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

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AN ECONOMIC MISSION TO CONAKRY
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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.

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DIRE ECONOMIC FORECAST FOR GUINEA
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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.

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PLAYING THE CHINA CARD
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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.

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COMMENT
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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