CODEL BUTTERFIELD MEETING WITH PRESIDENT SIRLEAF

UNCLAS SECTION 01 OF 04 MONROVIA 000618

SENSITIVE
SIPDIS

E.O.12958: N/A
TAGS: ECON LI OVIP EINV ETRD EAIR EAGR EWWT

SUBJECT: CODEL BUTTERFIELD MEETING WITH PRESIDENT SIRLEAF


1. (U) August 17, 2009; Monrovia, Liberia.


2. (U) PARTICIPANTS:

U.S.
Charge d'Affaires, a.i. Brooks Robinson
Representative G.K. Butterfield (D-NC)
Representative Sheila Jackson-Lee (D-TX)
Representative Lacy Clay (D-MO)
Representative Gwen Moore (D-WI)
Representative Steven Cohen (D-TN)
USAID Liberia Mission Director Pamela White
Steven Koutsis, Acting Deputy Chief of Mission
Angelle Kwemo, Counsel, Subcommittee on Commerce, Trade and Consumer
Protection
Timothy Robinson, subcommittee staffer
Shannon Weinberg, subcommittee staffer
Ingrid Gavin Parks, personal staff of Representative Bobby Rush
(D-IL)
Nishith Pandya, personal staff of Representative Bobby Rush (D-IL)
Economic Officer Sarah Gonzales (notetaker)

LIBERIA
President Ellen Johnson Sirleaf
Minister of Foreign Affairs Olubanke King-Akerele
Minister of Agriculture Florence Chenoweth
Minister of Commerce and Industry Miata Beysolow
Minister of Lands, Mines and Energy Eugene Shannon
Minister Without Portfolio Nathaniel Davis
Chairman of the National Investment Commission Richard Tolbert
Commissioner of the National Port Authority Matilda Parker
Acting Minister of Finance Tarnue Mawolo


3. (SBU) SUMMARY: The President and her Cabinet emphasized that
Liberia is "open for business," and expressed gratitude to CODEL
Butterfield for wanting to encourage more trade and investment
between Liberia and the United States. They outlined investment
opportunities in agriculture, natural resources and the extractive
industries and discussed efforts to improve the investment climate,
while cautioning that challenges remain, particularly in terms of
weak infrastructure and rule of law. CODEL Butterfield expressed
continued USG support for Liberia. END SUMMARY.


4. (SBU) The President thanked CODEL Butterfield for their visit,
emphasizing that such high-level delegations reinforce her
conviction that while Liberia faces challenges in terms of
infrastructure and human capacity, enormous economic opportunity
does exist. She introduced the Cabinet ministers present and called
upon each to brief the delegation on Liberia's economic
reconstruction, its natural resource wealth, and its efforts to
reform the investment climate and create a more favorable
environment for international investors.

Peace and Security
--------------


5. (SBU) In the absence of the Minister of National Defense,
President Sirleaf thanked the USG for its leadership in rebuilding
the Armed Forces of Liberia, and pointed out that it will take two
years or more for the AFL to become fully operational. Rebuilding
the police force, however, remains a challenge, and the
establishment of a viable police force is key to development.

Agriculture as the Engine of Economic Growth
--------------


6. (SBU) Minister of Agriculture Florence Chenoweth said that
Liberia is an agrarian culture with fertile soil and a large rural
population, which is nonetheless plagued with food insecurity as a
result of the devastating civil war. The re-emergence of both
commercial and small-scale agriculture will be the key to sustained
economic growth, while rebuilding livestock, seed supply and a
national research capability are also important. She thanked USAID
for its significant support to the agriculture sector, and
encouraged the USG to continue its efforts to train agricultural
professionals, not only at the senior levels, but also small-scale
local farmers. She added her biggest challenge as the new Minister
of Agriculture would be to reverse urban migration and encourage
Liberians to return to farming.

Natural Resources and Investment Opportunities
-------------- -


7. (SBU) In what he called a "paradox of poverty," Richard Tolbert,
Chairman of the National Investment Commission, emphasized that
Liberia enjoys a wealth of natural resources, including rubber, iron

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ore, gold, diamonds and timber, but for that wealth to translate
into economic growth and opportunity for all Liberians, the GOL's
first priority must remain sound resource management and good
governance. He thanked the USG for its support through the
Governance and Economic Management Assistance Program (GEMAP),and
said that as GEMAP concludes, assistance will migrate to public
financial management capacity building. In this way, the GOL will
continue to improve the investment climate to attract large-scale
foreign direct investment. He touted Liberia's revised Investment
Code and Revenue Code, and said the GOL recognizes that it must
improve not only the legal architecture but also the country's
physical infrastructure in order to attract more investment.


8. (SBU) Given that the GOL employs only 36,000 people, or roughly
one percent of the population, Tolbert emphasized that the private
sector, and not the public sector, must be the engine of pro-poor
growth. To that end, the National Investment Commission is working
specifically to attract investments that will stimulate job
creation. Tolbert noted that until all Liberians have a personal
stake in the country's economy, long-term political stability cannot
be assured.


9. (SBU) Minister of Lands Mines and Energy Eugene Shannon added
that there were extensive opportunities in mining. He noted that
the Mt. Coffee Dam, if renovated could generate 100 MW of
electricity, but has the capacity to generate 1,000 MW if a larger
reservoir were built.


10. (SBU) Rep. Cohen praised President Sirleaf's efforts to build
good governance, noting that in 2007 President Sirleaf was honored
at the National Civil Rights Museum in Memphis, Tennessee, his
congressional district.

Trade and AGOA
--------------


11. (SBU) Minister of Commerce and Industry (MOCI) Miata Beysolow
said that Liberia is struggling to break free of its import
dependence and identify possible export markets. Thanks to the
African Growth and Opportunity Act, Liberia qualifies for duty-free
access to U.S. markets for over 7,000 products, but given
limitations in its productive capacity, it has not been able to take
advantage of this benefit. Beysolow said she received guidance on
how to obtain an apparel visa during her recent trip to the AGOA
Forum in Nairobi, adding she was hopeful that Liberia could begin
exporting some traditional fabrics and clothing to small boutiques
in the United States.


12. (SBU) The MOCI is working on an export development strategy,
and may target a few promising agricultural products such as cocoa,
coffee, cassava and chili peppers. She also hopes to encourage
value-added exports, such as furniture made from rubber wood, and
she sees the potential for an American company to build a fruit
canning plant in Liberia.


13. (SBU) Representative Gwen Moore (D-WI) noted that the fishing
industry could be a major source of exports, and Minister Beysolow
agreed, adding Namibia recently agreed to provide technical
assistance to Liberia to help develop an export-oriented fishing
industry.

Transportation Infrastructure
--------------


14. (SBU) Commissioner of the National Port Authority Matilda Parker
thanked the CODEL for their visit August 16 to the Freeport of
Monrovia, adding that the challenges the delegation witnessed at the
port encapsulate Liberia's infrastructure shortcomings, but also
demonstrate the opportunities for economic revitalization with the
help of international private and public sector partners. As the
newly-appointed commissioner, she declared her intention to make the
Freeport the premier port in West Africa, despite its infrastructure
limitations, by marketing its low tariffs (she said Monrovia had the
lowest tariffs in Africa) and strategic location.


15. (SBU) Representative Sheila Jackson-Lee (D-TX) said she spoke
unanimously for the delegation in declaring their conviction that a
revitalized port could be the key to an economic renaissance in
Liberia. She said the CODEL would work with Congressional
colleagues to see if there was a possibility of facilitating
additional USG funding to reconstruct the marginal wharf.


16. (SBU) Representative Jackson-Lee added that the advent of a
direct flight between Liberia and the United States would provide an
enormous boost to the Liberian economy. She said the House
Subcommittee on Homeland Security, of which she is a member, would
welcome such a flight, but that the decision rested with the

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Transportation Security Administration, and would be based on safety
and security criterion rather than political considerations. She
urged the Liberian Civil Aviation Administration to produce a needs
assessment requested by the TSA, and said that TSA's upcoming
technical assistance to Liberia should serve as a signal that the
United States shares Liberia's eagerness to establish a direct
flight.

Impact of the Global Financial Crisis
--------------


17. (SBU) Even though Liberia is only a nascent player in global
markets, Acting Minister of Finance Tarnue Mawolo emphasized that
Liberia continues to be hard hit by the global economic slowdown.
As global food prices hit record levels in mid-2008, the GOL chose
to remove tariffs on food imports such as rice, which mitigated
price increases for poor consumers, but also reduced government
revenues. Revenue losses continued this year, as global commodity
prices sank, and customs taxes--which account for 60% of Liberia's
total revenue--declined. Further, foreign investors' appetite for
risk and access to capital continues to diminish, and Liberia is
struggling to attract potentially lucrative investment in iron ore,
forestry and rubber.


18. (SBU) Mawolo continued that such revenue losses have a direct
impact on the GOL's ability to provide services to its citizens.
Under the Highly Indebted Poor Country Initiative (HIPC),Liberia is
prohibited from contracting new sovereign debt, which means it
cannot conduct countercyclical spending to offset these revenue
losses. Instead, the GOL is forced to cut government expenditures
from an already-modest budget.


19. (SBU) Mawolo said that in three years, Liberia's external debt
has been reduced from $4.9 billion to $1.7 billion, and all the
remaining debt to the International Financial Institutions will be
eliminated when Liberia reaches HIPC Completion Point, probably in

2010. Most of Liberia's private external debt has been bought at 3
cents to a dollar, in line with the Paris Club rules, but there were
two hedge fund (or "Vulture Fund") holdouts. When Rep. Moore asked
who the holdouts were and what could be done, President Sirleaf
suggested she contact Steve Radelet of the Center for Global
Development, who has been following the issue. Rep Cohen said that
he had briefly seen a draft bill on the matter before his departure
and promised to look at the bill more closely upon his return to
Washington.

Rule of Law
--------------


20. (SBU) President Sirleaf concluded by acknowledging that
governance and the rule of law remain Liberia's biggest constraint
to growth. She explained that during 14 years of civil war, chronic
deprivation and poor compensation led to endemic corruption in the
civil service. She said the GOL has raised civil service salaries
from US$ 15 to US$ 80 per month, in order to deter corruption, and
the General Auditing Commission aims to expose mismanagement and
malfeasance. The President also emphasized she wishes to focus
future reform efforts on the judicial sector, where poorly educated
jurors remain susceptible to bribery and coercion, ill-trained
judges must be retrained and "re-oriented," because they cannot be
fired, and the accused languish in unsuitable prisons for months or
years while awaiting trial.


21. (SBU) President Sirleaf spoke briefly on foreign affairs, saying
that while debate on domestic issues continues, Liberia cannot
ignore its place in the world. Liberia is in a volatile subregion,
and will "walk with" its Guinean neighbors through the elections.
She closed on a positive note, emphasizing that Liberia is proud of
its independent media, and its freedom of speech and association.


22. (SBU) Rep Butterfield thanked the President for the
comprehensive briefing. Rep. Jackson-Lee added that she hopes to
return with a business delegation to learn about investment
possibilities. She will look into revitalizing the Sister City
relationship between Houston and Monrovia, and will brief energy
companies, especially minority energy companies, in Texas about
opportunities in Liberia. She noted that Monsanto is in the
congressional district of another member of the delegation (Rep.
Clay) and perhaps opportunities in agriculture can be pursued.


23. (U) This cable has been cleared by CODEL Butterfield.







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ROBINSON