JAMAICA: A GOOD WEEK FOR GOLDING, BUT DAUNTING CHALLENGES

UNCLAS KINGSTON 000084 SENSITIVE SIPDIS STATE FOR WHA/CAR (VDEPIRRO) (WSMITH) (JMACK-WILSON) WHA/EPSC (MROONEY) (FCORNEILLE) EEB/IFD/ODF (MSIEMER) EEB/ESC/IEC (GGRIFFIN) EEB/ESC/IEC/EPC (MMCMANUS) EEB/TRA (VLIMAYE-DAVIS) INR/RES (RWARNER) INR/I (SMCCORMICK) SANTO DOMINGO FOR FCS AND FAS TREASURY FOR ERIN NEPHEW EXPORT IMPORT BANK FOR ANNETTE MARESH USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA OPIC FOR ALISON GERMAK E.O. 12958: N/A TAGS: PGOV PREL ETRD ECON SNAR ASEC CJAN CVIS EAIR EFIN EINV, ELAB, EMIN, PREF, EAID, AORC, SOCI, KCRM, KCOR, JM, XL, HA, DR SUBJECT: JAMAICA: A GOOD WEEK FOR GOLDING, BUT DAUNTING CHALLENGES REMAIN REF: 09 KINGSTON 1190; 09 KINGSTON 709; 09 KINGSTON 1050 09 KINGSTON 1178; 09 KINGSTON 1188; KINGSTON 60 Summary -------------- ¶1. (SBU) Prime Minister (PM) Bruce Golding and his Jamaica Labour Party (JLP)-led Government of Jamaica (GOJ) have enjoyed a much-needed string of policy successes in recent weeks: rapid progress on negotiations for an International Monetary Fund (IMF) Standby Agreement, initiation of a debt-exchange arrangement with domestic creditors, a potential breakthrough in the pending sale of Air Jamaica, to Caribbean Airlines, and an enhanced regional profile as a result of the January 12 earthquake in Haiti. Nevertheless, economic prospects for the coming year do not look favorable, while refusal to cooperate on two high profile U.S. extradition requests raise serious doubts as to the GOJ's commitment to tackling the island's skyrocketing crime rate. End Summary. The Lost Year -------------- ¶2. (SBU) The GOJ spent much of 2009 buffeted by fiscal crises, an exploding balance-of-payments deficit, labor unrest, spiraling crime, police violence, and political paralysis (Reftel A). The PM has admitted that the JLP squandered the political capital it garnered on taking office in September 2007 and was late in recognizing the impact that the global economic crisis would have on Jamaica (Reftel B). IMF and Air Jamaica negotiations routinely missed deadlines and dragged on interminably (Reftel C),fiscal reforms were proposed in Parliament only to be hastily withdrawn and reworked when opposition arose (Reftel D),and high profile U.S. extradition requests were delayed for months while GOJ attorneys raised a series of technical legal concerns (Reftel E). Periodically, the Office of the Prime Minister (OPM) would raise expectations that "tough decisions" would be forthcoming in a major policy speech, only to allow the opportunity to be squandered. Most troubling was the growing perception in civil society and the private sector that, after 18 years in opposition, the JLP weren't up to the job of governing the country and that PM Golding was too hesitant, indecisive, and consumed by policy details to effectively manage the GOJ. What A Difference A Week Makes! -------------- - ¶3. (SBU) As 2010 dawned, however, Golding and the JLP seemed to have acquired a new lease on life. After months of negotiations and delay, the IMF staff announced on January 14 that a USD 1.25 billion Standby Agreement is near conclusion with the GOJ (Septel), while a long-awaited deal to sell off the perennial loss-making Air Jamaica to Caribbean Airlines appeared imminent (Reftel F). Meanwhile, Golding's proposal to reduce the GOJ's interest payments through a debt exchange with Jamaica's major domestic holders of government bonds, unveiled in a national address on January 13, appears to have been accepted by major lenders and has been proceeding smoothly. Although the economic outlook for the coming year remains dire, JLP Member of Parliament and Minister of Information Daryl Vaz told Emboff that he was hopeful these achievements would lay the foundation for long-term fiscal stability and growth. Astride The World Stage -------------- ¶4. (SBU) In addition, the devastation and turmoil wrought by Haiti's January 12 earthquake have offered PM Golding an opportunity to divert public attention from Jamaica's myriad economic problems toward regional and international affairs. Within days of the quake, Golding and Vaz visited Port-au-Prince, where they met with, and offered assistance to, Haitian President Ren???? Pr????val, as well as Santo Domingo, where they participated in a regional meeting on plans for Haiti's recovery ((NOTE: In a rare instance of Jamaican bipartisanship, opposition People's National Party (PNP) President Portia Simpson Miller accompanied Golding and Vaz on the Port-au-Prince visit. End Note)). The GOJ also: deployed a fire brigade and Jamaican Defence Force (JDF) units to Port-au-Prince to assist in rescue efforts; offered the use of its airports in Kingston and Montego Bay for aircraft ferrying relief supplies; met with Caribbean Community (CARICOM) leaders to propose using the island as its hub of operations; and offered to temporarily house Haitian refugees until they could return home. (NOTE: The GOJ has requested U.S. financial assistance to fund these efforts. Reftel F. End Note). ¶5. (SBU) On January 16, en route from Port-au-Prince back to Washington, the Secretary's plane landed briefly at Kingston's Norman Manley International Airport. Golding and Foreign Minister Kenneth Baugh met for a short time with the Secretary in the airport's VIP lounge; Vaz told Emboff that the topics of discussion included relief efforts in Haiti and the pending IMF agreement, but that the high profile extradition cases were not raised. On January 19, Golding announced that former PNP Prime Minister P.J. Patterson would serve as CARICOM's representative on a coordinating committee to organize an international conference to develop a strategic plan for Haiti's recovery and rebuilding. All That Glitters... -------------- ¶6. (SBU) Nevertheless, despite the recent positive press, serious issues continue to demand the GOJ's attention and to roil the bilateral relationship. Unemployment remains high, consumer prices continue to increase, and the bauxite industry continues to show few signs of life (Reftel A). The GOJ continues to trumpet its intention to bring down the island's spiraling crime rate, with Minister of National Security Dwight Nelson promising that "draconian" anti-gang measures to assist the Jamaican Constabulary Force (JCF) would soon be forthcoming. However, Attorney General Dorothy Lightbourne's recent refusal to extradite Presley Bingham (Septel) and the ongoing standoff over the Christopher Coke extradition request raise doubts as to the GOJ's resolve, especially when it comes to high-profile criminal dons with close ties to the JLP. Summary and Analysis: -------------- ¶7. (SBU) Having spent most of 2009 lambasted by critics as ineffective and indecisive, PM Golding and the GOJ now find themselves in an unfamiliar position - riding a wave of policy successes. Meanwhile, the tragedy of the Haitian earthquake has offered the PM a rare opportunity to rise above the bitterness and rancor of party politics and to present himself as a regional statesman and humanitarian, shepherding CARICOM's relief efforts and working closely with the Secretary and the USG. Nevertheless, it remains to be seen whether the GOJ will take advantage of these policy achievements to finally impose order on the nation's fiscal affairs, draw down its crushing debt burden in order to free up resources for private investment, and rekindle economic growth. Perhaps more troubling is the GOJ's recent recalcitrance in granting U.S. extradition requests, suggesting a lack of seriousness in addressing Jamaica's crime problems, or even the possibility that garrison dons and criminal elements have "captured" the GOJ. MINIMIZE CONSIDERED Moss