Identifier
Created
Classification
Origin
10BELMOPAN104
2010-02-24 15:07:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Belmopan
Cable title:  

UDP GOVERNMENT'S SECOND ANNIVERSARY BRINGS BUDGET SHORTFALLS

Tags:  PGOV PINS SOCI ECON BTIO BH 
pdf how-to read a cable
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DE RUEHBE #0104/01 0551509
ZNR UUUUU ZZH
R 241507Z FEB 10
FM AMEMBASSY BELMOPAN
TO RUEHC/SECSTATE WASHDC 0027
INFO WHA CENTRAL AMERICAN COLLECTIVE
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

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