SCENESETTER FOR USAID WARD'S VISIT TO BANGLADESH

C O N F I D E N T I A L SECTION 01 OF 03 DHAKA 000015

SIPDIS

SIPDIS

DEPARTMENT FOR F

E.O. 12958: DECL: 01/06/2018
TAGS: EAID ECON PGOV PREL MPOS BG
SUBJECT: SCENESETTER FOR USAID WARD'S VISIT TO BANGLADESH


Classified By: CDA a.i. Geeta Pasi, Reasons 1.4 (b) and (d)


1. (C) SUMMARY: Your visit comes at the one-year
anniversary of the Caretaker Government, which is struggling
to rehabilitate areas of the country devastated
by Cyclone Sidr and to address food security issues while
preparing for nationwide elections by the end of 2008.
Bangladesh largely met the emergency needs of victims of the
November 15 cyclone, due in part to assistance from USAID and
the U.S. Pacific Command. The longer-term task of
reconstruction will be particularly daunting given that
Bangladesh is an impoverished country that already was hit by
serious monsoon flooding earlier in 2007. These disasters
come at a critical time for the Government, which has
embarked on an ambitious political reform agenda that is to
culminate in national elections by the end of next year.


2. (C) SUMMARY CONTINUED: Bangladeshis have embraced
Caretaker Government (CTG) reforms to address chronic
political corruption and violence. Many high*powered
politicians and businessmen have been arrested on graft
allegations. Public support for the Government, however, has
been weakened by spiraling inflation, which crop damage from
the cyclone has exacerbated. Politics is in a heightened
state of flux, with two former prime ministers in jail facing
trial on corruption charges and no politicians of similar
stature coming to the fore. Behind the scenes, the army
actively supports the Caretaker Government and appears to
share our interest in seeing it succeed. We continue to
emphasize the need for the Government to adhere to its
election roadmap and to international norms of justice and
human rights, while also addressing the basic needs of
Bangladesh's population. We also continue to encourage
dialogue among the Caretaker Government, political parties
and the military to reach a consensus political vision for
the way forward. END SUMMARY.

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CYCLONE RELIEF
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3. (SBU) Cyclone Sidr slammed into the southern coast of
Bangladesh on November 15, affecting the lives of 8.9 million
people and resulting in as much as USD 2.3 billion in
economic damage. The Government of Bangladesh (GOB)
estimates that as many as 3,400 people died; loss of life was
mitigated by strengthened disaster preparation, a focus of
USAID's efforts here. (NOTE:
Cyclones in Bangladesh of similar strength left 500,000 and
100,000 dead in 1970 and 1991, respectively. END NOTE.)
Those who survived need food, water, shelter and a
restoration of their livelihoods. The cyclone damaged or
destroyed over 1.5 million homes and more than 640,000
hectares of crops. About 350,000 farm animals were lost, and
95 percent of the fish and shrimp ponds that are the basis of
the nation's lucrative aquaculture industry were
damaged.


4. (C) The U.S. government, including the U.S. military, has
played a key role in assisting Bangladesh with disaster
relief and management before, during and after Cyclone Sidr.
In the past, USAID provided disaster management assistance to
Bangladesh that was important for warning residents about the
cyclone's approach and sheltering people when the cyclone
made landfall. Immediately after the cyclone struck, the USG
provided USD 19.5 million in emergency relief as well as
desperately needed airlift to deliver food, water and
clothing to remote areas. Operation Sea Angel II was a
success, both in its mission to provide humanitarian
assistance and disaster relief and in highlighting strong
U.S. relations with a moderate Muslim nation.


5. (C) Now that the immediate crisis has passed we are
focused on longer-term reconstruction and rehabilitation.
USAID is proposing the USG continue its cyclone relief
efforts with an additional USD 115 million over the next
three years to help rebuild agriculture and aquaculture
industries, reconstruct rural electrification networks, and
mitigate future disasters. We also are recommending an
emergency allotment of 100,000 metric tons of food to assist
Bangladesh with food security; the nation's food stockpiles
could be depleted by spring as Bangladesh struggles to meet
the medium-term needs of cyclone victims.

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THE POLITICAL SCENE
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6. (C) The Caretaker Government (CTG) came to power in
January 2007 as political violence was spinning out of
control in the run-up to scheduled elections later that
month. The CTG, made up of 10 non-political advisers and
strongly supported by the military, imposed a state of
emergency and began cracking down on endemic political
corruption and violence. The crackdown initially won broad
public support, but frustration with the CTG spilled onto
the streets in late August when a dispute at Dhaka University
between students and soldiers became a rallying point for
thousands of Bangladeshis disaffected by inflation, other
economic woes and restrictions on political activity. The
CTG stopped the protests by imposing a curfew backed up by a
show of force from the army. Government leaders acknowledged
privately to us and others the need to stick to the elections
roadmap, to open up political discourse, and to communicate
more effectively with the public.


7. (C) Bangladeshis welcomed in September an easing of the
ban on politics and the initiation of formal dialogue between
the Election Commission and the parties on political reform.
The relaxation of the ban threw internal party disputes into
sharp relief. The most visible struggle is within the
Bangladesh Nationalist Party (BNP),which governed the
country from 2001 to 2006 under former Prime Minister Khaleda
Zia. When jailed in early September, Zia
fired the reform-minded party Secretary General and replaced
him with a loyalist. In a contested party meeting in early
November, two reformist party leaders were named acting
chairman and acting secretary general, but the appointments
have been hotly contested by Zia loyalists. The Awami
League, the other major party, has also experienced internal
strife between reformers and loyalists to former Prime
Minister Sheikh Hasina, but both sides accept her hand-picked
protege as acting party president while she is in jail. Army
Chief General Moeen Uddin Ahmed repeatedly has stated that he
has no political ambitions, even as he assumes by default a
higher public profile than the Chief Adviser, who is the top
official in the CTG. On December 26, Education and Cultural
Affairs Adviser Ayub Quadri took responsibility for the loss
of two priceless artifacts en route to an exhibition in Paris
and became the first of the CTG,s 10 advisers to resign.
Since then, rumors of a broader Cabinet shuffle have
intensified.


8. (C) In the midst of this political jockeying, voter
registration continues in preparation for national elections
scheduled by December 2008. While the mechanics of holding
elections seem to be largely on track, there is
still much debate about an "exit strategy" for the Caretaker
Government and the military, who want to ensure a newly
elected government maintains reforms and refrains from
settling scores. They fear retribution from a resurgent
political class that has been the main target of the
anti-corruption campaign.

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ECONOMIC CHALLENGES
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9. (C) Cyclone Sidr exacerbated worsening economic trends in
Bangladesh. Inflation was becoming a serious problem even
before the cyclone destroyed crops, and investment was
slowing as businessmen assessed the effects of the
anti-corruption drive and the CTG,s implementation capacity.
High world prices for food and fuel hit Bangladesh hard in
the wake of severe monsoonal flooding in the summer. Cyclone
reconstruction is yet another enormous economic burden the
current government must shoulder, albeit with assistance from
the international community. The Asian Development Bank
estimates GDP growth in Bangladesh this year will fall below
6.0 percent from last year's growth of 6.5 percent.
Bangladeshis are excited about the potential for the proposed
New Partnership for Development Act to boost the economy by
providing duty-free access to the U.S. market for ready-made
garments, which is the country,s main export. Bangladesh
remains interested in receiving Millenium Challenge
Corporation assistance but does not yet meet all of the
eligibility requirements.

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YOUR VISIT
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10. (C) Your visit to Bangladesh will underscore continued
USG support for Bangladesh and the CTG as it works to respond

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to the cyclone's devastation and to keep the country on the
path to free and fair elections by the end of 2008.
Bangladesh is a moderate Muslim-majority nation that has
played a responsible role internationally (especially in
peacekeeping operations) and is going through a difficult
political transition. In your meetings you should focus on
the importance the USG places on engagement and strengthening
the bilateral relationship. You should also focus on our
commitment to remain engaged
in helping Bangladesh recover from the cyclone and prepare
for future natural disasters. In your meetings with political
party leaders you should encourage them to promote democratic
reforms within their parties. You should
also encourage political parties, the government and military
to return Bangladesh to democracy and to rid the country of
endemic political corruption and violence.
Pasi