ERITREA GARNERS MORE MONEY FROM THE EC

C O N F I D E N T I A L ASMARA 000328

SIPDIS

DEPT FOR AF/E
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 06/18/2018
TAGS: ECON EAID PREL PHUM ER DJ
SUBJECT: ERITREA GARNERS MORE MONEY FROM THE EC

Classified By: AMB Ronald K. McMullen for reason 1.4(d).


1. (C) SUMMARY: On June 15, President Isaias Afwerki met with
Louis Michel, European Commission (EC) Commissioner for
Development and Humanitarian Aid, to discuss plans for
further development aid to Eritrea. Michel reportedly
broached several topics of humanitarian and diplomatic
concern with a strong message that Eritrea needed to
"deliver," to which Isaias listened but remained
noncommittal. Michel concluded the meeting by agreeing to
proceed with plans for disbursement of 120 million euros for
new development programs, despite receiving no promises of
improved GSE performance. End Summary.

"IT'S TIME TO DELIVER"
--------------


2. (C) According to Maria Fariello (protect),EC Economic
Attache, visiting EC Commissioner Louis Michel told President
Isaias in a June 15 meeting, "it's time to deliver,"
referencing the previous financial aid the EC had given to
Eritrea with little or no diplomatic returns. In particular,
Michel raised issues of political prisoners, Eritrea's poor
investment climate, and the EC's inability to freely visit
funded projects. Contrary to his normal accusatory rebuttals
when faced with criticism, Isaias reportedly listened calmly
to the list of complaints. At the end, he informed Michel
that he was unaware of any political prisoners in Eritrea,
but he would look deeper into the matter if the EC provided a
list of individuals about whom it was concerned. Regarding
the poor investment climate, Isaias defensively stated that
Eritrea had an open environment for foreign investors.
Michel also raised the issue of Eritrea's attack on Djibouti,
to which Isaias explained "we were attacked first by
Djibouti."

SHOW ME THE MONEY
--------------


3. (SBU) Despite shifty answers from Isaias, the EC plans to
move forward with allocation of an additional 120 million
euros to Eritrea from its European Development Fund (EDF) to
be used towards agricultural and infrastructure development
projects. EC personnel have previously expressed concerns to
Emboffs that the Government of the State of Eritrea (GSE) may
be unable to fully absorb EC funds, primarily due to lack of
suitable contractors able to implement funded projects.
Until only recently, the GSE was able to utilize just 1% of
the previous 53 million euros in EDF funds provided by the
EC. Fariello told poloff the GSE is often uncooperative in
trying to meet EC objectives for the use of funds, for
instance, demanding agricultural funds be used for the
purchasing of mass quantities of sheep rather than for
funding small farmers.


4. (C) In a follow-on briefing with the ambassadors of
European Union (EU) member states in Asmara, Michel was met
with vocal criticism by both the British and the German
Ambassadors for providing aid to the GSE without conditions.
Michel responded that the EC is simply the executive branch
of the EU and is not in a position to put conditions on
foreign aid. Michel also relayed that Isaias stated he is
willing to work with the EC (on unspecified issues),but the
president emphasized in the meeting that he would not want
media attention about such EC-Eritrean cooperation.


5. (C) COMMENT: According to Fariello, the EC does not expect
any progress on discussions regarding human rights or other
substantial issues, but believes the meeting will likely
provide the groundwork for smaller bilateral achievements,
such as being able to receive travel permits to visit
development projects. Post agrees that the EC is unlikely to
reap heavy rewards from the financial agreement, but is
likely to continue to receive "small favors" from the GSE as
long as the EC continues to provide monetary assistance. The
EC seems badly out of step with many of its member states'
bilateral assistance policies and more in line with the
uncritical, unconditional money provided to the Isaias regime
by China and some Arab States. End Comment.
MCMULLEN