ERITREA SPURNS WORLD BANK, ACCEPTS UAE LOAN

C O N F I D E N T I A L ASMARA 000017


DEPARTMENT FOR AF/EX AND AF/E

E.O. 12958: DECL: 01/07/2019
TAGS: EFIN PREL ECON PGOV ER AE
SUBJECT: ERITREA SPURNS WORLD BANK, ACCEPTS UAE LOAN

Classified By: Ambassador Ronald K. McMullen for reason 1.4(d)



1. (C) BANK: WANT $30 MILLION? ERITREA: NO THANKS
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Eritrea, objecting to conditions considered "an infringement
on its sovereignty," has forgone World Bank funding amounting
to about $30m in project support that would have, inter alia,
renovated the country's antiquated electrical system. The
World Bank country director (protect) told the ambassador
January 13 that Eritrea refused to sign the standard
agreement to notify the Bank in the event Eritrea took on
additional non-concessional debt. Regime officials told the
country director that Eritrea had no plans to take on any new
non-concessional debt, but objected in principle to the
requirement, as it impinged on Eritrean sovereign authority.


2. (C) BANK: ANOTHER $50 MILLION? ERITREA: SILENCE
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The country director stated that in addition to losing the
$30m, Eritrea has not responded to Bank offers regarding an
additional $50m in available project funds and credits. He
said the World Bank office in Asmara had not received regime
permission to buy diesel fuel since April 10, 2008 (along
with NGOs and UN agencies) and speculated that the Asmara
office may see a long staffing gap in its expatriate director
position upon his departure later in 2009. The country
director also related a request he made to the Minister of
Agriculture for information on recent crop estimates and a
potential appeal for food assistance; the Minister said he
would provide no information and would not support the notion
of a special appeal.


3. (SBU) ABU DHABI: HOW ABOUT $20m? ERITREA: YES!
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Eritrea has accepted a loan of about $20m from the Abu Dhabi
Fund for Development (ADFD) to be used to "support the
infrastructure of the country," according to January 14 media
reports. The loan agreement was reportedly signed for
Eritrea by an official of the Office of the President, not
from the Ministry of Finance.


4. (C) COMMENT: These developments illustrate the Isaias
regime's growing proclivity for largely "stringless"
assistance from Gulf states and a mounting distain for offers
of multilateral or Western bilateral assistance that require
some accountability. The Gulf assistance may have political,
as opposed to financial, strings attached. Dubai has become
a leading get-away destination for regime big shots; Dubai is
the only destination regularly served, with a fueling stop in
Jeddah, by nearly moribund Eritrean Airlines. According to a
leading opposition figure, Isaias personally purchased
property in Dubai's Palm Islands development in 2008. In the
face of widespread food shortages, rather than appealing for
international food assistance, Isaias publicly condemned
"materialism" and urged Eritreans to aim for a daily intake
of between 1,500 and 1,200 calories. END COMMENT.

MCMULLEN