KENYAN CEOS CALL FOR PEACE, RECONCILIATION, REFORMS, AND

UNCLAS NAIROBI 000383

SIPDIS

DEPT FOR AF/E, AF/EPS, EEB/IFD/OMA
DEPT ALSO PASS TO USTR FOR BILL JACKSON
DEPT ALSO PASS TO DEPT OF LABOR FOR MICHAL MURPHY, SUDHA HALEY,
PATRICK WHITE AND MAUREEN PETTIS
DEPT ALSO PASS TO USAID/EA
DEPT ALSO PASS TO USITC FOR RALPH WATKINS
TREASURY FOR VIRGINIA BRANDON
COMMERCE FOR BECKY ERKUL

SENSITIVE

SIPDIS

E.O. 12958: N/A
TAGS: ECON EFIN ELAB ETRD KE
SUBJECT: KENYAN CEOS CALL FOR PEACE, RECONCILIATION, REFORMS, AND
RECONSTRUCTION

REFS: (A) NAIROBI 380, (B) NAIROBI 353

SENSITIVE-BUT-UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. FOR
INTERNAL USG DISTRIBUTION ONLY.


1. (SBU) Summary: Over 300 CEOs from firms employing 12 million
Kenyans met on February 5 to issue a strong statement on the need
for peace, security, reconciliation, reconstruction, and reform for
Kofi Annan to deliver to Government-ODM negotiators. Although the
final text (para 8) of the CEO summit omitted figures on current and
potential economic losses, the meeting and the document were widely
publicized and should help keep the pressure on political leaders to
reach agreement on power sharing. End summary.

Private Sector's Grim Forecasts
--------------

2. (U) Encouraged by mediator Kofi Annan, Kenya Private Sector
Alliance (KEPSA) Acting Chairman Steve Smith, Safaricom CEO Michael
Joseph and the Kenya Association of Manufacturers (KAM) organized a
Business Forum on February 5 to discuss the current situation and
compile a statement to the government and ODM negotiators (Note: By
coincidence, both Smith and Joseph are American citizens. End
note). In a strong display of concern, over 300 CEOs of large and
small firms that employ 12 million Kenyans and support another 24
million, NGO reps, and diplomats filled a Nairobi hotel ballroom
with grim faces to hear Kofi Annan ask them to speak out and provide
leadership to help pull Kenya back from the brink. Annan described
the status of the Government-ODM talks and said that Kenya could be
healed with support from all stakeholders.


3. (U) Kenya Red Cross (KRC) Secretary General Abbas Gullet
described Kenyan efforts to assist internally displaced persons
(IDP) as fairly successful, but that security was still a major
problem. He said the Kenyan military has training from UN
peacekeeping missions, and should be deployed to help set up, run,
and guard consolidated camps that would also take in the many IDPs
that cannot stay much longer with family or friends. Gullet said
the KRC was torn between the IDP's voluntary requests for
transportation back to their ancestral homelands, and KRC's
reluctance to support ethnic cleansing.


4. (U) Steve Smith, who in addition to his KEPSA role is CEO of
Eveready Kenya, stressed that the private sector is the engine of
Kenya's economy, and that this success is based on human effort and
geographic location. The private sector, he said, needs political
stability and acceptable governance for continued growth and job
creation for the 500,000 young people entering the workforce each
year. He summarized the damage done to each sector of the economy
(ref B),expressing concern Kenya could face serious food shortages
in the coming months. Smith warned that growth could drop to zero
or lower in 2008 under the current conditions, but said 4%-5% was
still possible -- if a political solution is found quickly and the
violence stops. He noted that the rest of the world is moving on,
and firms could postpone or cancel investments, or even close their
plants if the situation does not improve. He stressed the
importance of maintaining (tribal) diversity in Kenya's private
sector, calling it a key strength in maintaining growth.


5. (U) The closed-door discussion focused on the need to restore
security, especially on the roads to permit free movement. Some
advocated harsh security measures that were not well received.
Ideas that received general support but were not specifically
mentioned in the text were tax breaks for investors and employers,
government insurance for investments against civil strife, deploying
the military to keep roads secure, building the justice system into
a credible and effective institution, prosecuting perpetrators of
violence to end impunity, ensuring diversity and relying on merit in
personnel practices, threatening to withhold tax payments until the
government and ODM reach some agreement, increasing the transparency
of parliament and accountability of MPs, and using all company
vehicles to display and deliver messages of peace and restoration of
law and order. There was disagreement over the utility or
feasibility of a new election or recount.


6. (U) The summit's statement (para 8) was delivered to Kofi Annan
and the negotiating teams, and was widely reported in the print and
broadcast media. Although the businessmen omitted the dire economic
statistics from the statement, they were included in the press

coverage of the event.

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

7. (SBU) By speaking so loudly with one voice in this way, the
private sector in Kenya is doing what it has always done, albeit
more explicitly now: Providing leadership to help temper the worst
tendencies of the country's political leaders. The summit and the
resulting statement should send a strong message to the political
leadership of both sides, and help ratchet up the pressure now
coming from all quarters for swift agreement on power sharing (ref
A) as a first step towards returning Kenya to a path of peace and
economic prosperity.

Text of Kenya National Compact for Peace and Stability
-------------- --------------

8. (U) Begin text

The Kenya National Compact for Peace and Stability

A Brief from the Business Community Meeting in Nairobi on 5 February
2008

Preamble

With the ongoing political crisis, Kenya has lost more than 1,000
citizens to violence, more than 300,000 are displaced from homes and
the Kenya business has suffered immense losses of staff, property,
business and confidence. The country needs to urgently find a
sustainable political settlement of the current crisis so that
further loss can be forestalled. At present a contraction of the
economy is imminent and business is fearful of further losses which
could affect decisions on investment and employment.

The business community welcomes and supports the international
mediation efforts led by Mr. Kofi Annan and the team of eminent
persons and urges all Kenyans to support his efforts to bring peace
to our country. We are fully supportive of the efforts and desire
success of the initiative.

In the views of the Business community, there are several issues
that require attention in order to provide confidence for the
protection of life and property and conduct of business.


1. Immediate Cessation of Hostilities and Violence
We are concerned by the violence that has rocked the country for the
past month. To this end it is important that all political leaders
affirm their commitment to ending of the violence. It is imperative
that the President and the Hon Raila Odinga and close political
associates issue statements endorsing the mediation efforts. In
addition, business expects that both leaders should jointly visit
the areas affected by the violence to preach peace. All political
and communal leaders should also visit the affected areas of the
country to preach peace and to demonstrate their commitment to the
mediation. The Government must take immediate steps to disarm the
armed militias that are terrorizing citizens in many parts of the
country. The communities and families from which these young people
are drawn from should be encouraged to play a role in this regard.


2. Restoration of Security
No business can thrive where there is no security. It is imperative
that all efforts are made to ensure that there is effective
security. To this end, we commend the efforts made to enlist the
services of the armed forces to ensure that security is delivered
and urge continued deployment until situation normalizes. We need
effective policing and the police must act to combat crime and
destruction of property.
Expeditious prosecution of all criminals and facilitation of
individuals in the demanding justice. Accountability of all the
police and public servants and must end culture of civil and
criminal impunity. We have a big responsibility to the region even
as we focus on the internal affairs; we need to give the region a
level of assurance through the opening of all transport corridors.


3. Political Dialogue and Mediation
In order to spur the confidence of society and the business
community, it is important that a sustainable political settlement
is arrived at from the ongoing mediation efforts. To this the

business community recommends a Broad based inclusive government
that supports and builds on the diversity of the Kenyan people and
promotes healing of the nation.


4. National Reconciliation
Kenya is a country of diverse peoples. This has been negatively
affected by the crisis which admittedly has brought to the fore
long-standing grievances for which the election dispute acted as a
trigger. It will be necessary for the country to go through a
process healing and reconciliation. We need a comprehensive
dialogue and a truth and reconciliation process. This includes
truth that would facilitate closure on the 2007 Presidential
elections. In addition we need to ensure that this does not recur
in future and therefore the country will need to invest in a long
term programme of national civic education on the need to maintain
diversity of the nation. We should explore criminalization of
tribalism, promotion of diversity and issuance of new IDs with no
tribal identity.


5. Communication of a correct and positive image
The Business community has urged its members from the media to act
responsibly and to desist from airing images and messages that
inflame the passions in the country. In addition, however, business
is also concerned about the quality and effectiveness of government
communication. Image-Kenya Brand reconstruction: The country and
its image has suffered immensely from the ongoing crisis. To this
end, Business commits itself and wishes to work with Government in
the reconstruction of the image and brand of Kenya.


6. Economic Recovery and Reconstruction
The Private sector in Kenya is the engine of growth. The Business
community commits itself to being part and parcel of the
reconstruction efforts in order to get Kenya working again. To this
end it is imperative that Government works with the community to:
Develop an economic stimulus programme that ensures no jobs are lost
and secures both internal and external investment. Such could
include the establishment of a reconstruction fund as well as
necessary fiscal and other incentives e.g. tax breaks.
Establish a Reconstruction programme with a special focus on the
SME.
Create a public works corps that engages the unemployed in building
and delivery of needed infrastructure.
Facilitate resettlement of farmers on their land to minimize the
possibility of food insecurity in the country.


7. Constitutional - Legal reforms
The issues that have arisen will need to be settled in a new
constitutional settlement. To this end the Business community
believes that the country should agree and conclude fundamental
reform that addresses equity, equality, justice and restoration of
all Kenyans democratic and human rights. Such reforms must provide
for management of ethnic diversity in the management of public
affairs as well as management of electoral disputes among others.

End text.
RANNEBERGER