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
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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