LACK OF POLITICAL WILL PROMPTS TREASURY PROJECT SUSPENSION

UNCLAS ADDIS ABABA 001546 DEPARTMENT FOR EEB/IFD/OMA: JWINKLER; EEB/ESC/TFS: JJALLORINA; AF/FO: TMOSS; AF/E: JWYSHAM; AND AF/EPS: AADLER TREASURY FOR OTA: JERRY ROWE AND CAROL KELLEY TREASURY FOR DO: VIRGINIA BRANDON SIPDIS E.O. 12958: N/A TAGS: KTFN EAID ECON EFIN PTER PREL ET SUBJECT: LACK OF POLITICAL WILL PROMPTS TREASURY PROJECT SUSPENSION ¶1. SUMMARY: Seven months after the signing of the Terms of Reference (TOR) between the National Bank of Ethiopia (NBE) and the U.S. Treasury Department for an Anti-Money Laundering and Counter Terrorist Financing (AML/CFT) program, the U.S. Department of Treasury has decided to suspend work on the project due to lack of progress and political will from NBE and the Government of Ethiopia (GoE). Embassy Addis Ababa fully supports this decision and Ambassador Yamamoto will inform the Prime Minister of the decision shortly. While the program is not being terminated at this time, the NBE must take specific and concrete steps before the Department of Treasury's advisor will make another trip to Ethiopia. END SUMMARY. ¶2. In November 2007, NBE and Treasury signed a TOR and work plan for an AML/CFT technical assistance program designed to equip Ethiopia with the requisite legal framework and assist in the implementation of an AML/CFT regime including a financial intelligence unit (FIU). An ominous prelude of things to come, the TOR was only signed after a ten-month negotiation and persistent foot dragging by the NBE Governor culminating in Ambassador Yamamoto's personal appeal to the NBE Governor to sign the document. ¶3. The Treasury advisor, Carol Kelley, the Ambassador and Poloffs have long held concerns about the political will within the GoE for this initiative. Attempts to recruit a high-level GoE member, Ato Neway-Kristos Gebre-Ab, Economic Advisor to the Prime Minister, to provide a whole-of-government perspective and senior initiative behind the effort were met with Neway's refusal to engage on the issue and assurances that the NBE was the sole and proper institution to champion the AML/CFT program. ¶4. NBE has not proven up to the task, and the Kelley has met with difficulties in fulfilling the TOR. Despite attempts to encourage the working group at the NBE to move expeditiously in finalizing a draft AML/CFT Proclamation (which is key to implementing any of the other parts of the TOR),the NBE staff continued to assure Kelley that the enactment of the Proclamation would be accomplished with little debate and in a short period of time. However, the draft Proclamation went through two drafts within NBE before the working committee expressed concern that they were acting outside of their expertise and jurisdiction in acting as proponents for the draft. While NBE staff have engaged Kelley during her bi-monthly visits, it is clear that the NBE is willing to allow Treasury to exert time and effort into establishing a AML/CFT regime for Ethiopia, but will not dedicate its own staff or resources to making the project a reality. When Kelley has left the NBE working group with tasks to accomplish during her absences between visits (the NBE rejected permitting a resident advisor),she has consistently returned to find that very little if anything had been completed. In her last visit, she returned to find that none of the necessary progress had been achieved. ¶5. This, coupled with the overall lack of progress, led Kelley to recommend that the program be suspended and she not make additional trips to Ethiopia until and unless specific information is conveyed to her in advance of travel. Treasury's Office of Technical Assistance and Embassy Addis Ababa fully support this determination. The information that will be needed to re-start the program is: 1. The proposed dates of the next visit; 2. A detailed description of the specific type of technical assistance that is requested; 3. A detailed description of any relevant information to support the need for the visit, including activities conducted and progress made on the Work Plan since the last visit; and 4. A detailed description of the specific preparatory steps taken by the Working Group and/or others to ensure the maximum utility of the trip. ¶6. COMMENT: Post and Treasury are disappointed and frustrated by the lack of progress and seeming disinterest on the part of NBE in this important project. Without an effective AML/CFT regime, Ethiopia risks losing its correspondent banking relationships with U.S. or other international banks and becoming even more isolated from the larger global financial sector. Kelley does plan to remain available by e-mail to NBE, and a potential collaboration with parties attempting to move a counter-terrorism proclamation through the GoE may offer a new opening for the AML/CFT effort. However, unless the requisite political will is exerted by NBE, its Governor, and the GoE more broadly, it is unlikely that Ethiopia will, at least in the near term, comply with global standards for AML/CFT. END COMMENT. YAMAMOTO