This record is a partial extract of the original cable. The full text of the original cable is not available.
231426Z Dec 04
UNCLAS SECTION 01 OF 02 ABUJA 002131
SIPDIS
DEPT FOR AF/W DAN EPSTEIN, AF/EX
PARIS FOR OECD/PARIS CLUB
E.O. 12958: N/A
TAGS: PREL ECON NI EFIN
SUBJECT: LETTER FROM PRESIDENT OBASANJO TO PRESIDENT BUSH
RE FOLLOW-UP ON DECEMBER 2, 2004 MEETING AT WHITE HOUSE
1. On December 10, 2004 Ambassador Campbell received a
letter from the President of Nigeria, Olusegun Obasanjo,
dated December 9, 2004 to be transmitted to U.S. President
George W. Bush. Original is being sent via unclassified
pouch.
Begin Text:
His Excellency
Mr. George W. Bush
President of the Untied States of America
The White House
Washington DC USA
Dear President,
FOLLOW-UP ON OUR DECEMBER 2, 2004 MEETING AT THE WHITE
HOUSE
I would like to congratulate you one more time on your re-
election victory and to thank you and your team most
sincerely for the warm welcome accorded us during our
recent visit with you in Washington. As agreed, this
letter serves as a follow-up to our discussion.
First, on the issue of Africa's role in resolving the
various conflicts on the continent, I want to assure you of
the resolve of the African Union Heads of State to continue
to play a leadership role on this front. As you are aware,
we are actively working on the crisis in Darfur and Cote
d'Ivoire whilst trying to stave off the re-emergence of
conflict between the Democratic Republic of Congo and
Rwanda. I have invested my personal time and effort in
this and committed Nigerian troops and resources to
resolving these conflicts. What we need is your continued
support in terms of logistics and training for our troops
to enable us strengthen our capacity to meet the merging
challenges. Specifically, we would like further logistical
support for African troops in Darfur. We would also like
to work closely with you on pre-emptive measures to stave
off renewed conflict in Democratic Republic of Congo.
On Cote d'Ivoire, we shall, as you suggested, take up the
issue of further support with European Union.
With regard to Nigeria, the one main issue where I would
request your support is that of our quest for Debt Relief.
You have recently shown remarkable leadership on this front
as regards Iraq and I would like to congratulate you and
the Iraqis on your success.
Nigeria, with a per capita income of US$300, has a debt
burden of US$34 billion, of which about US$29 billion (or
85%) is owed to the Paris Club of Creditors. Very little
is owed to multilateral institutions or to the London Club
of Commercial Creditors. A significant part of the debt
was incurred in the early 1980s under successive military
dictatorships and civilian administrations and at a time of
high oil prices, high interest rates, and exuberant lending
and borrowing on international capital markets. As oil
prices fell precipitously in the mid- to late 1980s,
Nigeria became increasingly unable to service this debt,
and arrears and penalties accumulated inflating the debt
stock. Successive attempts to reschedule the debt on
regular terms with the Paris Club have not yielded a debt
service burden that Nigeria can bear, given its revenue
profile, large population and huge needs. Arrears and
penalties have continued to accumulate such that if we were
to pay our full debt service for the years 2004 to 2009 for
example, this would require more than US$3 billion per year
in regular debt service.
Oil accounts for about 75%-80% of fiscal revenue. In this
year of high oil prices, we budgeted at US$25 a barrel for
total earnings of US$22.5 billion. With the higher oil
prices, we expect to earn an additional US$5.2 billion for
a total of US$28 billion in 2004. From this, we need to re-
invest $3.2 billion in our oil industry as our share of
production cost. With a population of over 130 million
people and net oil revenues of about $24.5 billion, this
amounts to a little over 50 cents per capita per day.
In addition, Nigeria has huge infrastructural needs,
without which we cannot attract the private sector to
invest, lead economic growth, and progress towards the
Millennium Development Goals (MDGs). For example, as we
mentioned during our meeting, Nigeria with a population of
over 130 million generates only 4,500MW of electricity
compared to South Africa's 45,000MW for 45 million people.
The World Bank estimates that we need an incremental US$1
billion a year in power alone for the next few years. The
same goes for water, roads, and other infrastructure if we
are to make progress. Thus, even with this year's high oil
prices, we would still not be able to meet our investment
requirements for basic infrastructure.
Nigeria's weight on the continent is widely acknowledged-
it comprises 10% of Africa's Gross Domestic Product (GDP)
and 55% of West Africa's. One in four Africans is
Nigerian. Therefore, economic progress on the continent
would be difficult in the absence of progress in Nigeria.
Nigeria provides a large market, and is the economic magnet
for all West African countries.
Finally, Nigeria has among the lowest aid per capita per
annum of the Least Developed Countries, at less than $2.
This compares with $21 per capita for the rest of sub-
Saharan Africa. In fact, Nigeria is presently experiencing
net negative transfers to the tune of about US$1.50 per
capita, sending back to the developed countries in payment
more than it receives.
For all these reasons, we are asking that Nigeria be
considered for Debt Relief under Evian terms. We are not
asking for more aid, just for Debt Reduction so that we can
plough such monies obtained into investment in
infrastructure, health, education, HIV/AIDS and malaria
prevention, and in general, the MDGs in a transparent and
results-oriented manner.
My Administration has been implementing a rigorous economic
reform programme monitored quarterly for the past 15 months
by the IMF. We are fighting corruption head on, managing
our finances transparently, and laying the foundations for
private sector-led (sic). We are achieving successes on
the anti-corruption and macro-economic stabilization front.
These reforms provide the foundation for monies coming from
debt reduction to be well used.
We also recognize the importance of maintaining a steady
flow of our oil resources to the international market. To
that end, we are taking positive steps to deal immediately
with the disturbances in our Niger Delta. We also
recognize the importance of maintaining peace and security
in the Gulf of Guinea.
Mr. President, the United States is one of smaller
creditors to whom we owe just about US$1 billion. However,
your leadership in supporting Nigeria's case for debt
reduction with the Paris Club will be paramount. Prime
Minister Tony Blair and President Jacques Chirac have
indicated their support. Only the political will to assist
us will make it happen. We pledge to continue our strong
reforms and request that in recognition of all the
arguments we have presented above, you lend your personal
support to our cause.
We would be delighted to work with your officials on the
specifics of such debt reduction if you so indicate.
With best personal regards.
Yours sincerely,
/s/
Olusegun Obasanjo
END TEXT.