UDP GOVERNMENT'S SECOND ANNIVERSARY BRINGS BUDGET SHORTFALLS

UNCLAS BELMOPAN 000104 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV PINS SOCI ECON BTIO BH SUBJECT: UDP GOVERNMENT'S SECOND ANNIVERSARY BRINGS BUDGET SHORTFALLS AND NEW OIL CONCESSIONS REF: 09 BELMOPAN 332 ¶1. (U) SUMMARY: On February 9 the Prime Minister held his quarterly press conference in Belize City. The main issues discussed were his Government's successes, social assistance programs, the economy, and crime and security. The PM also answered an onslaught of questions from the media, including ones on the ever popular topics of the oil industry, the nationalization of Belize Telemedia Limited, and the border dispute with Guatemala. END SUMMARY. ¶2. (U) Ambassador and Poloff attended Prime Minister Dean Barrow's quarterly press conference on Wednesday, February 9, in Belize City. The press conference was called by the Office of the Prime Minister with Ministers, CEOs, United Democratic Party (UDP) leaders, diplomatic corps Chiefs of Mission, and media house representatives present. The press conference coincided with the second anniversary of the UDP's election in 2008. The PM, flanked by Deputy Prime Minister Gaspar Vega and Minister of Economic Development Erwin Contreras, discussed four topics: the UDP's relative success, social assistance to the poor, the economy, and security issues. -------------- UDP SUCCESS -------------- ¶3. (U) The PM opened the press conference by welcoming his party members, the ministers, and the diplomatic corps, and saluting the media as "guardians of democracy and minders of ministries." He said that his intention had not been to give a state of the nation speech, but that the quarterly press conference just happened to coincide with the second anniversary of the election of the UDP to power. Despite the Government's "inherited crisis, natural disasters and the worst global recession in 100 years," the PM said that the UDP has done well; however, he qualified his remarks by saying one must consider this in the context of the international and domestic difficulties faced by the UDP. He closed this dramatic introduction with the promise that the "UDP will fight to see measurable improvement in the quality of life for every Belizean" and that the UDP "did not come to fail." -------------- SOCIAL ASSISTANCE PROGRAMS -------------- ¶4. (U) The PM continued by highlighting the Government's endeavors in social and economic development for Belize. He said that the UDP had increased social assistance to the poor and cited a number of programs designed to help the elderly, single mothers, the rural poor, women, and youth. He also emphasized his Government's efforts to improve potable water access for rural Belizeans, assistance in sustainable development projects, and rural road improvement projects. -------------- IMPROVING ECONOMY? -------------- ¶5. (U) Regarding Belize's economy, the PM referenced the Belize Statistical Institute's recent study showing that inflation decreased from 6.4% in 2008 to -1.1% in 2009. He underscored the fact that unemployment had gone from 13.1% in 2008 to 12.6% in ¶2009. In the Toledo district unemployment went from 12% in 2008 to 3.9% in 2009. ¶6. (U) However, the PM admitted that the budget outlook is not good and that there will be a BZ$60 million (US$30 million) shortfall for the 2009 budget. Belize's 2009 fiscal year ends March 31, 2010. When asked how he plans to fill the gap, the PM refused to answer until after the Cabinet had met on February 16 to discuss the 2009 and 2010 budgets. He asked the public for patience and understanding while the UDP works to repair its inherited circumstances of the superbond and high debt. ¶7. (U) Tourism is the leading foreign exchange earner for Belize, and on this topic the PM repeated figures from his previous press conference, of a 6.6% drop in overnight stays and a 10% increase in cruise ship arrivals. The Prime Minister said that tourism is the "star to which we have hitched our wagon" and that he "considers it to be the most important driver of our economy," since 80% of of all enterprises in the fiscal incentives system operate in the tourism sector. In 2009, more than BZ$1 billion (US$500 million) worth of proposed investments were approved under the fiscal incentives system, based on tourism figures from 2008; but, after the recession, the amount of actual investments was reduced to BZ$189 million (US$94.5 million). The GOB expects to receive in excess of BZ$500 million (US$250 million) in applications for fiscal incentives in the tourism sector in 2010. ¶8. (U) The PM outlined several projects currently underway to support development in the tourism sector, such as a BZ$30 million loan to fund sustainable tourism projects in Belize City, San Ignacio, Placencia, and San Pedro; the intention to improve the airstrips in Belize City and San Pedro; and the opening of a new international airport in Riversdale. -------------- THE WAR ON CRIME -------------- ¶9. (U) Finally, the PM's remarks turned to the issue of crime in Belize. He said that this is the most challenging area for the Government and that the "new dimensions of crime and violence [are] a frightening development" for Belize. The PM asserted that his Government and the police have not been idle by touting the success of the Belize Police Department and the "limited success" of "Operation Restore Hope," an operation which began in early January and which is expected to last for three months and is aimed at quelling the violent gang rivalries which exist in Belize City. He commented that the bulk of the police force is made up of good people, although he admitted that the morale of the force is suffering and there are some problem individuals. The PM shared details of 100 new positions within the Police Department, with Officers on the ground by the end of March. He also mentioned continued coordination among the Anti-Gang Unit, the Anti-Drug Unit, and the Crimes Investigation Unit to address the crime problem. Twelve officers from other units will rotate into hotspots in Belize City on a regular basis to augment the police capabilities. He announced the GOB's plan to purchase two buses to be used as stationary mobile patrols, which can easily move into areas of greatest need. The PM capped-off his discussion of the security issue by declaring, "We want our communities back." -------------- Q and A SESSION -------------- ¶10. (U) The PM entertained questions from every media house in a sometimes politicized and no-holds-barred manner for nearly 90 minutes. A wide range of topics was covered, the most important of which were oil, Belize Telemedia Limited (BTL),the 2009 and 2010 budgets, Belize City Council audits, Guatemala tensions, and village council elections. ¶11. (U) A reporter from the Amandala newspaper asked the PM what happened to his intention, stated in a January 2008 interview, to establish a national oil company holding trust which would take between 10% - 20% of Belize Natural Energy (BNE). The PM said it was a "noble aspiration on my part but then reality got in the way." The PM then discussed BNE and oil concessions in general. He said that the Cabinet had recently approved concession terms with three new companies, with royalties for oil of 10% and 7.5% for natural gas; production shares of 15% for zero to 5,000 barrels of oil per day, and a working interest of 10%. He contrasted these terms with those granted to BNE which are 7.5% royalties, 1.5% production share, and 10% working interest. The PM complained about the terms given to BNE, but said that unlike the case of the secret Telemedia agreement, that he is not going to interfere with legally binding, legitimate arrangements in other sectors, although he may not be satisfied with the agreements. He said that the burden of discerning the benefit of the agreement with BNE is on the GOB, and that the joint audit of 2007 and 2008 BNE revenues that is being conducted will determine the benefits. He did state, however, that the Government's take of oil revenues have been close to BZ$50 million (US$25 million). ¶12. (U) Regarding BTL, the PM defended his choice of his ex-wife Lois Young as legal counsel to the case, claiming that "all of the lawyers in Belize are in the pocket of Ashcroft" and that his ex-wife was a trusted legal counsel who had previously worked to the benefit of many public cases on a pro-bono basis (reftel). The PM said he makes no apologies for that decision. When asked about the timeline for re-privatization, he pointed to the People's United Party (PUP),saying that the reporter should question them, since they have placed an injunction in court to stop the BTL Annual General Meeting during which the company intended to pay dividends to small Belizean investors. On the nationalization of BTL, PM Barrow said, "What we did was in the interest of the Belizean people" and that the final outcome will be able to pass "constitutional muster." ¶13. (U) KREM Radio asked the PM about a November 2009 incident where Guatemalan soldiers "muscled-off" Belize Defence Force (BDF) soldiers from Sarstoon Island on the border. The PM said that there is no unity in the Guatemalan position, as there has been a noticeable increase in the verbal belligerency of some Guatemalan "people in foreign relations," while his impression is that the Foreign Minister of Guatemala has a different position. He went on to say, "We believe there are things happening that could provoke a shooting incident" and so the National Security Council, Ministry of National Security, and BDF have been given orders to be prudent, and careful with the maintenance of Belizean sovereignty. The Prime Minister said that Belize relies on the OAS and a group of partner nations for assistance. ¶14. (U) Finally, the PM confirmed that Village Council elections will be held during March and April but offered no other information about the process. ¶15. (U) The PM wrapped-up the press conference with an appeal for patience and understanding from the Belizean public, saying that he is not so naive as to claim that nothing has gone wrong with this administration but that "we've avoided coming loose from our moorings." He claimed that there is no cronyism and that the UDP has tried to operate on the straight and narrow. Citing that he was "born here, lives here and will die here," the PM pledged to succeed in producing uplift for the people of Belize. -------------- COMMENT -------------- ¶16. (SBU) The PM displayed a deftness in answering candid questions from the media and taking every opportunity to depict the UDP's efforts in a positive light. Yet despite his broad claims of success, Post has yet to see a significant difference between the current UDP Government and previous PUP administration. We often witness more of the same cronyism, public complaints of corruption at many levels of Government, and ineffective public service entities, including hospitals, police, and schools. In the face of extreme budget shortfalls and a downturn in tourism, the ambitions of the UDP-led Government seem unrealistic. While the PM describes the relative success of the economy, the public feels the pinch. While crime statistics have improved, the public's perception is that the country is becoming more violent. While the PM speaks of private sector increases in construction and an increase in funding for tourism development, the Teachers' Union is protesting the budget allocated to educators' pay for the 2010 budget. The UDP has made some strides in making the GOB more transparent, yet no charges have been brought to hold individuals accountable for the hundreds of thousands of missing dollars from a variety of Government offices. However, the GOB has been working with the Embassy on implementing the Merida Initiative in Belize, and has made strides in seizures of drugs and in thwarting several money laundering schemes. END COMMENT. Thummalapally