THE VIEW FROM NIGERIA ON THE NIE

S E C R E T LAGOS 000474


NOFORN

E.O. 12958: DECL: 07/10/2033
TAGS: PGOV PREL ECON NI
SUBJECT: THE VIEW FROM NIGERIA ON THE NIE

Classified By: Ambassador Robin R. Sanders for reason 1.4 (b) & (d)


1. (S/NF) Summary: The recently released National
Intelligence Estimate (NIE) on Nigeria presents a picture of
a country on a downward spiral with gradually worsening
economic, political and social conditions which, over the
next five years, should produce increased political
instability, civil unrest, communal violence and disruptions
to petroleum production. While noting the many issues to
which the NIE refers, Mission Nigeria would like to
contribute its on-the-ground sense of the most likely
scenarios over the next five years as a complement to the
intelligence assessment of Nigeria. In our view, we believe
that today's Nigerian elite are less vulnerable to political
and economic crises because they have both a commitment and
the ability to fashion solutions that help them maintain the
status quo and their vested interests. We also think the
risk of renewed military intervention is, at least within
this five-year parameter, decidedly unlikely, and that the
Nigerian economy is less vulnerable to external economic
shocks than the NIE foreshadows. In addition, while
Nigeria's political system -- with its elaborate
patron-client networks, "zonal" rotation of offices and
constitutionally mandated "federal character" provisions --
is cumbersome and not particularly democratic, it does
provide a mechanism to defuse the kind of ethnic tensions
which threatened to tear Nigeria apart 40 years ago, and that
continually threatens other parts of Africa. While we might
characterize our view of the most likely Nigerian political
forecast as "more of the same," we believe there are also
possibilities for both political and economic progress,
though these will require the support of outsiders,
particularly the USG, as well as better GON leadership, to
have a real chance of success. Nigeria is very much at a
crossroads, but all is not yet lost. That being said,
however, we will need to continue to heavily push our
strategic partner in the right direction to shake it out of
the "more of the same" framework in order for it to move
forward. End Summary.

Concerns Raised by the NIE
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2. (S/NF) We of Mission Nigeria read the NIE with great
interest, and appreciate the thoughtful analyses by different
Washington agencies who contributed to it. While
acknowledging the many shortcomings of this complex and often
frustrating country and the many failings of its current
leadership, we want to contribute to and complement the
assessment with other possible scenarios over the next five
years. The NIE highlights a picture of Nigeria which
foreshadows a gradual worsening of economic, political and
social conditions over the next five years. It notes that
this time-frame will be characterized by an increase in
political instability, more frequent incidents of civil
unrest and communal violence, growing disruption of petroleum
production, and expanding corruption and criminality. It
adds that this deterioration will produce an increasingly
unfriendly atmosphere for international oil companies, raise
the risk of Islamist terrorism and put growing strains on
U.S.-Nigerian relations. Our overall view, at least as far
as a five-year horizon, suggests the following: we believe
the ruling Nigerian elite today is less vulnerable to
regional, ethnic and religious divisions as forecast. We see
the elite as both more willing and more able to find
solutions which allow Nigeria to "muddle through" likely
crises as they have learned the hard way about the importance
of national unity. In addition, we think the Nigerian
economy can weather the storms like the rest of the global
community as the nation has markedly improved its
macro-economic framework. Most importantly, however, we
think that the Nigerian military is considerably less likely
to intervene in politics today than at any other time in the
country's post-independence history. The following
discussion focuses on the next five years.

An Elite Less Vulnerable to Division
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3. (S/NF) Like many places in the developing world, Nigeria
has deep divisions between rich and poor, though, even by
these measures, rich Nigerians are extremely few and very,
very rich, while most Nigerians are poor, even by West
African standards. One aspect of the rich/poor dichotomy in
Nigeria is the extent to which it has produced an elite which
is markedly different in its approach to ethnic and religious
identity from the vast majority of Nigerians. The vast
majority of ordinary Nigerians care a great deal about
cultural identifications such as ethnicity and religion, and
about certain economic issues such as access to land, water
and other resources; they also live in a subsistence economy
in which most of them have an income of below $1 per day.


4. (C) For elite Nigerians, by contrast, the main
preoccupations are access to political influence and office,
and to the oil wealth they control. While rich Nigerians are
certainly very sensitive to ethnic, regional and religious
identity, these are much less important issues to them than
they are to non-elite Nigerians. Nigeria's elite are, as a
group, much more diverse and integrated than are the majority
of poorer Nigerians. Former Head of State Babangida, for
example, a prominent Muslim Northerner, is married to an Igbo
from the Southeast, whose brother, Sonny Okogwu, manages
Babangida's money. A more current example is power broker
Bukola Saraki, Governor of the northern state of Kwara. He
too is married to an Igbo. There are many more examples of
the elite ethnic mixes throughout Nigeria. Nigeria's bloody
1967-70 civil war seems to have impressed upon the country's
elite the importance of national unity as the overriding
framework, avoiding the kind of domination by one ethnic
group or another which has characterized the politics of many
African countries.

A Shared Interest in "Muddling Through"
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5. (S/NF) The Nigerians of the generation which fought the
Biafran civil war, who are now in their late 50s or early
60s, seem to have learned that there must be a prevailing
view which provides for, more or less, an equitable division
of oil wealth and political influence among different ethnic
and regional groups. Moreover, these elite have gone to
considerable lengths to institutionalize this ethnic
balancing of wealth, office, and power making it an integral
part of the Nigerian political system. The constitution
requires the GON to be organized in such a way as to "reflect
the federal character of Nigeria and promote national unity,"
and that there be "no predominance of persons from a few
states or from a few ethnic or sectional groups." It
establishes a "Federal Character Commission" to define and
enforce these provisions, requiring not only that every state
be represented in the Cabinet, but that ethnic balancing be
carried out in the military and security forces, the
diplomatic service, and at least as far down as middle
managers in the bureaucracy. Above and beyond the legal
requirements for ethnic balancing, Nigeria's political elite
has developed a set of informal understandings about the
sharing and rotation of office and wealth among the country's
36 states and six geo-political zones. The result is a
system where all parts of the elite have a stake in the
system, and none can permanently predominate. The ruling
Peoples Democratic Party (PDP) has institutionalized these
further into the geographical and ethnic sharing-out of party
offices.


6. (S/NF) No one would argue that such arrangements are
efficient, let alone democratic. They do, however, give all
sections of the elite a stake in the existing order and a
strong incentive to "muddle through" political difficulties.
While certainly cumbersome, they do at least make more
unlikely the kind of ethnic-based crises we have seen
recently in several African states, and which almost tore
Nigeria apart 40 years ago.

The What Next Scenarios
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7. (S/NF) Hence, the question today is how does this play out
in the current crossroads that Nigeria faces? President
Yar'Adua's government is currently facing two major possible
crises: that the Supreme Court will annul his 2007 election,
or that his declining health will lead to his permanent
incapacitation or death well before his current term ends in

2011. Some pundits, as well as the arguments laid out in the
NIE, suggest that such crises would likely lead to major
outbreaks of civil unrest and communal violence. By
contrast, we believe the elite here would come up with a
"Nigerian solution" to deal with such a crisis without
major/major political disruption or a breakdown in civil
order, "muddling through" in the Nigerian way. Were the 2007
election to be annulled, we would expect the ruling PDP to
settle on a candidate (certainly a Northerner),and that this
candidate would win the rerun presidential elections.
Unfortunately, we would not expect a rerun election to be
better than the 2007 chaotic mess as election reform is still
pending, but it would probably be no worse. Were Yar'Adua to
die in office, we would expect Vice President Goodluck
Jonathan to succeed him as a transitional president until the
2011 elections. He would also be encouraged to pick (or be
directed by the PDP leadership to pick) a strong replacement
VP (again a Northerner) who would govern with him and could
serve as the PDP's 2011 presidential candidate.


Economics: The Limited Vulnerabilities of a "Village Economy"
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8. (S/NF) The NIE notes that the past eight years of high oil
revenues have not translated into significant macro-economic
gains nor have they been used to repair Nigeria's
deteriorating infrastructure, and that, in fact, most of the
country's oil wealth has either been stolen or squandered.
It also underscores that the country will become increasingly
vulnerable to economic disruption should there be a major
fall in world oil prices. We noted that even the one agency
in the intelligence community which dissented from the NIE
highlighted this vulnerability. Such a collapse, however,
has now happened, with oil prices falling by more than half
within a period of two months. In addition, virtually all
the foreign capital which had been invested in the Nigerian
stock market (much of it in the non-oil sector) has now been
pulled out as a consequence of the global financial crisis.


9. (C) By contrast, our sense is that the dire predictions of
economic disruption as a result of falling oil prices and the
withdrawal of capital are not likely to be realized as
foreshadowed. It is true that the GON has had to revise
downward the benchmark price it uses to make budgetary
calculations, and it has had to pump some money into the
banking sector. Since the 2006 bank consolidation, however,
Nigerian banks are more capable of handling difficulties.
The banks should, of course, be closely monitored because
they have built up large sums of cash but have been reluctant
to lend. Nonetheless, several economic indicators suggest
that the Nigerian economy will be less affected by the global
financial difficulties than most other developing countries.
Even after some falls in revenue, there should still be
enough wealth left to keep the wheels of the elite economy
sufficiently greased. We note, however, that corruption by
the elite is still very endemic and that the USG will need to
maintain its strong vigil on this issue. Overall, of course,
the GON could do even more to cushion the impact of any
revenue losses if it did a better job of spending its own
capital budget. The lead economist of the World Bank Nigeria
office told the U.S. Mission recently that only 30 percent of
the current capital budget has been spent, with only six
weeks left in the calendar and budget year. The vast
majority of Nigerians, who live largely in a subsistence
agricultural economy, will, in any case, be even less
affected.

A Less Political Military
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10. (S/NF) The NIE presages the risk that younger officers
could take advantage of either a political or economic crisis
to mutiny and overthrow the civilian government. While
anyone familiar with Nigerian history would be worried about
the possibility of yet another military coup, our sense is
that this risk is, in fact, rather small at present. The
military is still reeling from the long term effects of
sanctions from the 1990s, and is not eager to incur more
restrictions on its desire to modernize and be recognized as
a first rate military. Popular aversion among Nigerians to
another military government remains strong, even within the
military itself. Moreover, there is a rising generation of
educated Nigerians from civil society to well-educated
Nigerians returning from the diaspora, who have invested in
business or are now in the government, who have never lived
under a military regime. There is also a robust Nigerian
civil society and press that take their watch-dog roles very
seriously and would fight such a move backwards.


11. (S/NF) Even within the military, many of those who served
or participated in the post-independence coups are now well
into their late 50s and 60s, and beyond. In addition, former
President Obasanjo, himself a veteran of several coups,
vigorously purged, restructured and down-sized the military
during his eight year term as civilian President. During the
first months of the Yar'Adua government, there were rumblings
of discontent over poor military pay and conditions, but the
GON acted to address these problems, defusing the tensions.
Additionally, the newly appointed Chief of Defense Staff and
Service Chiefs share reputations for capability, relative
honesty and respect for both civilian rule and the rule of
law. We, of course, continue to monitor this issue closely,
but do not currently see evidence of growing discontent in
the military, certainly not the sort which could lead to a
coup or other military intervention for political purposes in
the 5-year time-frame forecasted.

Getting Nigeria Beyond "More of the Same"
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12. (S/NF) Over the next five years, we fully acknowledge the
many economic and political problems which the NIE well
describes. It is shocking to anyone who has followed this
country over many years that so much oil money has produced
so few gains, that corruption is still rampant, that most
Nigerians are still so poor, and that a country which moved
into electoral politics and effective self-government only
shortly after Ghana should have made so little progress on
development and on taking better care of its people.
However, these issues seem for now to run on a different
track than the recognition of the importance of national
unity. While we predict that the current state of affairs of
poor progress on developmental and corruption issues are
likely to continue, over the short to medium term, we are
not/not suggesting that this situation is one we find
satisfactory in a country which is one of our most important
strategic partners on the continent. Indeed, we see many of
the same dangers as laid out in the NIE, but we do not see
military coup scenarios in the 5-year horizon or the country
breaking into ethnic enclaves.

Wrapping Up: Conclusionary Points
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13. (C) Our sense is that, if Nigeria is to move in a
different direction, an upward spiral instead of either more
of the same or a downward trend, it will need the help of its
friends. Nigerians are proud of their country, and believe
they should lead the continent, even when they are not
exactly sure in what direction, or have no capacity to do so
in some areas. Nonetheless, they do heed the advice of their
close partners, particularly the USG, and will privately --
if not always publicly -- consider our admonitions to avoid a
perilous path. Our forthrightly expressed concerns about
former President Obasanjo's third term aspirations played an
important catalytic role in turning Nigeria away from that
course with the National Assembly stepping up and playing a
truly democratic role. This Mission is already working hard
on promoting economic reform, good governance and democratic
progress, and identifying those allies whom we can work with
-- reforming Governors, NGO activists, selected National
Assembly members, the press and returning members of the
diaspora, etc. -- in these efforts. We can draw strength
from the fact that this is a country where the vast majority
of people care greatly about what the USG thinks of them and
their efforts, and where we continue to enjoy considerable
access to both leaders and ordinary people. Helping Nigeria
along this road will not be easy, but we believe there is
time enough to do it.


14. (U) The Ambassador is presently in Lagos. This message
is a U.S. Mission-wide coordinated message.


BLAIR