ECOWAS ECONOMIC MISSION CALLS FOR GREATER

C O N F I D E N T I A L SECTION 01 OF 02 CONAKRY 000363 SIPDIS E.O. 12958: DECL: 06/13/19 TAGS: PREL PGOV EFIN GV SUBJECT: ECOWAS ECONOMIC MISSION CALLS FOR GREATER ENGAGEMENT WITH CNDD REF: CONAKRY 319 Classified By: Deputy Chief of Mission Kent C. Brokenshire ¶1. (U) Summary: A recent ECOWAS-led economic mission concluded that the political and economic situation in Guinea is clearly negative. The mission noted that the government is dysfunctional, and predicted the collapse of Guinea's economy in 2010 as a result of continued cutoffs in international assistance combined with falling commodity prices. The mission reported disarray in every quarter; the Forces Vives are isolated, divided and discouraged, while junta leader Dadis Camara keeps shifting prerequisites for election. A World Bank regional representative said US determination to prevent the World Bank and IMF from engaging in Guinea would "drive the Guineans to the Chinese." The economic mission's call for financial re-engagement with the GoG puts it at odds with the other international actors, including the US, who believe the junta would seize such an opening to legitimize and perpetuate its existence at the expense of a true democratic transition. End Summary -------------- AN ECONOMIC MISSION TO CONAKRY -------------- ¶2. (U) At a recent debriefing following its June 8 - 10 mission to Conakry, an ECOWAS-led economic mission said it made a "somber diagnostic" of Guinea and found a largely negative economic and political picture, with the government in a state of confusion, the military out of control, and the country's leadership suffering a lack of credibility. The group, which included representatives of the World Bank, IMF, and Africa Development Bank as well as ECOWAS, came to these conclusions after meeting with leading government officials, economic players and the Forces Vives. The latter include political parties, civil society and unions. The mission's list of prominent interlocutors included the Prime Minister, the Secretary General of the CNDD, the Minister of Finance, the Minister of Mines, the Director of the Central Bank, and representatives of leading international companies operating in Guinea such as Rio Tinto, Total, and Cellcom. The group also held talks with the independent electoral commission as well as economic and business leaders. ¶3. (U) The mission characterized the Forces Vives as discouraged, divided and weakened, with little communication among its various members or with the CNDD. It noted that many of its members fear criticizing the government for fear of retribution. Others play both sides of the fence, preaching democratic values by day and carousing with soldiers by night. Members of the Forces Vives told the mission they feared the transition was in danger of collapse. They complained of difficulties in dealing with junta leader Dadis Camara since he keeps changing the criteria for elections. Several months ago Dadis claimed that corruption had to be uprooted before elections could be held, while currently he states that Guineans must have water and electricity to vote. Tomorrow he may call for paved roads or a fully dredged deep-water harbor as a precondition. The Force Vives suspect these are mere ploys thrown out to keep Dadis in power as long as possible. -------------- DIRE ECONOMIC FORECAST FOR GUINEA -------------- ¶4. (U) The Commission expressed deep concern for Guinea's economic future. It stated that the government faces a budget shortfall of about $100 million. Some options for filling the gap include scaling back efforts to improve infrastructure, borrowing more money, and renegotiating previous loans as well as its internal debt. The commission cautioned that such obvious and basic measures as cutting general rice subsidies and slashing expenditures for the military would likely lead to a violent backlash from either the population or its undisciplined armed forces. ¶5. (U) IMF Representative Jean Le Dem said that Guinea would be able to pay for its external debt in 2009, but not in ¶2010. He said that plummeting mining revenues combined with the world financial crisis and a continued cutoff of foreign assistance would result in the collapse of Guinea's economy. "Unless Guinea gets some outside relief its economy will hit the wall in 2010," said Le Dem. "Unless we can launch a program the economy will really hit the wall." ¶6. (U) The possible collapse of Guinea's economy prompted both IMF representative Le Dem and World Bank Regional Representative Isaac Diwan to raise the possibility of offering financial assistance to the GoG. They added that they had already made a number of suggestions to the Minister CONAKRY 00000363 002 OF 002 of Finance on drafting an effective economic road map but that Guinea needed an infusion of funds from financial institutions to keep its economy afloat. -------------- PLAYING THE CHINA CARD -------------- ¶7. (U) Following the meeting, Diwan turned to DCM and said the World Bank was effectively paralyzed in dealing with Guinea because of US opposition, and feared the GoG would look for partners elsewhere. "The US position will drive Guinea into the arms of the Chinese," he said. DCM responded that any financial overtures by the IMF or World Bank to the junta would be interpreted as approval of its existence, and would likely lead to further consolidations of power at the expense of a democratic transition. DCM made clear the US Government would not approve of either institution assisting the Government of Guinea before the holding of free and transparent elections. The Ambassador of Spain, soon to represent the EU presidency in Conakry, took part in this informal discussion and agreed with this approach, a sentiment echoed by other bilateral representatives and the EU. -------------- COMMENT -------------- ¶8. (C) The arrival of the ECOWAS Economic Mission delineated a political fault line in the multilateral effort to promote a democratic transition in Guinea. On one hand the AU, ECOWAS, and international financial institutions have raised their voices for greater engagement with the CNDD. On the other, the EU, individual EU states, the US and Japan (the bilateral nations) continue to push for elections before other considerations. The very purpose of the ECOWAS mission was puzzling to bilateral nations, which see no reason to discuss economic assistance to Guinea until after the government makes good on its pledge to hold elections. ¶9. (C) Once on the ground, the mission's call for assistance to Guinea struck bilateral countries as short-sighted and naive. A number of EU nations, particularly Germany, had taken a soft line with the CNDD following the coup, and found it an ineffective expedient in dealing with a rogue regime. It should also be noted that those in the ECOWAS Mission clamoring for assistance were mostly representatives based outside Conakry, perhaps an indication that Dadis and the CNDD look better at a distance. Conakry-based World Bank Resident Representative Siaka Bakayoko, for example, remains steadfast in his opposition to any Bank assistance to the GoG. He also apologized for Diwan's outburst against the US. "Sometimes gets carried away," he explained. RASPOLIC