DEPUTY SECRETARY LEW HIGHLIGHTS U.S. FOREIGN POLICY AND

UNCLAS ADDIS ABABA 001617 SENSITIVE SIPDIS DEPARTMENT FOR D(LEW) - DHYDE, AND AF/E USAID FOR AFR - EGAST, CTHOMPSON, AND GANDERS USAID ALSO FOR GH - GSTEELE E.O. 12958: N/A TAGS: EAID PREL PGOV ET SUBJECT: DEPUTY SECRETARY LEW HIGHLIGHTS U.S. FOREIGN POLICY AND ASSISTANCE ISSUES REF: (A) ADDIS 1526 SUMMARY -------------- ¶1. (U) Deputy Secretary of State Jacob Lew's visit to Ethiopia on June 29-30 signaled the importance the new Administration is placing on how U.S. foreign policy and foreign assistance is working in Ethiopia. Deputy Lew held discussions with the Country Team, met with the Prime Minister (reftel),influential Government of Ethiopia (GoE) and business leaders, and held a press conference with 34 international and local press. He visited USAID food security and economic growth activities, a CDC-supported hospital and held a roundtable with USAID democracy/governance partners. The major theme running through the visit was a commitment to a continued strong U.S.-Ethiopia relationship and "a more productive and sustainable assistance program that meets the fundamental needs of the Ethiopian people." End Summary. ¶2. (U) On June 29, Ambassador Yamamoto and the Country Team (CT) briefed Deputy Secretary Lew on U.S. humanitarian, development and military assistance to Ethiopia, and domestic and regional security issues. Deputy Lew said that two of the Obama administration's areas of focus in foreign assistance are building sustainable agricultural sector growth that increases farm productivity and expanding the PEPFAR program to include an emphasis on health systems development and maternal and child health. Deputy Secretary Lew said the Obama administration was also committed to providing more country ownership for U.S. assistance funding. In general, CT members agreed there was weak capacity in Ethiopia, so it made sense to maintain our current approach, largely through NGO partners, but begin to channel some funding directly through some of the more efficient ministries -- such as Health -- although we should not expect technical and accountability standards that rival those of our current partners. Deputy Secretary Lew said that as the form of U.S. assistance shifts, such growing pains can be expected. (Note: Another suggestion for the new Administration to consider is restarting university exchanges, historically one of USAID's most successful programs for building African capacity. End note.) ¶3. (U) The Ambassador hosted a lunch with Health Tewodros Adhanom; Minister of Finance and Economic Development, Sufian Ahmed; Minister of State for Agriculture, Aberra Deresa; and Girma Wake, CEO of Ethiopian Airlines. The discussion focused on the Ethiopian officials' views of development issues. Minister Sufian said that Ethiopia's three priority areas for foreign assistance are: 1) health, 2) education, and 3) agriculture. Minister Sufian said capacity building at all levels of government was critical. Enticing the diaspora to return is an important component of increasing capacity: A successful USAID loan guarantee program is focused on helping diaspora to start businesses. Minister Tewodros, although acknowledging there are more Ethiopian doctors in the U.S. than in Ethiopia, said that the number of doctors in Ethiopia has increased four-fold due to the requirement for locally-trained doctors to do several years service in Ethiopia. ¶4. (SBU) The Ambassador also hosted a dinner in honor of Deputy Secretary Lew with ten prominent Ethiopian business leaders. Guests included leaders of the American Chamber of Commerce, Addis Ababa Chamber of Commerce, Seattle American Chamber of Commerce and pioneers in the sectors of horticulture, coffee, textiles/garments and shoes. The participants highlighted the fact that Ethiopia is a relatively new free-market economy - just 18 years young. The participants discussed a variety of constraints to growth, from the lack of skilled manpower, to the lack of a corporate accounting standards body, to low levels of manufacturing productivity. The textile industry participants praised the African Growth and Opportunity Act (AGOA) and expressed a desire to see the program continue. The business leaders discussed the dynamic business roles of China (Ethiopia's current number one trading partner),India, and Turkey. The participants told the Deputy Secretary that U.S. businesses do not have a strong presence in Ethiopia, but that most businesses would like to tap into the U.S. markets. Deputy Secretary Lew said that the Obama administration looks forward to working on these private sector issues going forward. ¶5. (U) Deputy Secretary Lew participated in events demonstrating USAID-Ethiopia's work in food security and economic growth. -- USAID-Ethiopia is part of a multi-donor $400 million a year Productive Safety Net Program (PSNP) that provides predictable cash/food aid transfers to over seven million of the most vulnerable people in Ethiopia in exchange for building community infrastructure projects such as bridges, dams, schools, and clinics. Minister of State for Disaster Preparedness and Food Security Mitiku Kassa; Heads of the World Bank, Donor Coordination Group, and UNICEF; and NGOs Save the Children UK and US explained how this strategy has shifted large populations who previously received emergency food aid into a program oriented towards achieving food security. USAID officials said this food aid/food security program is probably the most innovative in the world and is an example of USAID's strategy of coordinating its assistance -- in this case with the GoE, eight donors, and among USAID sectors since the Office of Foreign Disaster Assistance, Food for Peace, and the Economic Growth office are all contributing complementary funding. Deputy Secretary Lew said the new Climate Change Fund is aimed at building capacity to deal with recurrent climate change, clearly an issue in Ethiopia. -- Deputy Secretary Lew was joined by Minister of State for Industry and Trade Tadesse Haile at a trade fair showcasing USAID-funded projects aimed at transitioning from food security to economic growth. These included activities such as livestock development, agribusiness - coffee, oilseeds, leather, horticulture - AGOA promotion, WTO accession, and land tenure. -- Deputy Secretary Lew visited the one-year old Ethiopian Commodity Exchange (ECX),one of the few in Africa, to see the live trading floor and receive a briefing from CEO Dr. Eleni Gabre-Mahdin. The project grew out of research supported by USAID showing that Ethiopia's poorly functioning markets were a huge bottleneck to agricultural trade and exports. USAID has supported the ECX warehouse receipt system and management salaries with USD 2.6 million. Dr. Gabre-Mahdin stated that the ECX is transforming Ethiopia's agriculture sector as 70 percent of its export earnings now pass through the ECX. In response to a question by Deputy Secretary Lew, she said the ECX will be considering how to expand its services to include livestock trade. ¶6. (U) A visit to the 50-year old Gandhi Hospital, one of the major referral hospitals in Ethiopia, was aimed to show Deputy Secretary Lew the work CDC is doing in the HIV/AIDS counseling and testing center on and prevention of mother to child transmission. The HIV/AIDS facility has a relatively low loss to follow-up compared to the national average. USAID uses the hospital as a training center for health specialists around the country. A roundtable discussion at the hospital focused on the importance of family planning, which has been a focus of USAID funding over the last 20 years. Training is implemented through an integrated health platform, including malaria, tuberculosis, mother child health, with a focus on long-term family planning as an essential component of Ethiopia's quest of food security and achieving MDG goals. In response to a question by Deputy Secretary Lew on health sector coordination participants pointed to strong Ministry of Health and Donor Assistance Working Groups. ¶7. (U) Deputy Secretary Lew participated in a roundtable discussion with USAID Democracy and Governance (D/G) partners in order to learn first-hand about the impact of the recent NGO law restricting civil society operations (particularly for those working in the D/G sector) on activity implementation at the field level. USAID partners said the impact was still unclear but they were developing strategies for continuing activities such as re-labeling their programs and eliminating democracy, conflict and human rights language and have had success in working with forward-looking Ministers and cementing these relationships. However, registration under a restrictive NGO climate has presented obstacles. Women's Campaign International has not been able to register; American Bar Association's registration lingered for ten months until they received an informal nod by the GoE to proceed with agreed upon activities. Deputy Secretary Lew probed the nuances in the Ethiopian political landscape, and cautioned against using our own democracy model in the Ethiopian context. ¶8. (U) A press conference capped the Deputy Secretary's visit. Journalists mainly asked questions on Somalia, Eritrea and the future of U.S.-Ethiopian relations and foreign assistance to Ethiopia under the Obama administration. On the latter, the Deputy Secretary said that the deep relationship shared by the two countries would continue and that, looking forward, he hoped the cornerstone would be a broad agenda to improve lives of Ethiopians sustainably. A transcript of the press conference will be provided separately. ¶9. (U) Conclusion: Deputy Secretary Lew's visit made clear that the Administration plans to reform current foreign assistance mechanisms and funding to make them as effective and sustainable as possible. The Deputy Secretary was interested in coordinated mechanisms and direct local funding possibilities to encourage Ethiopian ownership of its development agenda. He emphasized that any incremental increases in funding for agriculture and health programs would likely directed to areas that would enable U.S.-provided assistance to become more sustainable. YAMAMOTO