BURKINA FASO: SCENESETTER FOR JUNE 3-4 VISIT OF AF DAS TODD

UNCLAS SECTION 01 OF 04 OUAGADOUGOU 000438

SENSITIVE

AF FOR DAS TODD MOSS FROM AMBASSADOR JACKSON

SIPDIS

E.O. 12958: N/A
TAGS: OTRA PREL UV
SUBJECT: BURKINA FASO: SCENESETTER FOR JUNE 3-4 VISIT OF AF DAS TODD
MOSS


1. Introduction: In his 20th year in power, President Blaise
Compaore is taking Burkina Faso, a country wracked by extreme
poverty, in the right direction: moving forward on the process of
democratization, working with donors and
others to ensure the nation's economic stability, turning away from
the negative regional role Burkina has played in the past, and
seeking better relations with the United States, in part to balance
Burkina's long-time partners such as Libya, Cuba and France.
Compaore overwhelmingly won re-election in November 2005, and his
party won 73 of the 111 legislative seats in the May 2007 elections,
and allied
parties a further 25 seats. The United States remains popular in
this majority Muslim country. Compaore appointed his former
Ambassador to Washington, Tertius Zongo, as his Prime Minister in
June, thus demonstrating his desire to continue to improve
U.S.-Burkina Faso relations. U.S. priorities in Burkina Faso are:
democracy and human rights, regional stability and the war on
terrorism, economic development, and mutual understanding.
End Introduction.

Economic Challenges In One of World's Poorest Countries


2. Poverty and Unrest: Burkina Faso, one of the world's poorest
countries, lies at the edge of the hot, arid Sahel. Its average
citizen scarcely ekes out a living on approximately $430 a year in a
nation that has few natural resources. Eighty percent of the
population of 14.25 million relies on subsistence agriculture. The
country faces low literacy rates, especially among women, along with
high unemployment and school drop-out rates. Malnutrition continues
to be near crisis levels. Sub-standard environmental and living
conditions, compounded by low education levels and gender
inequities, trap most Burkinabe at the margins of the economy.


3. Burkina Faso was ranked 176th out of 177 countries in the 2007 UN
Development Programme's (UNDP) Human Development Index (HDI),ahead
of only Sierra Leone. In absolute terms, while Burkina Faso has
made significant progress in recent years in the HDI parameters,
particularly in primary education, it made less progress than peer
countries, particularly in secondary education.


4. Burkina Faso's incidence of poverty steadily lowered from 46.2
percent in 2003 to 42.1 percent in 2006. With a slowing economy in
2007, however, the incidence of poverty in Burkina Faso rose from
42.1 percent in 2006 to 42.6 percent. Poverty in Burkina Faso
continues to be an overwhelming rural phenomenon with a
disproportionate number of poor living in rural areas (49.1 percent)
compared to urban areas (16.6 percent). At the same time,
increasingly difficult conditions for urban poor may have been a
factor strengthening support in several cities in Burkina Faso for a
series of marches and protests starting in February against rising
food and other living costs.


5. Corruption: As in many African countries, widespread corruption
has been a significant drag on Burkina Faso's development. Many
observers believe the corruption problem here is worsening.
Consistent with this, Burkina Faso's ranking on Transparency
International's corruption index tumbled from 10th in Africa and
79th worldwide in 2006, to 17th in Africa and 105th worldwide in

2007. While Prime Minister Zongo was behind the December 2007
creation of a new anti-corruption body, this entity lacks
independence, is overly dependent on the Prime Ministry, and lacks
subpoena and prosecutorial powers. Zongo, a skilled communicator
with the donor community, has made fervent promises to attack
corruption. Without a green light from President Compaore to follow
through, however, we remain skeptical about Zongo's ability to
achieve real progress.


6. One bright spot has been the Government's effort to facilitate
business. The World Bank ranked Burkina Faso (GOBF) 5th-ranked out
of 46 African countries early in 2008 for its business climate
reforms in three areas: starting a business, registering property,
and enforcing contracts. The GOBF plans new reforms on access to
credit, taxation, construction permits, government procurement, and
anti-competitive practices.


7. Economic Shocks Slow Growth, Stoke Inflation: Burkina Faso has
been subjected to several economic shocks during the past three
years, including rising oil prices and a cotton sector crisis
brought on in part because of lower world cotton prices quoted in
depreciating dollars, and production inputs priced in an
appreciating local currency. GDP growth slowed from 7.1 percent in
2005, to 6.4 percent in 2006, and 4.2 percent in 2007. The current
account deficit rose in 2007, and will widen further in 2008.
Although the inflation rate was a negative 0.3 percent through the

OUAGADOUGO 00000438 002 OF 004


first half of 2007, a dramatic rise in world oil and food prices
caused Burkina Faso's Consumer Price Index (CPI) to soar in the
second half of the year, from 118.6 in July 2007 to 122.6 by the end
of December. Anecdotal evidence strongly suggests that the CPI
again rose sharply in the first quarter of 2008, with large
increases in prices for basic food commodities such as rice and
bread, as well as a continued ripple effect through the economy of
higher oil prices.


8. Cotton: Burkina Faso is the largest producer in West Africa of
cotton, its primary export. Several years ago, Burkina bet on
cotton as a key agricultural money earner, and cotton now accounts
for 60 to 70 percent of the country's export earnings. However, a
decline in world cotton prices, the rising cost of fertilizers and
pesticides, and a lack of rainfall led to reduced planting and
harvest and a 2007-2008 crop that was 32 percent below expectations.
The GOBF recently adopted a new formula-based producer price
mechanism for the cotton sector that more accurately reflects
changes in world prices. It also recapitalized the main cotton
parastatal at a cost of one percent of GDP. These efforts should
strengthen cotton production and ginning, although unpredictable
weather conditions and lower cotton prices could cut profitability.



9. Burkinabe, including senior government officials and farmers in
the countryside, generally blame U.S. (and European) subsidies for
the low world market price for cotton. USAID launched in 2007 a
regional West Africa Cotton Improvement Program ($27 million) to
assist the four major West Africa cotton-producing countries to
improve production, transformation and marketing of cotton.


10. Burkina is also in the vanguard with its experimental trials of
biotech cotton in partnership with the U.S. company Monsanto. After
years of field trials, the company had planned to begin growing
biotech cotton during the 2008-2009 season. These plans hit a snag
in late May, however, when Burkina Faso imposed liability
requirements on biotech cotton that it could not accept. Limited
Brands recently concluded a contract to purchase some of Burkina's
high quality cotton for its Victoria's Secret brand garments. An
international entrepreneur who manufactures U.S. ginning equipment
is close to concluding a series of contracts that would permit him
to build plants to produce bio-diesel using cotton seeds.


11. Mining: The mining sector is one of the economy's most promising
sectors, and over the longer-term could help Burkina Faso reduce its
dependence on the cotton sector. Although mining now only accounts
for about two percent of gross domestic product (GDP),Burkina Faso
may be on the cusp of discovering and exploiting a diverse trove of
mineral resources, such as zinc, phosphate, manganese and possibly
uranium. Gold, only recovered in recent years by artisanal mining,
is already Burkina Faso's third-leading export after cotton and
livestock. The country's gold production is forecast to increase
six-fold between 2007 and 2012, at which point it will rival
neighboring Mali as Africa's third largest gold producer. High
River Gold Company (HRG),a Canadian company with significant U.S.
investment, opened Burkina Faso's only commercial gold mine last
October - the pay dirt of a mining code that was significantly
improved in 2004.

Politics: President Likely in Power Until 2015


12. President Compaore first came to power in 1987 in a coup that
overthrew and killed his long-time political ally, Thomas Sankara,
who himself had come to power in a coup four years earlier. For
many in Burkina Faso, and indeed in West
Africa, Sankara had represented a utopian vision of a different
Africa, but his four years in office had left the country in
economic shambles, and with a poor human rights record. Compaore's
early years in power were not much better, and he compounded
Burkina's poor regional reputation during the 1990s by involving the
country in the illegal diamonds for arms trade in war-torn Liberia
and Sierra Leone and by reportedly sending Burkinabe soldiers in
support of his allies in the war zones.


13. However in the late 1990s, following a period of rising civil
discontent that followed the killing of an immensely popular
journalist critical of the government, Compaore and his government
began to move toward greater opening.


14. In 2005, President Compaore was reelected to a third term with
80 percent of the vote. Observers considered the election to have
been generally free, despite minor irregularities, but not entirely
fair due to the ruling party's control of official resources. He is
expected to run for his second and last five-year term in 2010.

OUAGADOUGO 00000438 003 OF 004


Whether he will attempt to change the constitution to allow himself
another term in 2015 remains to be seen. Some observers believe
Compaore will urge his brother, Francois, to run for the Presidency
in 2015.


15. The 2002 legislative elections brought a significant opposition
presence to the National Assembly. During the 2007 egislative
elections, however, opposition parties retrenched, losing a number
of seats.


16. Thegovernment also initiated a decentralization proces in the
early 1990's. The final step in that pocess was the election in
April 2006 of local goernments for 350 newly created urban and
rural muicipalities. These elections rsulted in an unparalleled
increase in the number of female officials (5000 out of nearly
18,000. The President's ruling part won nearly two-thirds of local
council seats. While local populations have felt empowered by
decentralization, local governments still struggle to carry out even
basic functions because the central government has not shared
sufficient tax revenues.

Foreign Relations


17. You will be arriving in Burkina Faso at a time when President
Compaore and his country are in the regional and even global
limelight. He was reelected in early 2008 for another year as head
of ECOWAS and WAEMU. Compaore's crowning foreign policy achievement
was to negotiate a peace settlement in March 2007 between the
government of Cote d'Ivoire and rebels based in the north, hoping
that his efforts would not result in another discarded agreement.
Compaore's admirers suggest that he is in the perfect position to
lead the peace efforts there because of his personal relationships
with both President Gbagbo and rebel leader Guillaume Soro - a view
point corroborated by Compaore's successful efforts to convince the
principal Ivorian protagonists to confirm their support on May 9 in
Yamoussoukro their intention to support Presidential elections now
scheduled for November 30. Under the auspices of ECOWAS, he also
continues to closely monitor Guinea. Prior to assuming the ECOWAS
mantle, he was heavily engaged in resolving Togo's political crisis.



18. Reflecting Burkina Faso's 2008-2009 UNSC seat, Compaore's
Government has received a series of high-level visitors, including
Deputy Secretary Negroponte in November, and the Foreign Ministers
of France in January and Germany in February. In part because
Compaore is the current head of ECOWAS and WAEMU, his government was
also invited to the first India-Africa Summit in New Delhi in April,
and to Israel's 60th anniversary celebrations in May. Compaore
chose to travel to Israel in part because of his on-going effort to
secure a White House visit. Later in May, Compaore attended Japan's
Africa summit (TICAD-4),and the inauguration of the new President
of Taiwan, with which Burkina Faso has diplomatic relations.
(Burkina Faso, one of only four African countries retaining
diplomatic ties with Taipei, imports a large amount of Chinese
goods, but there is no significant investment here from China.)

Relations with the United States


19. Bilateral relations are excellent, and Burkina Faso has been
generally supportive of U.S. efforts in the War on Terror. One
newspaper here referred to the emerging relationship between our
countries as the "Ouaga-Ouashington
Axis," and many perceive that Burkina's Faso qualification for AGOA
benefits in 2004, and acceptance into the Millennium Challenge
Corporation (MCC) threshold country and compact program, as the
first fruits of this new policy.
MCC funded 132 primary school complexes ($13 million) with emphasis
on girls' education; and is working to develop a second phase of
this program to add classrooms for grades 4-6. MCC and Burkina Faso
concluded in May negotiations on a $481 million, five-year Compact,
which was approved by the GOBF Council of Ministers on May 24, and
is expected to be approved by MCC's board on June 17. Baring a
last-minute rescission of MCC's overall budget - a low-probability
nightmare that has surfaced in recent days -- both governments hope
to sign the Compact on July 16 in Washington. Compaore, eager for a
meeting with POTUS, has been putting tremendous pressure on
Ambassador Yonli to wrangle a White House invitation.


20. Burkina Faso has been as helpful to the United States as it can
be in the UN, given the pressure it faces from the Africa group to
oppose us on some issues. Burkina Faso, for example, was the second
sub-Saharan African country after Senegal to recognize Kosovo.
Burkina Faso's contribution to troops to Darfur, hosting of Joint
Special Operations Aviation Detachment (JSOAD) in Ouagadougou, and

OUAGADOUGO 00000438 004 OF 004


its cooperation on anti-terrorism in the trans-Sahelian region also
deserve our strongest praise. Burkina Faso will be only just over
six months into its two-year stint as non-permanent member of the UN
Security Council, and a mid-July meeting with POTUS around the time
of the MCC compact would build us enormous goodwill.


21. USAID's programs include nutrition, school feeding, health,
education, and trade promotion. There are 104 Peace Corps
volunteers and trainees in Burkina Faso. The Departments of
Agriculture and Commerce have small programs in Burkina Faso, and
the Centers for Disease Control have posted experts in meningitis
and in measles at World Health Organization in Ouagadougou.


22. Military ties are also strengthening. The GOBF is one of our
newest partners in the Africa Contingency Operations Training
Assistance (ACOTA) program. The United States has already trained
three 750-man battalions for peace support
operations. We have also partially equipped a battalion that may
deploy to Darfur as early as November 2008. Using a small
International Military Education and Training (IMET) budget, the
Embassy has established an English lab at a military base, and has
maximized attendance at officer basic courses. Representatives from
the Ministry of Defense have attended Africa Center for Strategic
Studies seminars. The government is eager for additional training,
especially in counter-terrorism, and warmly welcomed the opportunity
to contribute to the support of U.S. efforts in the Sahel by
providing a base for JSOAD. The GOBF recently signed a bilateral
Status of Forces Agreement (SOFA).

New Embassy Compound


23. The Embassy held a formal groundbreaking on our new, $78
million dollar New Embassy Compound (NEC) on April 1, with
commissioning expected in January 2010. Several new Embassy staff
members and family have come from OBO and DS to work on the NEC
project.

JACKSON