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

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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

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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reforms were proposed in Parliament only to be hastily withdrawn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!

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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

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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...

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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:

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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