AMBASSADOR GREEN AND PRESIDENT KIKWETE DISCUSS THE

C O N F I D E N T I A L SECTION 01 OF 04 DAR ES SALAAM 000049

SIPDIS

SIPDIS

DEPT AF/E FOR JLIDDLE; ALSO AF/RSA FOR MBITTRICK
DRL/AE FOR BCONNUCK, LLESSER
ADDIS FOR AU MISSION
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 01/18/2018
TAGS: PHUM PGOV KDEM PREL ECON KE TZ
SUBJECT: AMBASSADOR GREEN AND PRESIDENT KIKWETE DISCUSS THE
BANK OF TANZANIA, ZANZIBAR RECONCILIATION, KENYA AND
ZIMBABWE

REF: A. 07 STATE 169801

B. 07 DAR ES SALAAM 01009

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Classified By: Ambassador Mark A. Green for reasons 1.4 (b,d).

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

1. (C) President Jakaya Kikwete told Ambassador Green January
16 that he is closely involved in the final stages of the
discussions between the ruling CCM and the Civic United Front
(CUF) parties to fine-tune the details of a power-sharing
arrangement for the Government of Zanzibar that would go into
effect after the 2010 elections. The Ambassador noted if an
agreement can be announced soon, that in light of the
political gridlock in Kenya, all of Africa would notice,
particularly with the African Union Summit only weeks away.
Kikwete confided that persuading President Karume "is not
always easy," but he would continue to stay involved.
Kikwete said the Government of Tanzania (GOT) would
appreciate if the official U.S. visa of the former Governor
of the Bank of Tanzania were revoked, since he no longer has
any official reason to be in the United States. Kikwete is
deeply concerned about Kenya, including the inability of
Kibaki to rule should a standoff in the Parliament continue,
and about the slowdown in the Kenyan economy that is
affecting the entire region. He updated the Ambassador on
his efforts to informally mediate in Kenya, as well as
possibilities for regional security groups to take action.
However, at this juncture, Kikwete is supporting the recently
formed mission of Kofi Annan, Benjamin Mkapa and Grace Machel
to guide Kenya toward a solution equitable to all parties.
He stressed that in light of the Kenyan crisis, credible
elections in Zimbabwe are crucial, and promised to work
within SADC to push for international monitors to be involved
in the Zimbabwe elections as early as possible. End summary.

Upcoming POTUS Visit
--------------

2. (C) The Ambassador briefed President Kikwete on the status
of the upcoming POTUS visit, highlighting that President
Bush's three days in Tanzania will be the centerpiece of his
Africa trip where he will participate in PEPFAR, Presidential
Malaria Initiative (PMI) and Millennium Challenge Corporation
(MCC) events. Kikwete said he has instructed his team to
pull out all the stops and cooperate in every way with the
U.S. team to make assure the visit is "the best we have ever
had." President Kikwete added that in reviewing reports, he
realized that the United States is the largest donor to
Tanzania including PEPFAR, PMI, education funding and all
other programs, including the MCC. Ambassador Green
confirmed that not even counting the soon to be signed USD
698 million MCC Compact, in FY 2008 the USG bilateral and
multilateral contributions to Tanzania will total over USD
662 million.

Bank of Tanzania
--------------

3. (C) Ambassador Green and President Kikwete discussed the
possibility that the Department of State could revoke the G-2
visa of Mr. Daudi Ballali, the former Governor of the Bank of
Tanzania, who was fired by President Kikwete on January 9.
The President said the Government of Tanzania (GOT) would
welcome such a move since Mr. Ballali was no longer
representing the GOT in any official capacity, and will want
him returned to Tanzania to face justice. President Kikwete
confided that the independent auditor's report shows
transactions Governor Ballali was involved in during late
2005 of up to USD 100 million dollars that were processed by
the Central Bank illegally through its External Payment of
Arrears (EPA) account (Ref B). Kikwete hinted that as the
investigation proceeds, many others may be exposed as being
involved in these transactions. The Ambassador said the
fact President Kikwete has set a timeline for all
investigations to be completed within six months, which the
Ambassador had privately suggested to President Kikwete weeks

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earlier, is crucial, adding that the investigation needs to
be thorough, transparent, and those found responsible quickly
brought to justice. President Kikwete said he was pleased
with the role the U.S. has played in supporting his call for
a criminal investigation of the scandal, and understands how
important this is to the U.S. Government.

Zanzibar Reconciliation
--------------

4. (C) Ambassador Green said on January 9 leaders of the
Civic United Front (CUF) had told him that the CUF team and
the ruling Chama Cha Mapinduzi (CCM) team were beginning the
final stage of negotiations on an agreement to end the
political impasse in Zanzibar. The Ambassador commended
Kikwete for his consistent engagement in this issue and
stressed that, in light of the political standoff in Kenya,
the announcement of a fair, equitable power-sharing agreement
in Zanzibar would be noticed by all of Africa. The
Ambassador emphasized: "The CUF leadership has told us that
an agreement is close; you are the one who can move the CCM
team over the finish line, especially in getting President
Karume,s assurances to implement the agreement."


5. (C) Kikwete said he shares the view that an agreement is
close and is well aware that time is of the essence. He
noted that the final details are nearly worked out on what
shape the post-2010 election government in Zanzibar would
take, no matter which party might win, and he is personally
guiding the CCM team as final details are hammered out. He
explained that CUF initially proposed a government with a
president from the party who won the election, a vice
president from the opposition party with the second highest
number of votes, and a chief minister, also from the ruling
party. In discussing this model, President Karume had
expressed concern that if the ruling party president were to
pass away or become incapacitated, such a model would allow
the opposition vice president to become head of Zanzibar.


6. (C) Kikwete himself then proposed a compromise, based on
his experiences in both the Democratic Peoples Republic of
Congo (DRC) and Burundi. The power-sharing government in
Zanzibar could have a president and two vice presidents,
eliminating the current position of Chief Minister. The
First Vice President would be from the opposition party, and
make joint decisions with the President. The Second Vice
President would be from the ruling party and would succeed
the President, should he be unable to govern. However, the
day-to-day responsibility of the Second V-P would be to run
the government, similar to the position as a Chief Minister.


7. (C) With a deal very close, President Kikwete appears to
be advising the CCM negotiating team almost daily, as well as
serving as chief envoy to discuss with Karume. Kikwete told
the Ambassador his greater concern was that the final
agreement include an implementation plan beginning from now,
to include some members of the CUF in the cabinet of the
current government as a confidence building measure. Such a
move would demonstrate to both the CUF leadership and
rank-and-file members that the CCM is committed to sharing
power. More importantly, it would show Zanzibaris from all
political parties that a government of national unity after
the 2010 elections could work. Kikwete said he would meet
with Pres. Karume on either January 16 or 25 to discuss the
confidence building measures that need to be put in place
before 2010. "When I met with President Karume on January
12, the Zanzibar Revolution anniversary, he was responsive.
Other times he can be evasive; but in any case, I will keep
trying. We cannot lose this moment."

Kenya
--------------

8. (C) President Kikwete called the situation in Kenya "sad"
and outlined how he had tried during the past three weeks to
informally mediate, speaking with Pres. Kibaki twice, Raila
Odinga once and also once with Kalonzo Musyoka. Odinga

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told him the ODM is not asking Kibaki to vacate his seat, but
insisting that the elections be run again and fully monitored
at every stage to assure they are fair. Musyoka did not show
for a second meeting with Kikwete, calling to say since he
accepted the Vice Presidency "it would not be appropriate."
Kikwete admitted that the AU Chairman John Kufuor,s attempt
to resolve the crisis had failed; he understood that
Tanzania's former President Mkapa would join Kofi Annan and
Grace Machel to form a mediation team of three to try once
more to bring Kibaki and Odinga to sit down face-to-face and
discuss a way forward.


9. (C) However, President Kikwete confided that he was not
sanguine about a positive outcome from this next step of
mediation. President Kibaki has already named a Vice
President and Cabinet members; the ODM has the upper hand in
the Parliament. He stated: "Kibaki cannot rule; when it
comes to budget time, there can be no decisions." Kikwete
was very concerned that the renewed call for protests would
further paralyze the Kenyan economy, with serious effects for
the entire region. "Kenya is the economic hub of the region.
If Kenya catches a cold, Tanzania sneezes," he bemoaned. He
noted the East African foreign ministers had met January 11
to discuss how to deal with a humanitarian crisis in Kenya.
Initially the Kenyan FM insisted there was no problem in
Kenya, no possibility of a humanitarian crisis to erupt. By
the end of the meeting, however, the Kenyans admitted there
was potential for crisis, and were discussing how to address
possible scenarios.


10. (C) President Kikwete said there are several regional
organizations with clauses in their security charters
requiring the organizations to convene extraordinary sessions
in case of a crisis. The Great Lakes Region Executive
Secretariat, based in Bujumbura and headed up by the former

SIPDIS
Tanzanian Ambassador Liberata Mulamula, had contacted him
more than once urging that as the Vice Chair of the Great
Lakes group, he should convene an emergency session to
discuss the Kenyan situation. However, Kikwete explained
that currently President Kibaki is the chair of the Great
Lakes group, so he would have to make a bold decision to
convene the Great Lakes states possibly without Kibaki,s
concurrence. Kikwete said he will keep that option open for
now, while closely watching whether the Annan, Mkapa, Machel
team is making progress toward a mediated agreement or not.

Zimbabwe
--------------

11. (C) Ambassador Green stressed the importance to President
Kikwete that in order to avoid a repeat of Kenyan elections
or worse, international monitors should be allowed into
Zimbabwe well in advance of the elections (Ref A). He
requested that Presidents Kikwete and Mbeki both exercise
their influence within the Southern African Development
Community (SADC) to press President Mugabe to allow not only
observers for the election period itself, but monitors during
the pre-election period to ensure that there is a level
playing field for all parties. Kikwete agreed that there
needs to be credible elections in Zimbabwe and promised to do
his best within the SADC fora to press for international
monitors.

Comprehensive Anti-Trafficking in Persons Bill
-------------- -

12. (SBU) Ambassador Green thanked President Kikwete for his
support for the comprehensive anti-trafficking in persons
bill which has now been approved by the Cabinet and will be
introduced into the Parliament at the end of January. Kikwete
said that he had asked the bill to be fast-tracked, but it
was held up for several months in Zanzibar, under review. He
himself had intervened to accelerate the process. Zanzibar
authorities agreed to the bill in principle, offering
positive suggestions to make the bill more effective in both
Zanzibar and the Mainland. Thus the legislation was approved
by a special session of Cabinet on January 8. The Ambassador

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noted the importance of the GOT continuing to make progress
to combat the trafficking of persons. President Kikwete
fully agreed that human trafficking is a "silent crime" that
is often not easy to discover. "We need a law in place to
halt whatever trafficking may be going on; we do not want to
hear any horror stories," he said.

Comment
--------------

13. (C) President Kikwete has began to take methodical steps
to root out corruption. In November 2007, he fired the
Director of Wildlife at the Ministry of Tourism and Natural
Resources, Edward Severre, who had allowed corrupt practices
to continue in the hunting block sector of the wildlife
division under three different ministers. While opposition
party leaders and other critics say that Kikwete took too
long to fire former Bank of Tanzania Governor Ballali after
the release of the independent audit in late November 2007,
the fact that he set a clear timeline, put the investigation
under the joint authority of the Attorney General, the
Inspector General of Police, and the Prevention and Combating
of Corruption Bureau (PCCB),indicates that he is expecting a
thorough report, with no stones left unturned.


14. (C) Kikwete also appeared determined to convince, cajole
or push President Karume and other CCM hard-liners, as
needed, to successfully conclude the Zanzibar reconciliation
talks. This, coupled with his back-channel search for a way
to resolve the post-election crisis in Kenya, indicates to us
that he is ready to step up to the position of African Union
(AU) chairman, should he be tapped by his East African
colleagues during the upcoming AU summit in Addis Ababa
scheduled for the last week of January.
GREEN