABUJA 799 AND PREVIOUS

G. ABUJA 951

H. ABUJA 686

I. ABUJA 812

J. 07 ABUJA 2627

K. ABUJA 898

L. ABUJA 573

ABUJA 00000962 001.2 OF 010


M. ABUJA 780

Classified By: Ambassador Robin R. Sanders for reasons 1.4 (b) and (d).

--------------
Introduction
--------------

1. (S) This is the second cable in our series to address U.S.
Mission Nigeria's analysis of President Yar'Adua's
performance as head of state. Our first report card on him
appeared at just over the halfway mark of his first year in
office (ref A). This cable looks at what he has or has not
done since then, the mood of the country, and outlook for the
immediate future. Though it is difficult to generalize as
performance varies greatly in different areas, we give the
Yar'Adua administration summary grades of a D for its first
year political performance and a D+ for its first year
economic performance.

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

2. (S) In February 2008, Mission Nigeria assessed that the
Yar'Adua government (then at its 8-month mark) had made many
positive statements but had delivered few tangible results to
the Nigerian people. At the government's one year
anniversary on May 29, there is little new to report. Though
work continues (mostly behind the scenes) on priority areas
including Niger Delta security and development, electrical
power generation, electoral reform, anti-corruption
initiatives, and institutionalizing respect for the rule of
law, there is growing public concern that the administration
may be moving too slowly to deliver on its promises and there
is a growing sense of impatience in Nigeria on the need to
deliver. This cable will look at some of the forces
affecting the performance of the Yar'Adua administration,
including the President's health and personality, his cabinet
and key advisors, ruling party politics, and the ongoing
court challenge to the 2007 presidential election. We will
then briefly review the government's report card on key
policy areas, examining what concrete results (if any) have
been achieved in the first year and what the prognosis is for
future progress. Finally, we will sketch out four possible
scenarios for Nigeria's medium-term future. End Summary.

--------------
Forces Shaping the Administration's
Performance: Health, Personalities,
PDP Politics, and Elections
--------------

3. (S) The President's Health: We continue to assess that
President Yar'Adua has real health problems which impact (at
least to some degree) his ability to perform in office over
the long term. However, information regarding his health is
very closely held and it is nearly impossible for us to
confirm exactly what conditions affect him and how severe the
problems are (ref B). We continue to hear that the President
suffers from kidney problems (connected or not to
"Churg-Strauss syndrome"),that he undergoes dialysis, and

ABUJA 00000962 002.2 OF 010


(according to a source in Katsina in May 2008-- septel) may
have had a kidney transplant in 2002. There are also
persistent rumors that the president has ongoing respiratory
problems. Yar'Adua recently told a reporter from London's
Financial Times that he contracted malaria in April 2008, was
ill for four days, and was treated with "a new drug" (no
further information provided) which caused an allergic
reaction, necessitating his 12-day trip to Germany for
medical treatment. According to the interview, he chose
Germany because his medical records and regular doctors are
there; he said he has been treated in Germany for the past 22
years. Though there may be shades of the truth in this
story, it is difficult to believe that it fully explains his
unplanned, lengthy absence from Nigeria. We believe that
there are more serious underlying medical conditions that the
presidency refuses to discuss. However, in our observations
of him, including in one-on-one meetings with the Ambassador,
he has always been alert and engaged, and (at least on these
occasions) his health problems don't seem to impact on his
ability to focus or to articulate his vision or policy
challenges he faces in his government. He is very fragile
physically, but we have seen flashes of his steely
personality. We do feel that the latest round of interviews
about his health show his recognition of everyone's concern
about his ability to remain in office for the long term.


4. (S) Yar'Adua's Personal Style: In addition to concerns
about the President's health, his personality is also an
important factor in the government's performance. Whatever
the exact nature of his health problems, we know that
President Yar'Adua travels less than his predecessor did, and
Villa sources have told Poloffs that they work shorter hours
under the current administration. However, both the
President and other senior officials have underscored that
their focus is domestic and there are some reports that
Yar'Adua meets with his hand-picked confidants late at night
(meaning that some Villa sources may not be in the loop on
what Yar'Adua is doing). Since his April trip to Germany,
Yar'Adua has maintained a relatively low profile, but he has
made campaign appearances in Bayelsa and Sokoto and still
holds routine cabinet and other internal meetings. He will
also be traveling extensively in June, making international
trips to UAE, France, and South Africa. He also just
returned from Tanzania. President Yar'Adua is reportedly a
contemplative person who is not comfortable making snap
decisions. He likes to consider proposals and deliberate on
them at length, which can slow down government initiatives.
His contemplative nature may also leave room for those around
him to act as surrogates in some matters, increasing their
own power and opening the door to corruption. However, we
strongly note that regardless of his frail health, he is
known for being strong willed and can and does get angry.
Ambassador has seen flashes of this in discussions of GON
actions that were taken without his consent.


5. (S) Cabinet and Key Advisors: We believe that the
President relies on a small circle of trusted friends and
advisors, many of whom are from Katsina, who act as a kind of
kitchen cabinet. We have heard that the First Lady Turai
Yar'Adua has significant influence, as do Agriculture
Minister Ruma (an old friend of the president),Minister of
Defense Ahmed (his college roommate),and Economic Advisor
Yakubu Tanimu (associate and friend from the Katsina state
government). Governors Shema (Katsina) and Saraki (Kwara)
are also reportedly close to Yar'Adua. There are troubling
rumors of alleged corruption by the First Lady and Economic
Advisor Tanimu, and Governor Saraki is allegedly working to
weaken the EFCC in order to shield his family and others from
ongoing investigations (Ref C). There were initial concerns
that President Yar'Adua would lack control over his cabinet,
as some Ministers and advisors have clear ties to the

ABUJA 00000962 003.2 OF 010


Obasanjo administration (including Chief of Staff Mohammed,
National Security Advisor Mukhtar, Foreign Minister Maduekwe,
and Attorney General Aondoakka). However, there have been no
obvious signs of Obasanjo interfering in government matters
or setting policy. Interestingly, while President Yar'Adua
was in Germany last month, it appeared that NSA Mukhtar was
running the show and he was in regular communication with the
President. Since early 2008, there have been persistent
rumors that a cabinet reshuffle is in the works, but the only
Ministerial change so far has been the ouster of Health
Minister Adenike Grange after a scandal about misuse of
Ministry funds. No one has been nominated yet to replace
Grange, though there are rumors that former ruling party
Chairman Ahmadu Ali (a medical doctor) wants to take her
place. (Note: Ali is Nigeria's Ambassador-designate to South
Africa, but reportedly has refused to assume the position
because he is angling for something better. End Note.) If
the cabinet reshuffle finally happens, we will need to
examine the new Ministers closely and try to determine
whether they are technocrats, Yar'Adua loyalists, or clients
of another "big man" (i.e. Obasanjo, Babangida) to determine
what the cabinet changes really mean and whether they will
improve (or not) the government's capacity to perform and,
most importantly, to pick up the pace.


6. (C) PDP Politics: President Yar'Adua took office under
the shadow of Obasanjo, who had clearly hand-picked his
successor and ensured his victory at the polls. However,
early concerns that Yar'Adua would be a mere puppet for
Obasanjo have proven false. Obasanjo clearly retains some
power within the government and the ruling Peoples Democratic
Party (PDP),but he does not fully control either body. The
March 2008 PDP National Convention showed that former
President Obasanjo could not unilaterally impose his will or
his preferred candidates on the party. Instead, a group of
younger sitting governors (including Kwara Governor Saraki,
head of the Governors' Forum) imposed a "consensus"
candidate, ostensibly to avoid conflict between pro and
anti-Obasanjo factions (Ref D). Though the convention proved
that Obasanjo was not all-powerful, it was also notable that
President Yar'Adua seemed to be removed from the party
leadership struggles and did not exert authority over the
chairmanship race or even endorse a candidate. There is
little evidence yet regarding his relationship with new PDP
Chairman Ogbulafor, though it is likely that Yar'Adua will
have more influence over the new Chair than he did over
Ahmadu Ali (should he chose to exert it). Additionally, the
new PDP Chair does not seem to carry much weight on real
party issues. It remains to be seen how much influence the
party leadership will have over decision-making in Yar'Adua's
government. However, the administration is certainly working
closely with the PDP to deliver by-election victories to the
ruling party. This would seem to contradict or at least
temper the president's stated commitment to electoral reform.



7. (C) Election Challenge Continues: Though the
Presidential Election Tribunal ruled in President Yar'Adua's
favor in February 2008 (Ref E),the opposition's challenge to
the election is not yet over. Both Action Congress (AC)
candidate Atiku Abubakar and All Nigerian People's Party
(ANPP) candidate Muhammadu Buhari have appealed the
tribunal's verdict to the Supreme Court, where hearings began
in late April 2008. Opposition and civil society contacts
contend that the Supreme Court is more credible and less
corruptible than the lower court and there is some chance
that the opposition's appeal could prevail and the election
would be overturned. It is interesting to note that the
opposition offered to expedite the schedule for filing the
Supreme Court motions, but their proposal was rebuffed by
lawyers for the PDP and the President, noting that they would

ABUJA 00000962 004.2 OF 010


use the full time allowed to prepare their cases. Some
observers are asking why the government would choose to
prolong the Supreme Court process, rather than conclude it as
quickly as possible in order to emerge from the shadow of the
election challenges and get on with business. It is possible
that the lawyers for the government are simply exercising an
abundance of caution to ensure that their submissions are
well-prepared. However, some contacts in Abuja have
speculated that there may be a strategic reason to slow down
the court proceedings. As long as the election appeal
remains open, there is the possibility of holding a fresh
election. If the President's health is a major issue, the
ruling elite may wish to keep their options open and retain
the opportunity for a fresh election with a healthy
northerner as the PDP candidate. We believe that the Supreme
Court may be able to deliver its verdict in late July or even
August 2008, assuming it will postpone its normal summer
recess as has been rumored (ref F). In recent interviews
with the international press, Yar'Adua is on record saying
that he will not remain in office if his case is overturned
at the Supreme Court. (Note: According to at least one
article in the Nigerian press, Yar'Adua has also pledged not
to run again should his election be overturned. However, we
cannot confirm the validity of this statement, as Yar'Adua
has been careful in most other interviews to avoid making any
commitment about whether or not he will contest again. End
Note.)

--------------
The First Year Report Card
--------------

8. (C) Niger Delta: Militant activities, including pipeline
attacks, bunkering, and kidnappings continue in the restive
Niger Delta region, although expatriate kidnappings remain
below early 2007 levels. Oil production is down to 1.81
million barrels per day, causing Nigeria to lag behind Angola
for the first time as Africa's largest producer. Both the
federal and state governments need to work harder to bring
development to the region, as poor governance, lack of
infrastructure, and lack of jobs are still at the heart of
Niger Delta instability. Gas flaring continues (although it
has been reduced in some areas) though the GON has pledged to
stop the practice by the end of 2008. The GON's Gulf of
Guinea Energy Security Strategy process continues, but it has
become more of a mechanism for show and tell with the donors
than for actually discussing, agreeing upon, and monitoring
actions for security and development. The administration has
yet to hold a Niger Delta Summit, as it pledged to do soon
after inauguration. However, in mid-May President Yar'Adua
told the Financial Times that there will be a Niger Delta
summit "within 8 weeks." No details about this summit have
yet been made public, but we are told that there are a range
of presidential groups and committees trying to tackle the
Niger Delta's problems.


9. (C) Niger Delta continued: Secretary to the Government of
the Federation (SGF) Babagana Kingibe told the Ambassador on
May 22 that some progress had been made by state governors in
Delta and Bayelsa in curbing militancy, but that Rivers State
remained a real problem. Kingibe also explained that the GON
was therefore still not ready to hold the summit. In
addition, federal government sources recently told Poloffs
that the Vice President's Office still has the lead on the
Niger Delta and is working behind the scenes to create a
Niger Delta "Consultative Steering Committee" under the
leadership of Nigerian citizen and United Nations Special
Envoy Ibrahim Gambari (septel). However, we believe that the
UN is still considering the GON's request that Gambari be
placed on leave to head up this committee. In addition,
other sources note that Vice President Jonathan may have been
sidelined by Yar'Adua on Delta issues for lack of action and

ABUJA 00000962 005.2 OF 010


favoritism toward his Ijaw ethnic group. Yar'Adua may now be
working on the Niger Delta problem through other surrogates.
Although Minister of Defense Ahmed was recently quoted in the
Nigerian press proposing to hire Niger Delta militants to
"police the oil pipelines," Kingibe told the Ambassador May
22 that this proposal is not/not official GON policy, but
was merely "brainstorming" about employment creation by the
Minister with a Senator that was overheard by journalists and
reported as fact.
Overall grade: D
Prognosis for next year: If the Niger Delta Summit happens
soon and results in not just another "master plan" but in
concrete development and security improvements, then
Nigerians may rethink their criticisms of the President's
slow pace so far. But if the summit and other promises are
delayed at length, or if the summit happens and results in
yet another plan which gathers dust on a shelf, criminality
and militancy are likely to increase and criticism of the
President will also grow.


10. (C) Electoral Reform: President Yar'Adua pledged his
commitment to reforming Nigeria's electoral system upon
taking office and in August 2007 he inaugurated a 22-member
Electoral Reform Committee (ERC). The work of the ERC is
ongoing, though until recently it has mostly taken place out
of the public eye. In May 2008, the ERC participated in a
USG-sponsored workshop on election best practices (Ref G) and
has also begun a series of hearings to solicit public input
from around the country. The committee announced it has
received over 250 memoranda from interest groups and the
public with recommendations for reforms. The ERC's final
report may be released in August 2008, after which, if the
recommendations are accepted by the President, they will
presumably have to be studied by the National Assembly and
drafted into bills or even constitutional amendments.
Mission reporting on 2008 by-elections indicates that they
have been only slightly better than the 2007 general election
and still plagued by serious allegations of fraud. There
have been four gubernatorial by-elections this year, in Kogi,
Adamawa, Sokoto, and Bayelsa, all of which were won by the
PDP. Embassy officers observed the Kogi and Adamawa polls
(Refs H and I),and found some improvements in logistics and
election administration, though there were troubling
accusations of fraud at each contest. The only real proof of
one's commitment to electoral reform is holding better
elections. Nigeria's past elections have not failed due to
bad laws or policies; they lacked credibility because
existing laws were flouted with impunity. If Yar'Adua wants
to be taken seriously by the Nigerian people (and the
international community) on electoral reform, he must show
the political will to hold credible by-elections, reorganize
the Independent National Electoral Commission (INEC),and
begin early preparations for a well-organized poll in 2011.
Overall Grade: C -
Prognosis for next year: If the ERC report contains useful
suggestions for reforms of the electoral system, Yar'Adua
will need to act quickly to reassure the Nigerian people and
pressure INEC and the National Assembly to implement the
changes (which will likely include the reorganization of
INEC). If the report is not credible, or if the government
appears to merely shelve its conclusions, public faith in his
commitment to electoral reform will disintegrate.


11. (S) Combating Corruption: The administration's initial
moves in the anti-corruption field were promising. Half a
dozen former governors were brought to court to face
corruption charges, and investigations are reportedly
underway against several other former officials. However,
more recently the trend seems to have stalled, and now
appears to be moving in the wrong direction. First, the
widely respected EFCC Chairman Nuhu Ribadu was removed (Ref

ABUJA 00000962 006.2 OF 010


J). Then the prosecutions of the former governors seemed to
stall-- there has been no real news on the cases against
Ibori, Odili, or any other big fish in months and those on
trial have been released on bail (some because of poor
health). Meanwhile, on May 15 Yar'Adua announced the
nomination of Farida Waziri, a retired senior policewoman, as
the new acting EFCC Chair (pending Senate confirmation),but
already accusations are emerging that she may have personal
ties to some of the officials under EFCC investigation, which
could hamper her effectiveness (ref K). In addition to the
overall turmoil at the EFCC, Attorney General Michael
Aondoakaa has been a serious impediment to the fight against
corruption. EFCC sources allege he is currently holding up
at least four requests from foreign governments for law
enforcement cooperation on investigations of Nigerian
officials. Former EFCC Chairman Ribadu also told the
Ambassador in December 2007 that Aondoakaa was "a real thief
who stole all the time" (ref J) In addition, British sources
told us in 2007 that Aondoakaa personally held up a British
investigation of former Delta Governor James Ibori, leading a
London court to release part of his frozen assets at one
point due to lack of information. Ibori is also allegedly
linked to Waziri's appointment at EFCC (as is Kwara Governor
Saraki),and he reportedly maintains significant access to
President Yar'Adua. (Note: The President's relationship with
Ibori is uncertain as he was included at a recent
presidential press roundtable. This will be something we
will need to watch given his case before the EFCC. End
Note.) One recent positive development was the March 2008
forced resignation of the Health Minister Adenike Grange and
the subsequent EFCC investigation into both senior health
officials and Senator Iyabo Obasanjo Bello, former President
Obasanjo's daughter (Ref L). However, Iyabo was reportedly
treated with kid gloves and is now back doing Senate business.
Overall Grade: D
Prognosis for next year: It would be a good sign if AG
Aondoakka were removed in the cabinet shuffle, but Mission
considers that unlikely. EFCC needs to be judged by its
effectiveness as an institution, and unfortunately it may be
starting to fail on this point. If Waziri does not seem to
take vigorous actions in the first few months, it would be a
very negative signal. We have made it known that we are
watching this issue very carefully and any change in the
vigor of the EFCC would be of major concern to the USG.


12. (S) Rule of Law: Despite serious allegations that people
close to the President may have paid bribes to influence
court verdicts (Ref M),Yar'Adua himself seems to be
genuinely committed to improving the government's adherence
to the rule of law on big issues and on the surface. He has
generally refused to interfere with the workings of the
judiciary or the legislature, and has insisted upon greater
transparency by the legislature and the ministries in the
budget process. He sacked his Health Minister for failing to
comply with a directive to return excess funds at year's end.
He has insisted on reversing the privatization of Ajeokuta
Steel and the Kaduna and Port Harcourt refineries (all
approved under the Obasanjo administration). However, we
know that with certain inner circle and cabinet people he has
had to turn a political blind eye in order to get other
things he wants done. We believe he must know, for example,
that his Attorney General is a crook, but the AG provides a
service in helping him get some of the dirty work done. The
First Lady, we continue to hear, is a problem: likes to live
well, is not the kindest person in the room, and takes
advantage of illicit enrichment opportunities. It is
impossible for President Yar'Adua not to know these things.
Overall Grade: C- (as he rhetoric is right)
Prognosis for next year: Fair. Though it may have slowed
progress in other areas, Yar'Adua seems to be consistent in
insisting upon due process and rule of law, at least in

ABUJA 00000962 007.2 OF 010


large, visible public issues/projects. We hope the big
issues continue to have his rule of law commitment and if so,
over time, this may slowly have a positive impact on
government institution-building, accountability, and
transparency.


13. (S) Given the preceeding discussion on the political
landscape and themes noted above, we give the President the
following overall grade on political achievements: D


14. (C) Economic Growth: The Yar'Adua administration
inherited solid macroeconomic figures and over the last 12
months those figures have stayed steady. According to the
International Monetary Fund (IMF),Nigeria's real GDP growth
was 6% in 2006, and 6.3% in 2007, with 9% forecast for 2008.
Inflation remains in the (high) single digits and fiscal
restraint has been maintained in the 2008 budget. Obasanjo
government initiatives on development plans at the national,
state, and local levels continue and Yar'Adua's Economic
Management Team (EMT) has focused on incorporating these
programs into the Seven Point Agenda, which focuses on power
and energy; food security; wealth creation; transport sector;
and land reforms. According to the Nigerian Central Bank,
the non-oil sector grew at 10% in 2007, an increase from 8.6%
in 2005, and foreign exchange earnings reached $51 billion by
January 2008 and reports are that they reached $61.56 billion
as of May 2008. The banking sector consolidation has led to
stronger banks that have sought partnerships with American,
European, African, and Asian financial institutions.


15. (C) Economic Growth continued: Despite the strong
macroeconomic figures, the trade regime and investment
climate have not improved. Nigeria has failed to uphold its
commitments to the World Trade Organization and continues to
have high tarriffs and bans on a number of imports, including
agricultural products and cement. Job creation and new
investment are still hampered by infrastructure problems,
legal barriers to market access, high interest rates and lack
of investor confidence in the rule of law. The GON has
reversed itself on several privatization schemes, including
the sale of the SAT-3 cable, NICON insurance company, and the
Nigerian Telephone Company (NITEL). In the early months of
the Yar'Adua administration, increases to the value-added
tax, petroleum prices, and the sales of the Port Harcourt and
Kaduna oil refineries were quickly reversed. The naira has
appreciated against the dollar, and its continued
appreciation will likely reduce non-oil exports, hurting
domestic manufacturers. As detailed below, key policies for
all-important energy sub-sectors are still pending.
Overall Grade: C
Prognosis for next year: Despite repeated statements by the
President and other senior officials, it is unclear whether
the EMT has a long-term strategy. If there is no plan, then
it is likely that the solid macroeconomic figures may weaken
because of increased inflation. The government also needs to
ensure that poorer Nigerians reap some of the benefits of
Nigeria's growth and see some improvement to their basic
standard of living.


16. (C) Power Generation: President Yar'Adua has made
improving power supply nationwide one of his top priorities.
However, energy experts contend that electricity generation
has dropped from an estimated average of 2,800 megawatts (mw)
at the May 2007 inauguration to an average estimate of less
than 1,630 mw from the state run Power Holding Company of
Nigeria (PHCN) due to crumbling generation and distribution
infrastructure and insufficient natural gas supplies. In any
case, there has not yet been any increase in generation
capacity or delivery of electricity during the Yar'Adua
administration's first year. The National Assembly has been
investigating funds spent during the Obasanjo administration

ABUJA 00000962 008.2 OF 010


on power projects ranging from an alleged $10-16 billion.
The President said early on that he would declare a "state of
emergency" in the sector, allowing the federal government to
marshal additional resources, but so far nothing has changed
and the "emergency" has not yet been officially declared.
The government continues to trumpet Public-Private
Partnerships (PPPs) as the way forward, yet no clear plan has
been produced that integrates power projects with natural gas
supply, distribution, and transmission networks and rational
pricing to induce further investment. (Note: The USG is
providing technical assistance to help GON ministries with
the way forward. End Note.) The government's overall plan
is to first complete existing projects and then use PPPs to
create new ones. Overall Grade: C-
Prognosis for next year: If the GON executes its short-term
"quick-fix" plan, they could show initial measurable
improvements in power supply by the end of this year.


17. (C) Oil and Gas: The President's hands off approach to
policy making has sown, if not confusion, at least hesitancy
in the hydrocarbon sector. Oil production rose modestly in
the first few months of the Administration, but has fallen
steadily since September 2007. Although the President
announced in August 2007 that he intended to reorganize the
bloated and corrupt Nigerian National Petroleum Corporation,
failure to clearly establish a timeline or clear plan have
frozen the little work the company was doing and delayed
almost all new oil and gas contracts. Following the trend
set under the Obasanjo administration, the current
administration has failed to fully fund the joint ventures
with the oil companies, further crimping production.


18. (C) Oil and Gas continued: Plans developed under
Presidential Special Advisors Rilwanu Lukman and Emmanuel
Egbogah to restructure existing oil and gas contracts in such
a way as to eliminate the need for government cash payments
have been lauded in their overall intent, but industry
executives worry about the timing and the possibility that
new contract terms will be uneconomic. A new domestic
natural gas policy, developed under the previous
administration, was publicly unveiled in February 2008.
Designed to encourage the use of natural gas for domestic
electricity production and other industries, its top down,
statist approach to supply, demand and pricing is not likely
to spur the development of Nigeria's extensive gas resources.
The new-found emphasis on using gas to supply electricity,
while understandable, has lead to worry over Nigeria's
commitment to export gas projects like the West African Gas
Pipeline and the various liquefied natural gas projects under
consideration.
Overall Grade: D


19. (S) Given the preceeding discussion on the economic
landscape, we give the President the following overall grade
on economic achievements: D+

--------------
Look Ahead to Year Two (and Beyond?)
--------------

20. (S) Bearing in mind the factors influencing the
administration's success and the informal "report card"
above, we have sketched out four possible scenarios for
Nigeria's future. These scenarios represent a range of
possibilities from rosy to grim.


21. (S) "Yar'Adua Comes Alive": If the Supreme Court
upholds Yar'Adua's election, he and his advisors may gain new
energy and resolve. Once freed from the legitimacy question
that plagued his first year, Yar'Adua may feel more confident
and show new willingness to push against powerful interests
to accomplish his goals. He could reshuffle his cabinet to

ABUJA 00000962 009.2 OF 010


put in more technocrats or academics with specialized
expertise, insist that the EFCC reinvigorate its
investigations and prosecutions of corrupt former officials,
and insist on reconstituting INEC in preparation for better
elections in 2011. With competent advisors implementing
development and infrastructure projects, the Nigerian people
might begin to see some of the "democratic dividend" they
have been waiting for since 1999.
Probability: Less than 10%. This is a "best case" scenario
that assumes Yar'Adua remains in good health, is truly
committed to all his stated reform goals, is able to surround
himself with competent advisors and administrators, and has
the fortitude to stand up to the powerful networks that
benefit from maintaining the status quo.


22. (S) "Nigeria Muddles Through": Even if the Supreme
Court upholds the president's election, he will still suffer
from serious health problems. Regardless of health, he does
not have a gregarious nature or a strong political patronage
network. Nigeria's entrenched bureaucracies and corruption
may then continue to impede progress on political and
economic reforms, despite Yar'Adua's stated intention to
carry them forward. Yar'Adua's cabinet remains a mix of his
own loyalists and individuals connected to Obasanjo,
Babangida, or other godfathers, and this mix is not likely to
change drastically even if there is a cabinet shuffle. The
National Assembly is divided and inexperienced, and although
they have been given more freedom than in the past, due to
their inexperience and disorganization they are still
unlikely to make many concrete changes in the next few years,
although they have begun to make their voices heard through
greater exercise of their oversight role, even though they
are not always right on constitutional or legal grounds.
Though Nigeria's judiciary is demonstrating increased
independence and improved professionalism, the courts are
still hampered by corruption and mismanagement. The bottom
line: the Yar'Adua administration still faces difficult
political and bureaucratic hurdles to enacting reforms.
Reform progress is likely to be slow, perhaps painfully slow,
and happen in fits and starts, with corruption continuing to
impede progress and the same people remaining influential
players on both the political and economic fronts.
Probability: 60%


23. (S) "Yar'Adua Steps Down in Year Two?": If concerns
about Yar'Adua's health increase in the next few months, the
Supreme Court could decide to annul the April 2007 election
with a view to looking ahead and in the interest of national
stability. President Yar'Adua has pledged that he would
immediately step down if his election is annulled, and he has
not made it clear whether or not he would stand again as the
PDP candidate. If his health seriously deteriorates, he
would be unlikely to run again, and so Nigeria's "Northern
elders" we believe would respond by meeting in private to
anoint some other healthy, politically connected Northerner
(perhaps Kwara Governor Bukola Saraki, SGF Babagana Kingibe,
former NSA Aliyu Muhammad Gusau) as the new PDP candidate.
(Note: The role and influence of NSA Mukhtar is something we
need to pay attention to in this scenario as he too is an
influential Northerner. End Note.) There has been no major
change to the electoral system, so the PDP candidate would
easily win the new election, and Nigeria would soon return to
the status quo.
Probability: Probably less than 10%, but if Yar'Adua's
health takes a sudden turn for the worse between now and
August, probability would climb to nearly 80%.


24. (S) "Things Fall Apart": In this scenario, the Supreme
Court rules to uphold the presidential election (taking away
the easy, constitutional option to replace Yar'Adua should
the need arise). Some time later, President Yar'Adua

ABUJA 00000962 010.2 OF 010


flounders. This could unfold in several ways: he becomes
very ill or even dies; is just so ineffectual that he loses
the confidence of the Nigerian elite; or, the Nigerian people
(already frustrated because they have not yet seen a promised
"democracy dividend" after 9 years of civilian rule) lose
patience and are sparked to popular unrest, perhaps by a food
or fuel crisis (though neither of those triggers are likely
in the short term). If any of these three scenarios unfold
and Yar'Adua is unable to maintain control of the country, he
is likely to be pushed out. The least messy scenario would
be if the northern elites could "convince" Yar'Adua (or
southern VP Goodluck Jonathan, who would not be acceptable if
Yar'Adua has already passed away) to resign and call for a
fresh election. If however, he refuses to step down, or for
some other reason it is not possible to install a new,
healthy Northerner as president by legal means, the Northern
elites may decide to revert to old ways. However, the
Nigerian people now know the taste of civilian rule, so this
method could be a little harder to pull off than in 1980s and
1990s. (Note: The Mission continues to monitor the military
for signs of coup-plotting, and we do not believe the
military is considering such an option at this time.
However, the military still has strong ties to Babangida,
Obasanjo, Danjuma, and other members of the ruling elite, and
could potentially be persuaded by such individuals to act to
ensure Nigeria's continued stability. End Note.)
Probability: Forced out by Northern elites: 15%; Military
Coup: 5%; Popular uprising: Less than 1%

--------------
COMMENT:
--------------

25. (S) It is difficult to look ahead to Nigeria's future in
the second year of the Yar'Adua administration and beyond.
There are still many murky or unknown variables, including
the President's health, the Supreme Court verdict, a possible
cabinet reshuffle, and not least Yar'Adua's true intentions
regarding his stated promises to fight corruption, improve
election administration, or bring order and development to
the Niger Delta. To tackle thorny, multi-faceted, political
problems like these, he will have to fight entrenched
interests within his own government. It is not clear that
Yar'Adua can take on such powerful interests, or has the
political skill to successfullydo so. This is a country with
tremendous human capital and abundant natural resources. If
Yar'Adua and his government are sincere in their professed
reform goals and can make even minor improvements in power
supply, infrastructure, adherence to rule of law, and Niger
Delta development, it will make a tangible difference in
people's every day lives, and help to secure public
commitment for Nigeria's democratic future. The President
has professed the desire to do good. Let's see if he can
deliver. End Comment.
SANDERS