Cablegate: A/S Frazer Meeting with Nigerian Finance Minister

This record is a partial extract of the original cable. The full text of the original cable is not available.

071523Z Nov 05

UNCLAS SECTION 01 OF 02 ABUJA 002142

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: EFIN EAIR ETRD EINV NI
SUBJECT: A/S FRAZER MEETING WITH NIGERIAN FINANCE MINISTER

1. (SBU) Summary: On October 24, Assistant Secretary Frazer
and Nigerian Finance Minister Ngozi Okonjo-Iweala discussed
Nigeria's completed Paris Club deal and Nigeria's efforts to
improve its budget process and promote increased trade and
investment. The Minister urged favorable U.S. action on
Virgin Nigeria's application to open direct service between
Nigeria and the United States, highlighted Nigeria's recent
implementation of ECOWAS tariffs, and solicited State
Department support for a Nigeria Investment Promotion
Commission trade and investment promotion tour to the United
States during the week of November 7. The Minister also
asked about the status of Nigeria's G8 Transparency Compact
and emphasized that the Finance Ministry must have adequate
information regarding proposed USG assistance. End Summary.

2. (SBU) On October 24, Assistant Secretary for African
Affairs Jendayi Frazer met with Nigerian Finance Minister
Ngozi Okonjo-Iweala, accompanied by Ambassador Campbell,
Nigeria desk officer Dan Epstein and economic Counselor Necia
Quast. They briefly discussed the tragic crash of a Bellview
Airlines flight. In response to the Minister's statement
that Nigeria might ask for assistance in investigating the
crash, Assistant Secretary Frazer assured the Minister that
the U.S. was ready to respond to Nigeria's requests. A/S
Frazer offered condolences on the death of the First Lady,
and the Minister said it was a tragedy, but affirmed that
nothing would sidetrack the reform momentum.

Virgin Nigeria
--------------

3. (SBU) Minister Okonjo-Iweala stated that she hoped it was
possible to secure the required approvals for Virgin
Nigeria's forthcoming application to open a route between
Nigeria and the United States. She noted that airline
representatives were unsure about USG's reaction to the
proposal, but that it was clear that both countries would
benefit from the new service. Dan Epstein said that promoting
strong cooperation in the aviation sector has been an
important bilateral priority since 1999. He stated that he
did not believe that Virgin Nigeria had submitted an
application to the Department of Transportation (DOT), but
preliminary meetings left the impression that Virgin, a
British corporation, would maintain effective control over
the airline. Epstein said that it could be difficult to
secure the required DOT approval if it was determined that
Virgin maintained effective control, but DOT had not yet
reviewed a formal application. Responding to the Minister's
suggestion that Nigeria would likely approve Continental
Airlines' application for operating authority for a
U.S.-Nigeria route in the event that the Virgin Nigeria
application won DOT approval, Ambassador Campbell replied
that Continental was no longer pursuing the Nigeria project
and had shifted its resources elsewhere. The Finance
Minister said she hoped that another U.S. airline would then
apply.

Debt Relief Deal
----------------
4. (SBU) The Minister thanked A/S Frazer for the strong U.S.
support for Nigeria's Paris Club debt treatment. She stated
that it was important to quickly complete the requisite
bilateral agreements with individual creditors as soon as
possible. She noted that she would send an appropriations
bill to the National Assembly on that very day to secure
funds required for Nigeria's initial payments. She noted that
the process would be politically challenging, given that half
of the money belonged to the states and not the federal
government. She stated that the GON had $6 billion in hand,
but needed an additional $400 million more for the first
tranche and additional appropriations for the later tranches.
The first payment was due on October 31, giving the bill a
short time frame for passage. She noted that Central Bank
Governor Saludo was concerned about the possible impact on
the currency of a large transfer of foreign exchange. The
Minister stated that money would go into escrow and
subsequent payments would be automatically transferred to
creditors as each bilateral agreement was signed.

5. (SBU) In response to A/S Frazer's question about whether
she was satisfied with the final deal, the Minister said she
was pleased, although she acknowledged it would be hard to
sell to the public. She noted that a documentary and
pamphlets had been prepared as part of a public relations
campaign. The Minister agreed with Ambassador Campbell that
Nigeria would never have gotten a deal without a civilian
government and posited that the Nigerian people recognized
that fact, but she argued that it was vital that the Nigerian
people received immediate benefits from the arrangement. The
Minister reported that an IMF team would arrive in Abuja in
January to assess Nigeria's performance under its Policy
Support Initiative (PSI) through December 31 and a
satisfactory report would trigger the second tranche of
forgiveness.

G-8 Transparency Initiative
---------------------------

5. (SBU) The Finance Minister then asked where things stood
with the G8 Transparency Initiative. The U.S. side said a
team had recently visited Nigeria to do an assessment and the
bulk of our technical assistance would probably go the
Economic and Financial Crimes Commission (EFCC). The
Minister said her Ministry planned to take over the
coordination of donor assistance from the National Planning
Commission. The Ministry also was requesting trade and
investment data from the governments of major partners. A/S
Frazer agreed that good coordination was necessary but
cautioned against creating roadblocks by forcing donors to
provide all assistance through one agency. The Minister said
assistance would not go through the Finance Ministry, though
they would need to be informed. This was especially important
when counterpart funding was required. Regarding the EFCC,
she wanted donors to understand that the agency did not
depend on donor funding and had received a 150% increase in
its budget this year.

Tariffs
-------

6. (U) The Minister noted that Nigeria had moved to the
ECOWAS Common Economic Tariff (CET), although some trade bans
would remain in place until January 1, 2007. In the
meantime, Nigeria had restored the Manufacturers-In-Bond
Scheme (MIBS), which the President had cancelled, for several
weeks until the CET was fully implemented.

Africa Action Plan
------------------

7. (SBU) A/S Frazer asked if the Minister, who was on the
Partnership Committee, had received a letter proposing a way
forward with sectoral working groups. She was concerned that
this would make the process project-based rather than provide
strategic oversight as originally intended. The Minister had
not seen the letter, but agreed that sector experts should be
called to assist the committee on an as- needed basis only.

Nigerian Investment Road Show
-----------------------------

8. (SBU) The Minister said she hoped A/S Frazer would be able
to receive the Nigeria Investment Promotion Commission (NIPC)
trade and investment promotion tour to the United States
during the week of November 7 that the Minister was leading.
Frazer said she had looked forward to hosting the group, but
she would most likely be in Africa during that week. The
Minister said she would ask NIPC about moving the dates, but
the timing was probably fixed at this point.
CAMPBELL

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