UNIONS BLOCK PM ON FUEL - UNION LEADER SAYS

C O N F I D E N T I A L CONAKRY 000164 SIPDIS SIPDIS E.O. 12958: DECL: 03/04/2018 TAGS: PGOV ELAB PREL ASEC GV SUBJECT: UNIONS BLOCK PM ON FUEL - UNION LEADER SAYS PRESIDENT MUST GO Classified By: POL/ECON CHIEF SHANNON CAZEAU FOR REASON 1.4 B AND D ¶1. (C) SUMMARY. Guinea,s labor unions are attempting to block GoG efforts to reduce or eliminate the country,s economically unsustainable fuel subsidy program as they call for consultations. Despite having a doctorate in economics, union leader Ibrahima Fofana demonstrated an appalling lack of understanding of fundamental economic principles. On the political front, the unions and other political actors have been holding independent meetings in order to define a comprehensive strategy to resolve Guinea,s leadership crisis. According to Fofana, the group is likely to call for the impeachment of the president due to incompetence based on physical and/or mental illness. END SUMMARY. ¶2. (U) On March 4, Poloff met with Dr. Ibrahima Fofana, leader of the Union of Guinean Workers (USTG) and co-chair of the Unions-Intersyndicale. Ambassador Carter joined the meeting for about twenty minutes to discuss concerns over the Guinean Government,s continued fuel subsidy program. -------------- THERE,S NO SUCH THING AS A FUEL SUBSIDY -------------- ¶3. (SBU) Fofana confirmed that union leaders have been negotiating with the GoG regarding fuel price increases and pressuring the government to postpone any reductions in subsidies. Fofana told the Ambassador that the government subsidy is a specific provision within the January 27, 2007 Accords, which represents the first time in Guinea,s history that the population negotiated a fixed price for a commodity. &For that reason,8 Fofana said, &the government cannot change the price without consulting with us.8 ¶4. (SBU) According to Fofana, in actuality, there is no government subsidy. He said that what they are really talking about is a tax and that removing the subsidy is just another way of imposing a tax. Fofana said that when the unions sat down to negotiate the fixed price in 2007, it was clear that the actual cost of fuel at the port was 3000 GnF per liter. They then added in transportation costs and a fixed percentage profit for the vendors in order to arrive at a realistic price. Fofana said that the government is calling it a subsidy, but that this is just a way to confuse the public. &It,s just a tax,8 he said. He later told Poloff that such a tax is an unfair burden for the majority of the population, and only serves to make the poor poorer and the rich richer. ¶5. (U) The Ambassador emphasized that the GoG,s fuel subsidy program is absolutely unsustainable and that prolonging the inevitable only jeopardizes the IMF program. He questioned Fofana on his calculations and pointed out that the entire international community, including the IMF and the World Bank, share the same analysis as the Embassy. The Ambassador added that he would be interested in seeing Fofana,s calculations. ¶6. (SBU) Without rancor, Fofana said that he understands economics very well and in fact holds a doctorate in economics. He acknowledged the Ambassador,s comments as &logical,8 but said that such logic only works in a completely transparent environment. According to Fofana, the Guinean context does not provide a nurturing environment for logical economic principles. He added that he is meeting with the IMF and World Bank on March 5 and will be sure to discuss the issue further. ¶7. (SBU) While he did not provide a detailed outline of union objectives with respect to the fuel subsidy program, Fofana said that there should be a consultative process with all parties agreeing to any new price. He did not say it outright, but he clearly did not support completely eliminating the subsidy. At one point, he said that the problem is not only one of pricing, but also of consumption. When the Ambassador pointed out that consumption is high because people are smuggling Guinea,s cheaper fuel into other countries where they can sell it for significant profits, Fofana said that government is not managing its supply effectively. He then went on at some length about the GoG's policy of allowing the importation of cheap, used cars, which increases fuel consumption, arguing that better emission standards would address the consumption problem. Fofana then mentioned rice prices, which have risen significantly in recent months, as another example of poor government management. ¶8. (SBU) At one point, the Ambassador said continuing down this economic path of ongoing subsidies is the epitomy of economic stupidity. He pointed out that unsustainable economic policies will do nothing to advance the country's development and will undermine progress. Fofana nodded his head and then continued to explain why basic economics do not apply in Guinea. -------------- THE PRESIDENT MUST GO -------------- ¶9. (SBU) After the Ambassador left, Poloff asked about the Committee de Suivi and general progress towards a solution for Guinea,s political problems. Fofana said that the Committee is one element, but that most political actors are participating in a separate dialogue in order to develop a comprehensive political platform and strategy. A February 29 meeting included representatives from unions, opposition political parties, civil society, religious denominations, and the civil-military committee. Fofana said that the group is close to reaching agreement and expects to have clearly defined objectives before the end of March. ¶10. (C) Poloff pointed out that the Committee de Suivi was established to monitor the implementation of the January 27 Accords and asked about the purpose of the second dialogue group. Fofana agreed, but said that the January 27 Accords did not actually resolve anything and the dialogue group is looking at the underlying political crisis and trying to define how to address it. &The President is clearly ill and unfit to govern,8 he said, &and that needs to be addressed.8 ¶11. (C) When Poloff asked Fofana how he thought the group might address the problem, he said that the answer is clear. He pointed out that the law permits the National Assembly and the Supreme Court to declare the president unfit for reasons of physical and/or mental health, thereby ushering in a 60 day transitional period, under the leadership of the President of the National Assembly, so that presidential elections can be organized. &This is essentially the same situation we had in 2007,8 Fofana said, &but we were blocked by the Supreme Court, the National Assembly, and the military.8 Poloff asked if these groups would now support such an initiative. Fofana said that there is only one way to find out. He added that the dialogue group is focusing on defining the agenda and once that is done, will then approach the various institutions to push it forward. &If they do not support us, then the population will need to pressure them to do so,8 he said. ¶12. (C) When pressed to specify what exactly he was hoping to achieve, Fofana said &we need the president to leave and then we will have a clearly defined period of political transition in which we can organize presidential elections.8 Fofana added that they will demand that the president step down due to his being medically unfit for the position. -------------- COMMENT -------------- ¶13. (C) Fofana,s discussion of the fuel subsidies and his underlying economic analysis was confusing and did not make sense. At one point, he acknowledged record international oil prices, but did not seem to make the connection to Guinea,s internal pricing. Although he claimed to have a doctorate in economics, none of his analysis could be linked to standard economic principles. Paradoxically, the unions have been Kouyate,s staunchest supporters, but their opposition to fuel price increases threatens to undermine one of Kouyate,s few indisputable successes ) the return of the IMF program. When Poloff pointed this out, Fofana seemed unconcerned. ¶14. (C) Continuing in this vein throughout the discussion, Fofana seemed much less interested in the consensus government. It was not even so much an indication of diminished support, rather, an almost complete disinterest in discussing the consensus government as a mechanism for change. Instead, Fofana was focused on getting rid of the president. However, it is difficult to imagine the president and various elements of the government peacefully accepting a transitional political period of governing. Post will be following up with other participants in this dialogue process to see what people are talking about, although Fofana,s comments appear to echo those of other prominent leaders, especially within the opposition political parties. ¶15. (C) Throughout his discussions of Guinea's political and economic situation, Fofana's arguments were borderline incoherent. It seemed as if he had assembled a number of facts together, facts that did not necessarily support his position, but he was not going to let them get in the way of advancing his argument. Fofana seems to have lost sight of the fundamental economic problems plaguing Guinea and realistic fixes to those problems. In arguing for continued fuel subsidies, he is in fact only further impoversishing the country and blocking development initiatives that would ultimately benefit his support base. The same was true for his political arguments. His proposed course of action is unlikely to succeed unless there is a popular uprising behind it, which would likely result in violence and loss of life. It is important to note that Fofana speaks for Fofana, and not necessarily for the unions, but there is no question that he is one of their most influential leaders and as such, his almost fanatical convictions are cause for concern. END COMMENT. CARTER