SAO TOME & PRINCIPE - UPDATE ON MILLENNIUM CHALLENGE

UNCLAS LIBREVILLE 000139

DEPT ALSO FOR AF/C LISA KORTE
TREASURY FOR BILL REMINGTON AND CARLOS CORREA
DEPT PASS TO MCC MALIK CHAKA

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL EFIN ETRD ECON KMCA TP
SUBJECT: SAO TOME & PRINCIPE - UPDATE ON MILLENNIUM CHALLENGE
THRESHOLD PROGRAM

REF: LIBREVILLE 0128

--------------
Summary
--------------


1. (SBU) Senior political leadership in Sao Tome and Principe
(STP),including the president and prime minister, remain committed
to the Millennium Challenge Corporation (MCC) threshold program but
frustrated over what they perceive as a lack of progress. MCC
Threshold Programs Director Malik Chaka traveled to STP in late
March to assess progress on the three-year, $8.66 million program.
Chaka also sought to more clearly identify blockages stalling the
program and decide on the best way forward. Sustained pressure and
continued close coordination will be required for the current
threshold program to succeed. We also recommend consideration of a
Stage II Threshold Program for STP. END SUMMARY.

--------------
Meeting the President
And the Prime Minister
--------------


2. (SBU) Chaka's March 18 meeting with President Fradique de Menezes
was cordial, but dealt mainly with the history of the MCC program in
Sao Tome. Although the President seemed discouraged at the lack of
demonstrable progress, he brightened noticeably when Chaka called
him the ?father of the MCC program in Sao Tome?, indicating that the
President's early commitment to democracy had been a key factor in
Sao Tome's selection as a threshold country. De Menezes alluded to
constitutional changes and a protracted political gridlock that have
diminished his ability to influence government actions, but said he
remains committed to the MCC program and hopeful that the current
threshold program will lead someday to a full MCC Compact. Chaka
said this is a worthy goal, which should be pursued quickly and
diligently. Embassy Libreville Econoff accompanied Chaka on the
visit.


3. (SBU) Prime Minister Rafael Branco, the president's one-time
rival who is now in charge of day-to-day governance in STP, also
voiced continued support for the threshold program. He encouraged
Chaka and Embassy Libreville to remain engaged and build on positive
momentum generated by the visit. The MCC program was ?very
important?, Branco emphasized, and he was committed to pushing it
through to successful completion. Branco told the Ambassador the
same thing in February (reftel),and appears to have conveyed this
message successfully to Minister of Plan and Finance Angela Viegas
and other government officials.


4. (SBU) In any event, Chaka found a more positive attitude from
Minister Viegas and other officials than in recent visits. In
addition to the Minister of Plan and Finance, we met a half-dozen
other key government figures, including the Ministers of Justice and
Foreign Affairs, the directors of the Tax and Customs departments,
and the director of the Maritime Institute. Chaka consulted
extensively throughout the visit with Department of Treasury Office
of Technical Assistance (OTA) staff, and OTA staff participated in
most of the meetings. OTA is MCC's prime implementing partner for
the threshold program.

--------------
Assessment--and a Way Forward
--------------


5. (SBU) The visit gave all parties a chance to discuss reasons for
the recent lack of progress on the threshold program. Several
themes emerged. These include an incomplete understanding of the
MCC process, less than optimal communications on both sides, and
some changes that had been made to the original threshold program
without the full knowledge of MCC headquarters staff. By week's
end, all sides were able to air their concerns, and agreed on a
framework to help push the process along more rapidly.


6. (SBU) It was agreed that there will be regular meetings between
relevant OTA staff and appropriate STP government officials,
including the government's official MCC coordinator. OTA staff and
STP officials agreed to regular monthly meetings between OTA staff
and relevant ministers. At the meetings, OTA staff will provide a
monthly work plan and a list of action items that would require
attention. STP officials also told us that at their request,
retired U.S. Foreign Service Officer Jan Hartman, a former long-term
resident of STP, would return to STP to help the STP government
facilitate this process.

--------------
Public Outreach
--------------



7. (U) Another purpose of the visit was to increase broader public
awareness in STP of the importance of the MCC program. Director
Chaka visited the Port of Sao Tome and met with officials there, and
also led a public information session for more than 100 people at
the Brazilian Cultural Center. Both events received positive
coverage in the local media.

--------------
Comment
--------------


8. (SBU) While we made important progress during the visit, the STP
threshold program still faces serious obstacles. It is clear that
OTA and the government of STP will need to redouble their efforts to
work together to achieve the program's goals. The agreement for
monthly meetings at senior levels, with an agreed workplan and a
list of action items, is an important initiative. We should insist
that the STP government keep its promise to coordinate regularly at
the senior level. Both MCC headquarters and Embassy Libreville
should support these efforts. Another alternative worth considering
is a Stage II Threshold Program. Like other threshold programs, the
objective of a Stage II threshold program is to assist a country to
become eligible for MCA Compact funding by supporting improved
performance on the MCC selection criteria. If the STP government is
both amenable and motivated, MCC could initiate a process to assist
STP develop a proposal (in partnership with MCC and other U.S.
agencies) that would significantly increase the prospects of STP
fully qualifying for MCA Compact assistance. END COMMENT.


9. (U) MCC Threshold Programs Director Malik Chaka reviewed this
cable prior to transmission.

REDDICK