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FOR EUR/NB MIGUEL RODRIGUES

E.O. 12958: DECL: 07/20/2018
TAGS: PREL RU GG EN
SUBJECT: ESTONIAN PRESIDENT ILVES EMPHASIZES NATO
COLLECTIVE DEFENSE

Classified by: Ambassador S. Davis Phillips for reasons 1.4
(b) & (d)

¶1. (C) On September 2, Ambassador called on President
Toomas Hendrik Ilves to discuss the situation in Georgia.
Ambassador was accompanied by DCM and Pol/Econ Chief
(notetaker). Sven Jurgenson, Ilves? Foreign Policy Advisor
(and a former Ambassador to the United States) and Jana
Vanaveski, Head of the Foreign Policy Department also
participated in the meeting. Ilves opened the discussion
by asserting that NATO needs to get back to its core
issues. Russia's invasion "changes everything" he noted.
This requires us to think seriously about what NATO's main
mission is. We were caught up on the "peace dividend," but
now we have to start investing again in collective
security. The Ambassador asked Ilves his views on the
possibility of NATO bases in Estonia - a topic which has
been debated widely in the Estonian press. Ilves cited a
few areas where NATO support would be useful (pre-
positioning equipment, development of Estonia's Amari
airbase, investing in strategic infrastructure, putting
ships into Paldiski Port near Tallinn). However, he said, the real
issue is not basing. What NATO needs is a coherent
strategy to deal with a "belligerent, aggressive" Russia.

¶2. (C) Ilves contended that the conflict with Russia now is
fundamentally different than it was during the cold war.
Countries in Western Europe no longer feel the immediate
threat at their doorstep so they downplay the situation.
However, Georgia proved East Europeans fears about Russia
were not irrational. Now they want Europe to take a
tougher position, but they also want a U.S. presence.
Jurgenson emphasized this point, saying there are "things
which we cannot discuss effectively at NATO." Also, the
split within the EU means the best Europe can come up with
is what was decided September 1 in Brussels. We are at the
very early stages of a "new cold war" and the underlying
center of gravity can only be the United States, Jurgenson
added.

¶3. (C) Ilves also noted that the struggle with Russia is no
longer an ideological one. In practical terms, this means
siding with Russia doesn't raise questions about one's
loyalty. Pointing to former German Chancellor Schroeder
and former Finnish PM Lipponen's involvement with the
Nordstream Pipeline, Ilves asserted that officials are
clearly being "bought" by the Russians. It has also been
clear - since President Putin's speech at Munich - that
Russia is trying to position itself as a counterweight to
the United States, Ilves said. But who is going to align
themselves with Russia? Only "pariahs, sleazebags, or
rogue states" like Chavez, Castro and Lukashenko will
recognize South Ossetia.

¶4. (C) Ilves called NATO's decision not to offer MAP to
Georgia and Ukraine at the Bucharest Summit a key problem.
This decision was misread (or read correctly) by Russia and
it "emboldened them." Now, if Russia senses ambiguity
(words but no consequences), it will go even further than
it already has. While MAP is still an important step, NATO
needs to focus on its primary mission - collective defense
of its allies. Ilves also noted, with interest, an August
26 Washington Post article which advocated using the
terrorist finance legal framework against the Russians.
Money and travel privileges are consequences the Russians
will understand, Jurgenson added. Suspension of Russian
membership in the Council of Europe (for invading a
sovereign country), suspending the EU-Russia visa
facilitation agreement (for Russian noncompliance with its
provisions) and supporting economic and political
development in Ukraine and Georgia could also be important
measures.

¶5. (C) Comment: Ilves has taken a headline role in beating
the drum on Georgia for Estonia. However, he is clearly
frustrated by his own lack of real executive authority and
by Europe's lack of unity. Ilves did not offer specific
proposals on next steps. Instead, he emphasized NATO's
need to focus on collective security and speculated it will
take "many months and years" for the west to figure out how
to handle the new situation with Russia. End comment.

Phillips

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E.O. 12958: DECL: 04/04/2028
TAGS: PGOV PREL TU
SUBJECT: TURKEY: THIS COUNTRY IS NOT WITHOUT AN OWNER

Classified By: Consul General Sharon A. Wiener for reasons 1.4 (b) and
(d).

¶1. (C) Summary. Consul General called on Turkish Economic
and Social Studies Foundation (TESEV) Chairman Can Paker on
April 1, the day after Turkey's Constitutional Court agreed
to hear arguments in the Justice and Development Party's
(AKP) closure case. Paker said the secular elite is fighting
to preserve their position and perks. Unlike previous
battles between the government and the civil
(judicial)/military group arrayed against them, Paker could
not predict the outcome of this confrontation but he drew
attention to a phrase well-known, he said, in Turkey which
everyone accepted as true: "This country is not without an
owner," referring to the civil/military bureaucracy. End
summary.

¶2. (C) The timing of the Consul General's courtesy call on
the unreserved TESEV Chairman took place less than 24 hours
after Turkey's Constitutional Court placed AKP in jeopardy by
agreeing to hear a closure case against the party brought by
the country's chief prosecutor. While he couldn't predict
the final outcome after anticipated legal and other moves and
counter moves, Paker said he was sure of what Turkey's
friends in the west and liberals in Turkey should do: fight
the closure with every available tool. Turkey, he explained,
is in transition from a centralized, statist country to one
imbued with the values of liberal democracy. Turkey had been
founded with a "civil/military" elite at the core supporting
a state apparatus set up to protect them and their cadre,
including through special economic set-asides. This
structure is now challenged by a new capitalist class that is
no longer satisfied with "crumbs from the table" offered by
old monopolistic structures. The new class are competitors
born of the experience in capitalistic enterprise. The "old
guard" will oppose the challenge to their privilege with
everything they have, said Paker. "This country is not
without an owner." The lightly coded sentence meaning the
civil and military bureaucracy owns Turkey is regarded as so
descriptive of fact that no one in Turkey finds the statement
awkward, he claimed.

¶3. (C) But the fundamental dynamic has changed, according to
Paker, since the end of the Cold War. During the Cold War,
the U.S. only concerned itself with preserving Turkey's
anti-Soviet stance, now, the U.S., as well as the EU, want a
democratic Turkey. These external forces are powerful and
reinforce internal demands.

¶4. (C) Paker referred to TESEV research that indicates 30
percent of the Turkish population is secular and the
remaining 70 percent religious. Among the 70 percent
religious, one in seven, or 10 percent of the population,
hold extreme nationalist views. Another group of the
religious Turks (nine percent of the population), are
extremely religious and support imposition of sharia. Among
the overall 30 percent of the population that is secular,
one-third, or 10 percent of the population, hold extreme
nationalist views that are anti-Europe, anti-U.S. and
anti-foreigner. The 50 percent of the population who are
religious moderates trade, marry and socially interact with
the 20 percent of the population who are moderate seculars,
according to the TESEV research. AKP has the potential to
unite this 70 percent of the population to defeat efforts to
remove what religiously-oriented middle-class Turks have won
through continuing social and economic reform. If not AKP,
Paker predicted another entity would in time overturn the
civil/military bureaucratic elite structure in Turkey.

WHAT HAPPENS NOW?
-----------------

¶5. (C) Paker concedes legal experts diverge in their views
of relevant law and practice on whether AKP's bid to modify
two articles in the constitution successfully shield it from
closure. The possible referendum on these changes, which
Paker supports, will represent a very serious moment for
Turkey. Before the July 2007 general election in which AKP
won nearly 47 percent of the vote, memorable pro-secular
rallies were held in Istanbul, Izmir, Ankara and other cities
around the country. The AKP and its supporters chose not to
respond. But all those attending the pro-secular rallies in
the summer of 2007 cannot be counted on to support party
closures; AKP can easily turn out street demonstrations that
would dwarf the 2007 rallies, especially if they succeed in
galvanizing the 70 percent of the population that potentially
supports their cause. A rally effort would intensify the
already charged atmosphere and could even result in violence.
But Paker supports taking that chance.

ISTANBUL 00000182 002 OF 002



¶6. (C) AKP missteps since the July elections resulted from
the party's focus on upcoming municipal elections in March
2009, according to Paker. Hoping to co-opt the
nationalism-motivated voter in 2009, AKP relegated continuing
economic and free expression reform to the back burner. Had
AKP reignited its program of transformational reform on July
23 following their resounding victory at national polls,
Paker maintains elites would not have dared touch the party
now due to the support the AKP would have drawn from the EU.

¶7. (C) Unable to predict a linear unfolding of events,
Paker's research leads him to optimism. Eighty-five percent
of Turks believe they are middle class and 60 percent say
they're fighting for advancement through diligence and hard
work, not corruption and sleaze. Turkey looks much more like
the U.S. than geographically closer countries like Russia or
especially France (darling of the civil/military bureaucracy
for its enthrallment with elitist ascendancy.) Turkey's
misfortune is that it is located in Anatolia and not Mexico.
The right move for the United States now would be to signify
clear support for the aspirations of the Turkish middle
class, Paker argues. Delayed backing will be seen in the
future as unprincipled and not worthy of respect. These
Anatolian tigers, fostering explosive production resulting in
new centers of learning and further economic development,
will not be deterred from their goal of free market economic
rules and equal treatment under the law. There will be ups
and downs, Paker predicted, in this desperate struggle, but
the long-term outcome for Turkey, if not AKP, is secure.

WHAT SHOULD BE DONE
-------------------

¶8. (C) Paker believes Tayyip Erdogan should do everything he
can to win the struggle. Paker claimed he'd succeeded in
convincing the Turkish Industrialists and Businessmen's
Association (TUSIAD) to state that closing political parties
is not a solution to current divisions. If it were up to
Paker, he would advise the Prime Minister to use public
demonstrations to influence the outcome, even knowing this
could risk confrontation; he did not know if the PM would
take this route. Prompted, Paker agreed there were means of
building bridges to unite disparate groups. Bankers,
businessmen, teachers, people from the professions such as
law and medicine, represented in the 51/20 majority could
unite to build societal bridges with the capacity to defeat
the "frenzied, illogical and destructive" plans of the
civil/military bureaucracy.

¶9. (C) Comment. Paker's views are a forceful echo of those
held by many conservative liberals. A child of the
privileged class, Paker is convinced of the rightness of the
liberal ideals of liberty, equal treatment under law, freedom
of expression and choice. Though he factually describes
sociological phenomena regarding the debate over the
headscarf, possibly a trip-wire that led to the closure
indictment, he also downplays the concerns of those like
Lieutenant Colonel Vedat Zamir, public information officer
with the NATO Rapid Deployable Corps in Istanbul who told us
March 13 "the military is fighting radical Islam." For
example, Paker declined to comment on where he thought the
Fethullah Gulen movement fit into Turkey's political
landscape, claiming he had no research results on which to
base any judgment. End comment.

WIENER

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STATE FOR EUR/WE, INR/EU

E.O. 12958: DECL: 01/25/2018
TAGS: PGOV PINR UK
SUBJECT: (U) HAIN RESIGNATION TRIGGERS LIMITED CABINET
RESHUFFLE


Classified By: Political Minister Counselor Maura Connelly for reasons
1.4 (b, d)

¶1. (C/NF) Summary: Peter Hain resigned on January 24 as
Secretary of State for Work and Pensions and for Wales after

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the Electoral Commission referred to the police his failure
to report donations to his 2007 campaign for Deputy Leader of
the Labour Party. The Hain resignation came on the same day
that Downing Street announced the appointment of a new chief
of staff for Brown, Jeremy Heywood, to replace Tom Scholar,
who moved over to a senior position at Treasury. Hain vowed
to clear his name, insisting it had all been an innocent
mistake. His departure triggered a limited Government
reshuffle (see para. 7 below) that produced the first-ever
married couple in the Cabinet, as Yvette Cooper joins her
husband Ed Balls. Paul Murphy comes back into the Cabinet as
Secretary of State for Wales. The timing of this reshuffle

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was imposed on Prime Minister Brown by events beyond his
control and most of the UK media and Brown's political
opponents saw it as another blow to Brown's political
standing. Brown's supporters argued that the decisive
nature of his cabinet reshuffle can help him regain some
initiative and limit the damage from what Brown himself
described as "an incompetence" by Hain. End Summary.

An Expected Resignation
-----------------------

¶2. (C/NF) On January 24, Secretary of State for Work and
Pensions and for Wales Peter Hain became the first minister
to resign from Gordon Brown's Cabinet. Hain had stood firm
against calls for his resignation as long as the matter was
before the Electoral Commission and not a subject of police
investigation, but once the Commission referred the matter to
Scotland Yard, Hain said he felt he had "no alternative" but
to step down. It was a personal decision by Hain -- there
was no legal requirement that he step down, none of Tony
Blair's government who were under criminal investigation in
2007's cash for honors affair stepped down at the time -- but
the media and internal Labour drumbeats on the need for Hain
to go had been increasing so his resignation was not
unexpected. Much of the political and media reaction to the
resignation criticized Brown for not forcing Hain to step
down earlier, but no doubt Downing Street was aware of the
precedent it would set if any non-criminal investigation into
funding irregularities required a cabinet resignation -
especially for the current Labour party, which has been hit
by a wave of such investigations over the past several years.

What Hain Did or Didn't Do
--------------------------

¶3. (C/NF) Hain has admitted that his summer 2007 campaign
for Deputy Leader of the Labour Party failed to make a timely
declaration of donations totaling GBP 103,000 (about USD
205,000). He has consistently said it was an innocent
mistake, blaming poor administration and pointing out that he
himself reported the matter to the authorities once he became
aware of it. In announcing his resignation, Hain said "I
severely and seriously regret the mistake in declaring the
donations late," and insisted he would clear his name.
Unlike in parliamentary campaigns, where the legal
responsibility for financial reporting lies with the
candidate's agent, in party contests the candidate
him/herself is legally responsible. The Parliamentary
Commissioner for Standards is conducting a separate inquiry
into why Hain failed to declare the donations on the Register
of Members' Interests.

¶4. (C/NF) From the available information, it is not/not
clear that Hain was guilty of anything more than an
administrative failing in not reporting the donations within
30 days; there had been an important change in Hain's
campaign staff just before the problem of non-reporting
began. Nonetheless, two facts are seen as troubling:

- The large sums of money involved (the amount not reported
on time was twice the total raised by the winning candidate,
Harriet Harman; Hain still finished fifth out of six
candidates for the Deputy Leadership).

- The fact that some money was channeled through a
think-tank, the Progressive Policies Forum, that has
apparently done no work at all since being set up in December
2006 by a close contact of Hain's. The concern is that the
shell think-tank may have been used as a way of concealing
the identity of donors.

LONDON 00000240 002 OF 003

The Political Response
-----------------------

¶5. (C/NF) PM Brown reacted to Hain's departure by saying he
had done the right and honorable thing. The PM had earlier
characterized Hain's failing as "an incompetence" - a damning
turn of phrase in what was ostensibly a supportive statement
in which Brown strongly rejected the notion that there was
any taint of sleaze in Hain's failure to report the donations
or to the Labour party itself. Upon learning of the
resignation, Deputy Party Leader Harman praised Hain before
the House of Commons as "an excellent colleague and good
friend" who has been doing "important work for people in this
country." Health Secretary Alan Johnson, runner-up to Harman
in the race for Deputy Leader, said he was "really sad" to
see Hain go, "because it's a big loss for us."

¶6. (C/NF) Comments from the opposition were more critical:
Conservative leader David Cameron said the resignation was
weeks overdue, and Conservative Shadow Secretary for Work and
Pensions Chris Grayling said it was "inevitable," adding
"nobody could understand how it was possible to get those
donations so far wrong." Liberal Democrat spokesman for Work
and Pensions Danny Alexander suggested this was symptomatic
of a more general collapse of the Labour Government, saying
"the transition from Blair to Brown feels increasingly like
the transition from Thatcher to Major."

¶7. (C/NF) Hain's resignation triggered a limited Government
reshuffle:

¶A. CABINET:

- James Purnell moves over to Work and Pensions from being
Secretary of State for Culture, Media and Sports.

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- Andy Burnham takes over at Culture, Media and Sports; he
was Chief Secretary to the Treasury.

- Yvette Cooper becomes Chief Secretary to the Treasury; she
had been housing minister with the right to attend Cabinet
but without being a full member. Her promotion is seen as
reinforcing Brown's direct influence at Treasury. She and
her husband Ed Balls, already Secretary of State for
Children, Families and Schools, become the first-ever married
couple to serve in the British Cabinet at the same time.

- Paul Murphy returns to the Cabinet as Secretary of State
for Wales (after serving in that position 1999-2002).

¶B. JUNIOR MINISTERS:

- Caroline Flint replaces Cooper as housing minister, also
attending Cabinet. She had been welfare minister in the Work
and Pensions Department.

- Stephen Timms moves from the business department to replace
Flint.

- Liam Byrne, the immigration minister in the Home Office,
adds a Treasury portfolio with responsibility for revenue
protection at the UK's borders.

- Baroness Vadera moves from the Department for International
Development (DFID) to a similar junior-minister position at
the Department for Business, Enterprise and Regulatory Reform.

- Gillian Merron moves from the Cabinet Office to Vadera's
former position at DFID.

- Tom Watson moves from the Whips office to the Cabinet
Office.

- Phil Hope stays at the Cabinet Office but replaces Merron
as minister for the East Midlands.

- Lord Grocott steps down as chief whip in the House of
Lords, replaced by Baroness Royall, a former personal
assistant and press officer to ex-leader of the Labour Party
Neil (now Lord) Kinnock.

- Lord Triesman leaves the Department for Innovation,
Universities and Skills, having been selected as the new
chairman of the Football Association. He is replaced by
Baroness Morgan, a former chief executive of Breakthrough
Breast Cancer.

LONDON 00000240 003 OF 003

Comment: A Plus or Minus for Brown?
-----------------------------------

¶8. (C/NF) Hain's departure will have no effect on Brown
Government policies nor does it remove from cabinet a close
confidante of Brown's whose departure will result in shifts
in policy. It is, however, one more political and media blow
at a time when the Prime Minister remains politically weak
and stalled in efforts to reclaim the momentum of his
post-election honeymoon period. The timing of this reshuffle
was imposed on Brown by events beyond his control and most of
the UK media and his political opponents saw it as another
blow to Brown's general political standing and the Labour
party's growing reputation for sleaze. Brown's supporters
took to the airwaves to argue in rebuttal that the decisive
nature of his cabinet reshuffle will help Brown regain some
initiative and limit the damage from what he himself has
described as "an incompetence" by Hain. We doubt that the
latter view is the one really believed inside Downing Street.

¶9. (C/NF) The Hain resignation came on the same day that
Downing Street announced the appointment of a new chief of
staff for Brown, Jeremy Heywood, to replace Tom Scholar, who
moved over to a senior position at Treasury. Heywood will
report directly to Brown and Sir Gus O'Donnell, the Cabinet
Secretary. Heywood's appointment, following last month's

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appointment of a new communications and strategy advisor at
Downing Street, was another sign of Brown's determination to
make personnel and managerial fixes to his Downing Street
operations; fixes that one Labour party insider called
partial solutions that fail to address the fundamental
problem -- Brown's own personality.

Visit London's Classified Website:
http://www.state.sgov.gov/p/eur/london/index.cfm

LeBaron

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STATE FOR WHA/CEN -- ROIS BEAL

E.O. 12958: DECL: 12/10/2017
TAGS: PGOV ECON EFIN ENRG EPET SOCI BH
SUBJECT: (C) BELIZE OIL: CORRUPTION ALLEGATIONS REACH PRIME
MINISTER'S OFFICE

REF: BELMOPAN 624

Classified By: Ambassador Robert J. Dieter for reason 1.5(d).

¶1. (C) Summary: Two U.S. energy firms have complained to
the Embassy that bribes determine who receives oil
exploration contracts in Belize. One company official who
claims to have actually paid a bribe and has electronically
recorded numerous conversations, alleges that the Prime
Minister's driver/bodyguard was the bag man for the
transaction. Both companies sent strongly worded protest
letters and the GOB has responded by threatening legal action
and deportation. End Summary.

--------------------------------------------- ---
U.S. Companies' Corruption Allegations
--------------------------------------------- ---

¶2. (C) Lagoon Resources, a U.S. company with experience in
the oil sector on whose complaints we have previously
reported (reftel), has alleged that a production contract the
firm applied for was awarded to a local business with no oil
exploration experience and that the deciding factor was a
sizeable bribe paid to Johnny Briceno the then-Minister of
Natural Resources. The firm claimed that the money was
routed to the Minister through the purchase of a cable
television business. These allegations subsequently became
public when a letter the company wrote was leaked to the
press by the opposition leader. On December 7 econoff met to
discuss the case with former Minister Briceno who stated
that he was planning to sue the company for libel.

¶3. (C) A second U.S. company, Miles Tropical Energy (MTE),
claims to have actually paid a bribe and produced recordings
it claims support the allegations. MTE principal Allen Saum
told econoff (as well as the press) that he paid US$100,000
to obtain an oil production contract. Saum stated that he
wired funds to Belize and that his Belizean business partner
delivered the money in cash to Prime Minister Said Musa's
driver/bodyguard. MTE stated that Musa's son facilitated the
exchange and served as local attorney for the company.

¶4. (C) The Belizean Director of Geology and Petroleum
(protect) (the GOB's lead expert and director of oil issues)
confirmed that several contracts were awarded against his
professional recommendations for what he thinks are purely
political reasons. When questioned about the companies that
were actually awarded the contracts he explained that the
companies had no qualifications or prior experience in the
sector and were awarded the contracts because the owners are
strong supporters of the governing People's United Party.

-------------------
Political Fallout
-------------------

¶5. (C) Allen Saum delivered digital recordings to the
opposition party leader and some recordings were subsequently
aired by the opposition party radio station. Econoff has
listened to them, and although they are somewhat random and
the quality is varied, the recordings seem to support the
bribery allegations. In addition several individuals econoff
has spoken to about the allegations are convinced the
transaction took place.

¶6. (C) The Director of Petroleum noted that the process for
awarding the contract to MTE did not follow normal procedures
and that the Prime Minister's bodyguard pressured the
Ministry into signing the contract and waited outside the
Ministry CEO's office door to personally take possession of
the document as soon as it was signed. (Note: Embassy
investigation confirmed that the MTE contract was sent to the
Cabinet for approval separately from all other oil contracts
which were later delivered to Cabinet as a group. End note.)

--------------------------------------------
Accusations and Counter-accusations
--------------------------------------------

¶7. (C) After being awarded a contract in an exploration
block different than where he was seeking, MTE representative
Saum on November 14 addressed a complaint letter to the Prime
Minister's office alleging criminal conspiracy, corruption,
and lack of transparency. The letter demanded the return of
the US$100,000 paid and noted he did not want "any cocaine
smudged money." The letter closes by challenging the Prime
Minister "to hold me responsible, but keep in mind I never
fight a battle I will not win. I await your immediate reply.
Let's say 24 hours."


¶8. (C) The GoB's response was swift. The Ambassador was
called to the MFA, shown the letter, and told that the PM was
very upset by the unfounded allegations and tone,
particularly with an election looming. The MFA would be
reviewing Saum's immigration status and he might be deported.
The Embassy was asked to contact Saum and let him know of
the GoB's displeasure. We made it clear that Saum was not
under our control but that his legal rights should be
observed. Subsequent attempts to reach Saum were not
successful.

¶9. (C) Saum has since telephoned the Embassy on several
occasions to demand intervention with the GOB. He stated
that he "has been speaking with our attorneys in the United
States including an attorney at the United Nations" and they
felt that the problem should primarily be addressed by the
Embassy. Econoff advised Saum as he has before, to consult
with both local and U.S. legal counsel and that if he
believed a crime was committed against him he should file a
report with local police.

¶10. (C) During a recent trip to Orange Walk where Saum
remains at a local hotel, econoff spoke with a number of
people to seek additional information on this case. The
responses are fairly uniform: Saum seems to be an erratic
figure, but most people think there is something to his
allegations.

¶11. (C) Comment. Scandals have continued to dog the Musa
government, but they have largely been neutralized or swept
under the rug, and the opposition has done a poor job of
capitalizing on the apparent sleaze. In this case, we have
found Saum to be a very unpredictable interlocutor, but note
that there is significant circumstantial evidence to support
his claim. The PM's involvement will probably never be
known, although his driver/bodyguard has long been rumored to
have a major role in handling illicit payoffs of various
sorts. As the election looms and the PUP faces the
possibility of defeat at the polls, party members seem to be
grabbing everything they can possibly to fund the campaign
and possibly as a retirement nest egg. Sadly, conventional
wisdom is that even if the opposition wins the election,
nothing much will change. End comment.

DIETER

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RUEKJCS/SECDEF WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHDC

UNCLAS SECTION 01 OF 02 WELLINGTON 000690

SIPDIS

SIPDIS

SENSITIVE

STATE FOR D (FRITZ), EAP/FO, AND EAP/ANP
NSC FOR VICTOR CHA
SECDEF FOR OSD/ISD LIZ PHU
PACOM FOR J01E/J2/J233/J5/SJFHQ

E.O. 12958: N/A
TAGS: PGOV NZ
SUBJECT: SCANDALS APLENTY, BUT TALK OF LABOUR'S DEMISE IS
PREMATURE

Ref A: WELLINGTON 598

Summary
-------

¶1. (SBU) Labour's recent political problems have been compounded by
new accusations of election campaign spending abuse. Meanwhile, new
evidence of inappropriate behavior by an already disgraced Labour MP
may finally force Labour's leadership to kick him out of the party,
impairing the Government's ability to pass legislation. In theory
this could cause the Government to fall, leading some analysts to
predict that PM Clark will not last through her three-year term. To
date only one poll shows firm signs of the public abandoning support
for Labour.

New scandal comes at a bad time for Labour
------------------------------------------

¶2. (SBU) Labour's latest crisis was brought to the public's
attention on August 22nd when the Auditor-General made public the
contents of a draft report questioning the legality of Labour's 2005
general elections campaign spending. The report, which has not yet
been finalized, suggests that Labour misappropriated NZ$446,000 of
taxpayer money on party pledge cards and brochures sent to voters
three weeks before the September elections. Heather Simpson, Prime
Minister Clark's influential chief adviser and overseer of Labour's
campaign funding, narrowly escaped prosecution in March after police
found there was a prima facie case against her over the pledge card.
Further muddying the waters for Labour are media reports that
Labour Party President, Mike Smith, knew in advance of the election
that it was illegal to use taxpayers' money on the cards.
¶3. (SBU) National's leader Dr. Don Brash is demanding Labour pay
back the money. PM Clark initially countered that the election
spending rules are unclear and ineffective. She claimed the
National had overspent as well (although it has paid back the
NZ$10,588 the Auditor General identified as having been overspent by
National). Clark argues that the draft report could have
implications for the NZ$350 million in spending by all political
parties over the past 15 years. When her counterattack failed to
gain traction, Clark changed tack and floated the idea of state
funding for political parties. This would include retrospective
legislation to validate Labour's election spending. The public was
not impressed: a Herald DigiPoll found that 81% all of respondents
(and 75% of Labour supporters) believe that all political parties
should repay unlawfully spent public money. The same poll found only
13.5% of Labourites support Clark's proposed retrospective law.
Labour seeks to distance itself from disgraced MP
--------------------------------------------- ----

¶3. (SBU) Just when the election scandal reared its head, Labour
received another blow from fresh allegations of improper behavior by
its Samoan MP Philip Field, who has been accused of using his
Ministerial position to improperly help and even exploit immigrants
for personal gain (Ref A). The new accusations involve document
tampering, taking money from an elderly constituent and accepting
bribes for services. Clark has in the past stood by Field out of
party loyalty and the need to preserve her one-seat majority in
Parliament. But as even Pacific Island community leaders are now
calling for Field to resign in light of the latest accusations, on
August 29 Clark at last openly questioned whether he has a future in
the Labour Party. On August 31, the NZ Police announced it would
investigate formally the allegations. Clark immediately suspended
Field from all his duties with full pay. Field's vote in Parliament
will be held by Labour's Chief Whip until he returns from leave,
thus retaining Labour's majority.

¶4. (SBU) Field has announced that he will not resign as Labour's MP
for Mangere, although his refusal to comment whether he will run at
the next election may signal that he accepts Clark's hint that he
has no future in Labour. But, little is certain about where both he
and Clark go from here. The PM has the power to prevent Field from
running as a Labour candidate in two years' time and can also expel
him from the party now (although for now she has little incentive to
kick him out since he has been suspended.) NZ law prevents Clark
from ousting Field from Parliament, where he could remain as an
independent if kicked out of Labour. At present, Labour needs the
support of two other parties to pass legislation. As the vast
majority of votes in Parliament are Party votes (where the MPs vote
along party lines), the loss of Field's unconditional support would
require Labour to secure backing from three parties to ensure
passage of legislation. An independent Field could therefore

WELLINGTON 00000690 002 OF 002


undermine Labour's ability to pass key legislation such as the
budget, which could in turn cause the Government to fall.

¶5. (SBU) Field could alternatively resign from Parliament and run
as an independent in the resulting by-election. Field claims he has
done nothing wrong and that the people of Mangere want him to remain
as their MP. His victory is not a shoo-in, however. Mangere is one
of Labour's safest seats, and some Pacific Island community leaders
believe that Field only won his seat because he was the Labour
candidate. A Labour win in a by-election contest would ensure
Clark's majority is maintained.

Polls suggest Labour slippage
-----------------------------

¶7. (SBU) Not surprisingly, Clark claims ordinary voters are not
overly concerned by the latest scandals. Colmar Brunton's latest
poll bears this out, with an insignificant National lead of two
points over Labour (45% vs. 43%). The latest Morgan Poll found early
August support for National Party was down 1% to 41%, with Labour
support dropping just 1%, to 39%. Labour's own internal polling
actually puts it ahead of National. The recently released UMR poll
shows National has crept ahead to a 4.5 point lead over Labour.

¶8. (SBU) The just-released Herald DigiPoll shows National opening up
a 7.7 point lead over Labour (46.4% vs. 38.7%). So far, at least,
the Government is not convinced this means it's heading down a
negative track. One well-regarded Labour MP close to Clark told us
that some "backlash was bound to happen" as a result of the
attention paid to Labour's problems. He claims the party will not
lose too much sleep over this one poll as the election is a
"political lifetime away" and Labour won the 1999 election with this
same level of party support. He also says Clark, Simpson and Deputy
Prime Minister Michael Cullen are far more skilled politically than
National and they can ride out the scandal. Significantly, most
National MPs we've spoken to agree that Labour is in no real danger
of tumbling over its latest troubles.

(SBU) Comment: The police investigation has upped the ante for
Field. If he is found to have committed a crime, then he will be
removed from Parliament. It might not get this far though. Post
believes that Field will resign before he is pushed. The fact that
National is only now reaping a political dividend from Labour's
seemingly never-ending scandals shows how ineffective the
opposition's attacks have been to date. Clark has pretty much headed
off every National gambit to taint her administration, leading some
to speculate that Brash's days as leader are numbered. Nonetheless,
the Herald poll is giving National MPs a boost, and we see no signs
National plans to end its campaign to link Labour with sleaze (in
fact, one National MP tells us what his party really wants Field to
remain as a Labour MP in order to help reinforce this perception).
But National's strategies aside, Labour may be helped by the fact
that politics in New Zealand is a short game. The next scheduled
election is 2 years away, and it is only really when the official
election campaign starts, just 3 months out from Election Day, that
most New Zealanders sit up and pay attention to politics. As long as
the police investigation lasts, the Government can justifiably
refuse to comment on the Field case. If the latest problems persist
(or increase) as the next election nears, they are likely to damage
Labour's prospects. Until then, we wouldn't write the Government off
just yet.

McCormick

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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UNCLAS SECTION 01 OF 02 WELLINGTON 000268

SIPDIS

SIPDIS
SENSITIVE
STATE FOR EAP/ANP - DAN RICCI

E.O. 12958: N/A
TAGS: PGOV NZ
SUBJECT: LABOUR'S NEW TALENT DEFICIT.

REF: 06 WELLINGTON 226

¶1. (SBU) Summary: After two full terms in power, PM Clark has
failed to effectively rejuvenate her Labour Party's ranks. Labour's
lack of recognizable next generation leadership could be a real
handicap over the short to-medium term, especially as the opposition
National Party has a number of capable new MPs. End Summary.

Labour's Icarus syndrome.
------------------------

¶2. (SBU) Labour's rising stars appear to be plagued with an
affliction: those who fly too high plummet rapidly back to earth.
Since Labour come to power in 1999, a pattern has emerged in which
soon after Labour MPs have been anointed as potential future leaders
they make career damaging missteps. The tag "the next big thing"
increasingly seems to be the kiss of death for a budding Labour MP.


Parker the latest in a line of fallen Clark protgs
--------------------------------------------- -------

¶3. (SBU) Former Cabinet Minister David Parker (reftel) is only the
latest of Clark's rising Labour stars to fall off his perch. The
first was Lianne Dalziel. Touted as a potential Labour leader when
she came to Parliament in 1990 and named by Time magazine as a
future world leader in 1995, Dalziel acquired increasingly important
Cabinet assignments in quick succession. Her run was interrupted
when she resigned from Cabinet in 2004 after being caught in a lie
over leaking a document to the media.

¶4. (SBU) The second to go was John Tamihere, the charismatic former
MP identified early on by some analysts as a possible first Maori
Prime Minister. He too fell to earth after being implicated in
financial malfeasance in his iwi (tribe). He then gave an interview
that he claims did not know he was giving, in which he poured scorn
upon members of his own caucus, including Clark herself. After being
marginalized by his party, Tamihere refused to go on the Labour list
and is now out of Parliament altogether after losing his
constituency seat at the last election.

¶5. (SBU) Unlike Tamihere, whose future in Labour Party politics
looks distinctly bleak, Clark has indicated to the press that Parker
might return to Cabinet if he is cleared of accusations that he
falsified documents related to his business. Indeed, Clark has a
predisposition to rehabilitate disgraced MPs whom she thinks still
could add value in her government. The obvious precedent is Dalziel,
who after being out in the political wilderness for twenty months
was brought by Clark back into the Cabinet after the 2005 election
and now hold three portfolios. Dalziel is no longer touted as a
rising star, however, and Parker may find the same fate. Clark has
to balance her party's need for a competent next generation with the
desire to avoid controversies that the now-strengthened opposition
could exploit.

Labour caucus short on commercial experience.
--------------------------------------------

¶6. (SBU) Parker and Tamihere were regarded as new generation Labour
politicians, who would, over time, front the major commercial
portfolios in the Clark administration. Their departure from the
immediate scene leaves only David Cunliffe as a new generation
Labour MP with a credible business background.

¶7. (SBU) As a former Fulbright Scholar, Harvard Business graduate,
management consultant, and diplomat who once served in Washington,
Cunliffe has impeccable business credentials. As such, he is an
anomaly in a caucus full of former trade unionists and teachers. In
Clark's effort to maintain the confidence of the business community
with new and experienced political talent, Cunliffe stands out. Yet,
it is uncertain to whether he is able to build strong support within
his own caucus in order to move into a vaunted leadership role in
the future. Some analysts note that Cunliffe's interpersonal skills
leave a lot to be desired and he reportedly has few friends within
the Labour caucus.

Labour's newest "next big thing".
-------------------------------

¶8. (SBU) The latest Labour MP who has been widely tipped for future
leadership is new high-flying list MP Shane Jones. Like Tamihere
before him, Jones is viewed by some analysts as a future Maori Prime
Minister. Yet, already there are signs that Jones could be destined
for trouble.

¶9. (SBU) In late 2005, mere months after entering Parliament, Jones
faced a political storm when the opposition National Party
questioned his intention to stay on as the paid chairman of a Maori
Fisheries Commission. Clark herself was not happy about Jones'
alleged conflict of interest and it was ultimately agreed that he
would remain as Chairman for an undefined transition period. Clark's

WELLINGTON 00000268 002 OF 002


reason for quickly moving to try clear up this matter goes beyond
protecting Labour's newest political star from a premature downfall.
Jones is also chairman of Parliament's powerful Finance and
Expenditure Committee. An inference that the committee's Labour
chairman is involved in a conflict of interest would further add to
the Government's growing reputation for political sleaze.
Labour alleges a dirty plot
---------------------------
¶10. (SBU) The political troubles of both Parker and Tamihere were
brought to light by Ian Wishart, a journalist who once worked for
former Labour Prime Minister Mike Moore. "Investigate," the
magazine Wishart founded in 2000, is an influential publication sold
in both New Zealand and Australia. Seen by some as the New Zealand
version of Woodward and Bernstein, others accuse born-again
Christian Wishart of having an anti-Labour, conservative agenda.
Wishart counters that his publication has also "annoyed the Right in
the past". Unconvinced, or at least threatened, Clark in a recent
radio interview called Wishart a "little creep".
The next in line - the short game.
---------------------------------

¶11. (SBU) Despite Clark's efforts to change the subject, the makeup
of a post-Clark Labour Party is becoming an increasing common parlor
game among political analysts and the media. It is widely assumed
that the contest for the next Labour leadership battle will be
between the moderate wing and the traditional left-leaning faction
of the Labour Party. Defense Minister Phil Goff reportedly leads the
moderate faction. The left-leaning wing is more splintered, however,
with Ministers Steve Maharey and Trevor Mallard being the lead
contenders. Despite the rumors, Clark has not identified an heir
apparent. Nor have any of the leading contenders openly articulated
their own ambitions. There is very much a sense that Labour has yet
to decide upon a leadership plan.

The National Party
-----------------

¶12. (SBU) Contrast the uncertainty of the succession question within
Labour to that of the National Party. Most commentators see as
inevitable the rise of John Key, National's Finance spokesman, to
replace Don Brash in the top slot. Although Key publicly backs away
from talk of a leadership challenge to Brash, the impetus is firmly
behind him as the public is becoming increasingly cognizant of his
leadership credentials. Significantly, Key now ranks third in
preferred Prime Minister polling, behind Clark and Brash.
(Ironically, John Tamihere ranks fourth, ahead of Finance Minister
Michael Cullen and Defense Minister Goff.) National also has a
number of other competent younger MPs, many of whom entered
Parliament during September's extremely close general election.

Lack of renewal and new talent will hurt Labour going forward
--------------------------------------------- ------

¶13. (SBU) Comment: It seems unlikely that further cabinet
re-shuffles will rid Labour of its ever-growing image of staleness.
The failure to bring enough fresh and expert eyes to look at
existing problems also means Labour may go into the next election
short of new and innovative ideas. Measured up against a rejuvenated
National opposition, Labour's lack of new blood may well be all the
more noticeable.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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C O N F I D E N T I A L LONDON 002203

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STATE FOR EUR/UBI

E.O. 12958: DECL: 03/24/2016
TAGS: PGOV KDEM PINR UK
SUBJECT: (SBU) "LOANS FOR PEERAGES": MORE SMOKE THAN FIRE,
SO FAR


Classified By: PolCouns Charles Skinner; reason 1.4 (d)

¶1. (C) SUMMARY: The British media are making much of the
revelation that Prime Minister Blair nominated some wealthy
individuals for peerages after they had made unpublicized
loans to his Labour party. Those loans were not public
knowledge, because transparency rules (introduced by Blair)
apply only to donations, not loans. All those involved deny
that peerages or honors were promised in exchange for the
loans, and there is no evidence that any laws were broken.
The opposition can scarcely exploit this affair, because both
the Tories and the Lib Dems also accepted loans; the Tories
refuse to reveal the sources of their loans, while Labour and
the Lib Dems have revealed theirs. Blair has moved swiftly
to address the perception of sleaze by appointing a retired
senior civil servant to review the whole issue of
political-party funding and seek consensus among the parties
for additional measures to restore public trust. At the
behest of an MP, the Metropolitan Police are investigating
whether the law was broken (the "smoking gun" would be any
evidence that favors were promised in return for loans).
Absent any such revelation, Blair should have little
difficulty riding out the furor. Still, the perceived
secrecy of the loans and the impression of too-clever-by-half
politicians manipulating the system, feed public cynicism
about British politics. Having promised to step down before
the next general election, and being unpopular with much of
the media and the left wing of his own party, Blair can
expect that every fresh controversy will be portrayed by his
opponents as the scandal that will force him out of office.
END SUMMARY.

¶2. (SBU) "LOANS FOR PEERAGES": It has emerged that twelve
wealthy individuals loaned a total of approximately 14
million British Pounds Sterling (BPS) to the Labour party in
advance of the 2005 general election, and that Prime Minister
Blair subsequently nominated four of them for peerages. The
loans were not public knowledge, because transparency rules
apply only to donations, not to loans made on commercial
terms, as these were. What broke the story was that the
Appointments Commission which vets nominations for peerages
asked the four individuals if they had made donations to any
political party, and they answered 'no.' Someone then leaked
to the Commission that the men had made loans; when the
Commission asked, all four confirmed this, explaining that
they had not mentioned it because they had not been asked
about loans, only donations. The Commission apparently
considered this response unsatisfactory and blocked the
nominations. Another one of the twelve benefactors resigned
from the company he had founded, saying its reputation had
been damaged by allegations (which he denied) that it had
gained government contracts in return for his personal loan
to Labour. At the behest of a Scottish nationalist MP, the
Metropolitan Police are investigating whether the law
(specifically, the 1925 Honours (Prevention of Abuses) Act)
has been broken. The "smoking gun" would be any evidence
that favors were promised in return for loans).

¶3. (C) BAD IMPRESSION: Blair has come in for sharp
criticism because he came to power campaigning against "Tory
sleaze," pledging to be "whiter than white" in his method of
governing. It is he who instituted the independent
Appointments Commission and Electoral Commission, and made it
mandatory to declare all donations over 5,000 BPS. His
recourse to loans is widely seen as a cynical exploitation of
a loophole in the safeguards he himself had devised. The
impression of impropriety was reinforced when it emerged that
the party treasurer had not known about the loans, and
neither had the Deputy Prime Minister. Neither had
Chancellor Gordon Brown, but Brown has taken pains to explain
that as Chancellor, responsible for public expenditures, he
always deliberately stayed out of party financial matters.

¶4. (C) REGAINING THE INITIATIVE: After the initial flurry,
the whole affair has simmered down somewhat as it became
clear that: (1) there was no evidence of illegality, (2) the
opposition had also used undeclared loans, and (3) the Prime
Minister was moving quickly to address concerns about party
financing. Commentary has become more balanced,
acknowledging that parties do need to be funded somehow, and
that people should not be disparaged for making political
contributions. Blair has tasked Sir Hayden Phillips, a
retired senior civil servant, with examining the entire issue
of party funding and seeking consensus among the parties on
additional steps to restore public trust. Blair has also
said he would consider withdrawing from the process of
nominating people for honors. Other possible steps include
partial state funding for parties, and a lower cap on a
party's total campaign funding (currently 20 million BPS).
Separately, the PM has also just named Sir John Bourn to
advise Cabinet ministers on their duties under the

ministerial code of conduct, a step also related to a recent
controversy involving Tessa Jowell, the Secretary of State
for Culture, Media and Sport.

¶5. (C) Chancellor Brown has supported Blair's steps to
address the problem, while distancing himself from the whole
affair. On the other hand, inside sources tell us, Brown's
staff is working feverishly behind the scenes to try to
hasten Blair's resignation. Party treasurer Jack Dromey's
scathing criticism of the Prime Minister for keeping him in
the dark about the loans is widely seen as part of the
Brownites' attempt to hasten their boss's anticipated
promotion to Number 10 Downing Street. (While Dromey, a
union official, holds the position of elected treasurer, it
is officially the General Secretary, Peter Watt, who is the
party treasurer, and Watt did know about the loans.)

¶6. (SBU) Labour's National Executive Committee (NEC) met
March 21, then issued a statement that stressed it had held a
"warm and friendly discussion on the whole issue of party
funding" and fully supported Sir Hayden's review. The NEC
said its officers would "take responsibility for overseeing
all matters concerning donations and commercial loans."
Blair's close friend Lord Levy, who arranged the loans,
continues to be the main fundraiser for the Labour party.
The press is reporting that Levy will have a televised
question-and-answer session with the House of Commons' select
committee on public administration May 2.

¶7. (SBU) OPPOSITION QUIET: The opposition is ill-placed to
make hay out of this affair. Labour has revealed the names
of those who gave it loans, and the amounts they lent; the
Lib Dems have followed suit, but the Tories flatly refuse.
All three main parties agree that in future, such loans
should be subject to mandatory disclosure.

¶7. (SBU) LABOUR IN DEBT: We understand that Labour had
tried to get a loan from its bank to help fund the 2005
general election campaign, but the party was so indebted that
the bank refused. There has been speculation that the party
might sell its headquarters in order to settle its debts.
Some of those who lent money say they are still willing to
work with Labour to either turn their loans into donations or
defer repayment.

¶8. (C) COMMENT: For now, there is no evidence that anyone
broke any laws, and the main parties appear amenable to
agreeing on new rules to try to regain public confidence.
Barring more serious revelations, Blair should have little
difficulty riding out this furor. Still, the perceived
secrecy of the loans and the impression of too-clever-by-half
politicians manipulating the system, feed public cynicism
about British politics. Having promised to step down before
the next general election, and being unpopular with much of
the media and the left wing of his own party, Blair can
expect that every fresh controversy will be portrayed by his
opponents as the scandal that will force him out of office.

Visit London's Classified Website:
http://www.state.sgov.gov/p/eur/london/index.cfm

Tuttle

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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C O N F I D E N T I A L SECTION 01 OF 03 NAIROBI 000395

SIPDIS

SIPDIS

DEPT FOR AF/E, AF/EPS, EB/IFD/OMA
USAID FOR AFR/DP WADE WARREN, AFR/EA JEFF BORNS AND
JULIA ESCALONA
MCC FOR KEVIN SABA AND MALIK CHAKA
TREASURY FOR LUKAS KOHLER
LONDON AND PARIS FOR AFRICA WATCHERS

E.O. 12958: N/A
TAGS: ECON EAID EFIN KCOR PGOV PREL KE
SUBJECT: CORRUPTION IN KENYA: NOT THE TIME TO MOVE FORWARD
ON THE IMF AND MCC PROGRAMS

Ref: A. Nairobi 284 B. 05 Nairobi 5103

Classified by Econ Counselor John Hoover for reasons 1.4
(B) and (D).

¶1. (U) This is a joint Embassy-USAID message and contains
a policy recommendation and rationale in paras 10-14.

¶2. (C) Summary: Public release of serious and credible
evidence of graft and cover-up at the highest levels of the
Kenyan Government is generating outrage in Kenya and
threatens to plunge the country into another round of
political crisis. A befuddled leadership under President
Mwai Kibaki has yet to fully respond to the allegations,
and the early indicators point towards yet another attempt
by the leadership to ride out the storm. Until the
leadership takes swift and decisive action to demonstrate
political will in the fight against corruption, the U.S.
Mission in Kenya recommends postponing any upcoming action
on Kenya's IMF and MCC programs. End summary.

-------------------------------------
High-level Graft and Cover-up Exposed
-------------------------------------

¶3. (SBU) As previewed in reftels, Kenya's largest daily
newspaper, the Nation, began running a series of stories on
January 22 detailing high-level corruption and cover-up
within the Kenyan administration of President Mwai Kibaki.
The serial is based on a 19-page summary dossier provided
in early December to the paper by John Githongo, the GOK's
former Permanent Secretary for Governance and Ethics.
Githongo resigned under pressure from his post in February
2005 and has been in self-imposed exile in the UK ever
since. As reported reftels, President Kibaki, the Kenya
Anti-Corruption Commission (KACC), and the U.S. Embassy
were also provided copies of the summary dossier, which is
now circulating widely among the Kenyan press, which
commendably continues to give it prominent play.

¶4. (SBU) The Githongo dossier offers information that has
been circulating in USG channels for some time. What is
new, however, is the graphic and coherent way it details
the high-level involvement and cover up by some of Kibaki's
most influential and trusted ministers in connection with
the Anglo-Leasing and other similar scams, which first came
to light in April, 2004. Named and shamed in the report,
among others: then-Justice and current Energy Minister
Kiraitu Murungi; former Security Minister Chris Murungaru;
Finance Minister David Mwiraria; and, Vice President Moody
Awori.

------------------------------------
Githongo Dossier Completely Credible
------------------------------------

¶5. (C) Githongo was a close contact of the U.S. Mission
prior to his resignation and self-exile, and remains so
now, indirectly. He is widely viewed by Kenyans and the
international community as a person of great integrity and
dedication to the anti-corruption cause. His "dear diary"
account squares with information from a variety of other
sources available to the U.S. Mission. We therefore view
it as completely credible, both in its details and in the
broader connections it makes between senior leaders of the
Kibaki administration and a shadowy network of private
businessmen who for years have brokered corrupt procurement
scams at a huge cost to Kenyan taxpayers and to the
country's economic and political development.

-----------------------------
Public Reaction Gathers Steam
-----------------------------

¶6. (SBU) Now that the story is in the public domain, it is
predictably causing public outrage. In an eloquent and
unprecedented page-one editorial on January 22, the Daily
Nation described "the long hard struggle to break the cycle
of sleaze...fueled by hunger for power and quick wealth."
It promises, "Today, we start that fight." As the public
continues to follow and digest the story in the press, a
coalition of church groups and Transparency International
have already called for the resignation or dismissal of the

NAIROBI 00000395 002 OF 003


ministers and officials implicated in the Githongo dossier.
Uhuru Kenyatta, Chairman of Parliament's Public Accounts
Committee (and not coincidentally also the head of the
official opposition) is planning a trip by committee
members to London to meet with Githongo shortly to review
his detailed evidence. On January 26, Uhuru further called
for the resignation or sacking of implicated ministers, for
the reconvening of Parliament, and for "mass action" in the
event the President fails to bring Parliament back into
session on schedule.

------------------------------
The U.S. Approach - Short Term
------------------------------

¶7. (C) Thus far, the U.S. Mission, in coordination with
other key donor countries, has adopted a low-key public
approach to the Githongo revelations. This is to allow
what is in every respect a Kenyan drama to play itself out
and to allow President Kibaki and his re-made Cabinet time
to digest and respond to it. We are currently formulating
a joint letter with other missions to President Kibaki that
we anticipate could be delivered quietly before or during a
hoped-for meeting with the president the week of January
¶29. It will note our collective alarm about the
allegations and suggest that the administration take swift
and decisive action to demonstrate political accountability
and repair what little is left of its credibility on the
anti-corruption front.

-----------------------------------------
GOK Response: Nothing Yet; Signs Not Good
-----------------------------------------

¶8. (SBU) Preliminary feelers indicate that we should
not/not anticipate the GOK will take soon the kind of
swift, decisive, and politically painful actions needed to
restore the confidence of Kenyans or of donors. In its
first statement on the issue, Justice Minister Martha Karua
on January 23 reiterated age-old talking points about the
high priority the GOK places on fighting corruption, and
then simply refuted the overwhelming evidence contained in
the Githongo dossier by stating: "The Government never has
and will never sanction corrupt or irregular deals to
finance politics." The Cabinet then met January 26 under
the chairmanship of Vice President Moody Awori (Kibaki was
away attending a funeral) to discuss the matter. The
result, according to preliminary press reports, was that 35
ministers and assistant ministers (which is only be around
half of the cabinet) "rallied around Awori and pledged to
counter the Anglo-Leasing 'story' collectively." In a
press statement read after the meeting, Lands Minister Amos
Kimunye denied knowledge of the Githongo dossier, attempted
to cast doubts on Githongo's credibility, and blamed the
press for politicizing the corruption issue.

¶9. (C) Equally if not more disturbing has been the
reaction, or lack thereof, of President Kibaki. In his
meeting with Kibaki January 25 on the corruption issue,
British High Commissioner Adam Wood reported that when
asked about the Githongo dossier, Kibaki simply denied
having ever seen it. (Comment: Kibaki is either not fully
in command of his faculties, or more likely is being
disingenuous. We have reliable reports that he received
and read the dossier in early December, and the document is
now in wide circulation in any event. End comment). In
other second-hand reports from people who met with Kibaki
this week, he has been described as relaxed and serene,
almost unaware of the political storm gathering around him.

--------------------------------------------
Recommendation: Postpone IMF and MCC Actions
--------------------------------------------

¶10. (C) Until the Government of Kenya responds in a full
and satisfactory way to the credible allegations now in the
public domain about high-level graft and cover-up within
its ranks, this Mission recommends that the United States
and the international financial institutions in which we
are members be selective in approving new upcoming credits,
tranches, or assistance programs for Kenya. In this
context, the U.S. Mission recommends that U.S.
representatives to the International Monetary Fund request

NAIROBI 00000395 003 OF 003

a postponement of the scheduled February 22 IMF Board
meeting, which was expected to approve the second review of
Kenya's Poverty Reduction and Growth Facility. In a
breakfast meeting with the Ambassador on January 26, five
other Nairobi-based Chiefs of Mission (UK, Canada, Germany,
Sweden, Switzerland) said that they would be making similar
recommendations to their capitals.

¶11. (C) For the same reason, we recommend no action be
taken in January or February at the Millennium Challenge
Corporation (MCC) in connection with Kenya's Concept Paper
for the MCC Threshold Program.

¶12. (C) Should in the coming days or weeks the GOK do an
about-face on this issue and take bold action that has the
effect of achieving a measure of political accountability
and renewed confidence in the GOK, we would of course
modify these recommendations accordingly.

---------------------
Comment and Rationale
---------------------

¶13. (C) The U.S. Mission to Kenya is not arguing for
broader disengagement from Kenya in response to the most
recent revelations of scandal. On the contrary, we seek
greater, more coordinated engagement to send an
unmistakable signal to the Kenyan leadership. We should
not underestimate the seriousness of the latest
allegations. Their corrosive effect will likely
destabilize Kenya politically and thus further hamper our
ability to advance U.S. interests on all fronts here. We
are not sure the leadership yet grasps the seriousness with
which we, the Kenyan public, and other donors take the
situation. Sadly, the leadership's track record suggests
it may simply try to ride out the storm.

¶14. (C) Therefore, we should in concert with like-minded
donors send an early and clear signal on the need once and
for all for political will and serious action by Kenya's
leadership. Moving ahead now at the IMF or the MCC could
and would be painted by the enemies of good governance
within the GOK as support for business-as-usual, and would
thus send a negative signal and put us on the wrong side of
this issue. The United States retains respect and
admiration among large swaths of the Kenyan population
precisely because at key moments when leadership and
courage are required, we come out not on the side of
individual leaders or administrations, but on the side of
democracy and improved governance as guiding principles for
Kenya's development. This is one such moment.

Bellamy

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 004599

SIPDIS

STATE PASS AIT/W

E.O. 12958: DECL: 11/16/2015
TAGS: PGOV TW
SUBJECT: PRE-ELECTION SCENE SETTER: TAICHUNG CITY AND
TAICHUNG COUNTY, KMT AHEAD BUT STILL CAUTIOUS


Classified By: AIT Director Douglas Paal, Reason(s): 1.4 (B/D)

¶1. (U) Summary: Kuomintang (KMT) candidates for Taichung
City Mayor and Taichung County Magistrate, both incumbents,
are comfortably ahead of their challengers according to
published public opinion polls. In Taichung City, the
campaign atmosphere is muted with little visible election
competition due to the large lead enjoyed by popular Mayor
Jason Hu. In Taichung County, however, the DPP is energized
and hopeful that its anti-gambling platform will be able to
unseat incumbent KMT Magistrate Huang Chung-sheng. Due to
the large number of undecided voters, the unreliability of
public opinion polls, and the possibility of "last minute
surprises," both parties are cautious about predicting a
winner in Taichung County. End Summary.

Taichung City: KMT Cautiously Confident
----------------------------------------

¶2. (C) KMT Taichung City Chairman Mu Kui-hsin told AIT that
55 percent of Taichung City voters support the Pan-Blue camp
and 45 percent support the Pan-Green camp. More
specifically, Mu estimated that 35 percent of voters are
strongly committed to the Blue coalition and 30 percent to
the Green, while 30 percent are undecided and will vote
according to the personal qualities of the candidates.
Although incumbent Mayor Jason Hu is leading by a wide margin
in all public opinion polls, Mu continued, Taiwan's polls are
historically unreliable because voters are reluctant to
reveal their true candidate preferences and because sample
sizes are too small to be truly reliable. Noting that KMT
Chairman Ma Ying-jeou's two earlier visits had a positive
impact on Mayor Hu's re-election campaign, Mu told AIT that
Ma plans to return at least two more times before election
day, December 3.

¶3. (C) Chairman Mu told AIT that he expects the gap between
Mayor Hu and DPP candidate Lin Chia-lung to narrow as
election day nears and that he expects the final vote to be
much closer. The People's First Party (PFP) refused to
cooperate on a common Pan-Blue candidate, Mu explained, in
hopes of leveraging KMT support for PFP candidates competing
in other districts. PFP candidate Shen Chih-hui is stuck in
the race now because, Mu surmised, were she to drop out at
this late date her supporters would think she had made a
"secret deal" with the KMT. Mu insisted that, contrary to
rumors, Mayor Hu is in good health (Note: Hu suffered a
relatively minor stroke three years ago; he went on a
television talk show last night, November 15, to demonstrate
to voters how robust his health is now. End note.) While
continuing to stress Hu's achievements as Mayor
(construction of highways and stadiums), Chairman Mu noted
cryptically that the party is also planning a few "special
activities" during the final week of the campaign.

¶4. (C) DPP Taichung City Chairman Chen Ta-chun told AIT that
according to DPP internal polls, DPP candidate Lin
Chia-lung's voter support has risen to 22 percent while Mayor
Hu's support has slipped to 40 percent. Chen acknowleged
that DPP suport in Taichung is declining, but insisted the
party still has a chance to win since outside polls always
underestimate DPP support. Chen told AIT that the DPP will
continue to focus on Hu's "problems" in hopes of gaining
votes. The DPP has attacked Mayor Hu for inflating his
number of years in civil service, largely by including his
years working for the then-ruling KMT, after he retired from
the central government to run for Taichung Mayor in 2001;
there are also sleaze rumors being circulated by unnamed
sources that Mayor Hu is a homosexual. In an odd note,
Chairman Chen, acknowledging his own aspirations to run for
Taichung Mayor, criticized DPP candidate Lin Chia-Lung as an
"outsider".

¶5. (C) Tunghai University (Taichung) Political Scientist
Wang Yeh-li separately assessed to AIT that DPP accusations
against Mayor Hu will have minimal effect on the Taichung
City race. Professor Wang explained that voters in Taichung
City come from all parts of Taiwan and have limited party
identification, which makes election predictions especially
difficult. Professor Wang told AIT that DPP candidate Lin
Chia-lung's greatest liability is his lack of personal ties
to Taichung City, because many Taichung voters are
uncomfortable with the DPP nominating an outsider. The real
reason the DPP nominated non-residents to run in Taichung
City and County races, as well as in Taipei County, Wang
explained, was to cultivate a younger generation of leaders
for the future.

Taichung County: KMT Still Cautious, DPP Energized
--------------------------------------------- ------

¶6. (C) Lin Chao-tang, a Section Chief in the KMT party
headquarters in Fengyuan, told AIT that although KMT
incumbent Magistrate Huang Chung-sheng continues to lead in
public opinion polls, poll samples were too small -- around
1,000 out of over 1 million voters -- to be reliable. With
KMT membership only about 40,000 county-wide, Lin said, most
voters will end up voting for the candidates they know best,
regardless of party affiliation. While 60 percent of
Taichung County voters traditionally vote KMT and Magistrate
Huang brings a strong record as magistrate to the race, the
KMT remains cautious and uncertain. Although local factions
no longer exert as much influence in elections as they did in
the past, they are still influential in rural areas, which
will befit KMT candidate Huang with his superior relations
with the factions. Lin predicted that the voter turnout
would increase from 60 percent in earlier elections to 70
percent, for which he credited the new "three-in-one"
election format.

¶7. (C) DPP Taichung County Director Chang Wen-huai told AIT
that the DPP out-polled the KMT in the 2004 presidential
election despite the fact that the KMT support base
outnumbers the DPP 55-45 percent. Explaining that internal
DPP polls show rising support for DPP magistrate candidate
Chiu Tai-san, Chang insisted the election is much closer than
commonly believed and will probably be decided by
30,000-50,000 votes. Candidate Chiu's campaign manager Li
Chin-hsiang separately told AIT that the influence of local
factions is on the decline, especially among younger voters,
while the percentage of undecided voters is increasing.
Since the latter are more independent in their voting, the
DPP will campaign for their support by emphasizing Chiu's
qualifications. It will press the DPP's anti-gambling
platform in order to capitalize on DPP candidate Chiu
Tai-san's accusations that KMT incumbent Magistrate Huang
illegally approved licenses for video arcades. (Note: KMT
Taichung County Magistrate Huang has issued a six-point
statement refuting these allegations. End note) Explaining
that the DPP considers Taichung County to be a battleground
race and a potential win, Wang and Li told AIT they are
confident Chiu's popularity will continue rising and will
catch his opponent by election day.

Paal

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

C O N F I D E N T I A L SECTION 01 OF 03 CAIRO 008034

SIPDIS

NSC STAFF FOR POUNDS

E.O. 12958: DECL: 10/17/2015
TAGS: PGOV KDEM EG
SUBJECT: EGYPT: AYMAN NOUR AT THE END OF HIS ROPE


Classified by DCM Stuart E. Jones for reasons 1.4 (b) and
(d).

-------
Summary
-------

¶1. (C) Opposition leader Ayman Nour recently gave poloff a
dramatic account of his current political travails, claiming
the GOE has responded "with ferocious vengeance" to his
strong showing in the September 7 presidential election.
While this is Nour's version of events, and needs to be put
in the context of political maneuvering in advance of the
parliamentary elections, Nour is the leading opposition
figure in Egypt and his charges are likely to be reported
widely in the western media. Nour described to poloff a
"vicious campaign" to destroy him, his reputation, and his
party. According to Nour, the latest of the "dirty tricks"
includes a recording of unknown origin now in circulation
entitled "Ayman Nour's scandal" -- which contains separate
audio recordings purportedly of both Nour and his wife
Gameela, each engaged in lurid conversations with their
respective lovers.

¶2. (C) Claiming the GOE was bent on kicking him out of
parliament, Nour asserted that State Security was directly
and bluntly intimidating voters in his home district. Nour
also accused the GOE of engineering the emergence of a
parallel Ghad Party -- led by Nour's former friend and
confidante Musa Musa, which has now issued a parallel Ghad
Party newspaper and will apparently field its own
parliamentary candidates under the Ghad Party banner. Nour
believed he may soon be re-arrested and jailed on a new
"trumped up" bribery case. The dispirited Nour confided that
all the stress had taken him near the breaking point, and
openly contemplated withdrawing from politics and/or leaving
Egypt. Though we cannot absolve Nour of any wrongdoing in
his past, we find credible his charges is the target of a
politically motivated campaign to remove him from the stage.
End summary.

--------------------------------------------- --
"Dirty Tricks" Campaign Shifting into High Gear
--------------------------------------------- ---

¶3. (C) Poloff met for 90 minutes on the evening of October 15
with Ghad Party President Ayman Nour, at the latter's
request. We understand Nour has also been speaking with
western journalists, including the New York Times, which may
soon publish an article detailing his allegations of GOE
persecution. In his meeting with poloff, the normally
confident Nour was uncharacteristically morose. Nour said
that the weeks since the September 7 presidential election
had been the worst in his life. Nour surprised observers in
the presidential election by receiving, according to the
official results, more than 500,000 of the 7 million votes
cast. (Nour claims that he actually received many more votes,
perhaps as many as 22 percent of the vote.) "This result was
extremely painful for the ruling powers," Nour asserted, "now
they are determined to take revenge by destroying my career,
destroying my reputation, and destroying my spirit."


----------------------------
Re-Arrest, Jailing Imminent?
----------------------------

¶4. (C) Nour told poloff that he feared That he will be
re-arrested and returned to jail in a second "trumped up"
case - this time apparently a bribery charge. Nour said he
had received a call from the office of People's Assembly
Speaker Fathy Surour advising him that the Speaker had
received a request from prosecutors that his parliamentary
immunity be lifted and that Surour felt he had no basis to
deny the request. (Note: Nour's immunity was also lifted
hours before his arrest in January. End note.) The
prosecutor's request apparently relates to the case of Ayman
Barakat, a former employee in Nour's law office who was
accused of bribery and fraud. Prosecutors alleged Barakat
paid a poor resident from his village in the Delta to "stand
in" for him in jail. Nour told us that last week he was
informed by the Public Prosecutor's office that he has now
become a target in the investigation -- the "stand-in" is
claiming that Barakat, in setting up the arrangement, was
acting on Nour's orders. (Note: We have no independent
confirmation that Nour will become a defendent in this case.
End note.)

¶5. (C) Nour insists he has never met and had never heard of
the "stand-in" before the case broke and is extremely
agitated by the prospect of returning to jail. "They are
planning to put me in Abu Za'bal - the worst jail in Egypt,"
he stated, recalling his allegedly brutal handling during his
first arrest in January. "I cannot go back to jail...I
believe they want me in jail on Election Day (November 9),"
he asserted.

---------------
Smut and sleaze
---------------

¶6. (C) Nour and his wife (and principal advisor) Gameela
Ismail, who sat in on the meeting with poloff, were also
agitated by a CD of unknown origin entitled "The Scandals of
Ayman Nour," which they said began circulating in Cairo last
week. The CD, which has already been the subject of an
article in the tabloid Al-Midan, contains purported audio
recordings of Nour engaged in a lewd conversation with a
"girfriend" and a second recording, purportedly of Gameela,
engaged in pillow talk with a "lover." Gameela said the CD
was analyzed by a professional audio technician who told her
it had been heavily dubbed. Ayman and Gameela charged that
the CD marked a new low in the GOE's efforts to destroy them,
by invoking sexual innuendo; a particularly devastating
weapon against a woman in an Islamic society.

---------------------------
Intimidation in Bab Shariya
---------------------------

¶7. (C) Nour also claimed that State Security intimidation of
voters in his parliamentary constituency of Bab Shariya, a
working class neighborhood in Central Cairo, had become
increasingly blunt and heavy-handed. The challenger for
Nour's seat in the district, the NDP's Yahya Wahdani, has a
"day job" as a senior officer in the State Security service.
According to Nour, many of the local "pillars" of his
constituency, neighborhood businessmen and community leaders,
had been summoned to State Security and warned to withdraw
their support for Nour or face unspecified consequences. He
claimed that constituents who shake his hand and greet him on
the street during his regular visits to the district are
questioned by State Security minutes later. Additionally,
Nour charged that the work stoppage of the new Ministry of
Health clinic under construction in his district also
constituted retaliation against him.

------------------
The Parallel Party
------------------

¶8. (C) Nour also complained of actions by Musa Musa, formerly
his best friend and deputy leader of the Ghad Party, until
they fought for control of the party in Mid-September.

¶9. (C) Musa and fellow expelled members of the Ghad's central
committee Ragab Hilal Hameida and Mursi Al-Sheikh have now
set up their own Ghad Party in parallel to Nour's. Nour told
poloff he was convinced Musa's efforts to form a
rival/parallel Ghad Party leadership were financed by State
Security and coordinated with the wider GOE. He noted that
the first "General Conference" of Musa's parallel Ghad Party,
staged in early October, had received front page coverage on
leading pro-government daily Al-Ahram. Nour asserted that
the parallel party's conference had been populated not by
dissenting Ghad Party members, but by a "rented" crowd
organized by Musa's brother, a personal friend of Gamal
Mubarak and a member of the NDP policies secretariat.

¶10. (C) Nour observed that on October 12, a parallel Ghad
Party newspaper, identifying Musa as party leader, hit the
newsstands, replacing Nour,s Ghad Party paper. Showing
poloff a copy of Musa's "dummy" Ghad paper, Nour pointed out
several articles on the first three pages - one defaming Nour
as an incompetent and irresponsible autocrat, one praising
Mubarak's restraint and dignity in the face of taunts and
insults from Nour, and even a page three article asking "why
are Gamal
Mubarak's political rights being denied?"

¶11. (C) Nour claimed that the "dummy" paper had cost the
"actual" Ghad paper thousands of dollars in lost revenue and
was bound to confuse the his paper's substantial readership.
Moreover, Nour added, Musa's "dummy" paper was issued and
distributed without any license or permit, a criminal
offense, but the GOE had not prevented it. Nour's written
complaint to the Public Prosecutor's office on the matter has
gone unanswered. Moreover, Nour continued, there are now
signs that Musa's parallel party is planning to field its own
candidates for parliament, under the "Ghad Party" banner.

--------------------------------
Criminal Forgery Trial to Resume
--------------------------------

¶12. (C) Compounding Nour's woes, his trial on criminal
forgery charges is scheduled to resume on October 22.
Prosecutors declined to drop the case against him, as some
observers had expected, when their star witness told the
court in June that he had been coerced into giving testimony
against Nour by prosecutors (ref B). Nour predicted that the
court would hold daily sessions beginning October 22, and
consume as much time as possible during the two weeks before
the November 9 election.

----------------
Who's Behind It?
----------------

¶13. (C) Nour was convinced that the campaign against him
could ultimately be traced back to Gamal Mubarak and his
supporters. He claimed that they see him as a threat to
Gamal's plans to succeed his father. He also charged that
the political leadership appears to have delegated to State
Security the task of coordinating the campaign of harassment.
Nour confided that the stress of the past few weeks had
taken him to the breaking point, adding that he saw the end
of his political career on the horizon.

-------
Comment
-------

¶14. (C) Although we are unable to absolve Ayman Nour of any
past wrongdoing in either his political career or his private
legal practice, we find credible Nour's assertion that the
campaign against him switched into high gear in the lead up
to parliamentary election. Young and charismatic, Nour
diverges from the archetype of the Egyptian opposition
leader. Virtually all of his opposition counterparts are in
their seventies, out of touch with youth, and wedded to
outdated and impractical political ideologies. On one hand,
even under ideal circumstances, he can barely dent the
anticipated electoral support for the NDP parliamentary
candidates. On the other hand, it does appear that he has
offended -- and gotten under the skin -- of the political
establishment, which has decided to retaliate with the full
arsenal of political tools at its disposal. End comment.

RICCIARDONE

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

C O N F I D E N T I A L SECTION 01 OF 03 LAGOS 001463

SIPDIS

STATE PASS DOE FOR DAS JBRODMAN AND CGAY
TREASURY FOR ASEVERENS AND SRENENDER
COMMERCE FOR KBURRESS
STATE PASS TRANSPORTATION FOR MARAD
STATE PASS OPIC FOR ZHAN AND MSTUCKART
STATE PASS TDA FOR NCABOT
STATE PASS EXIM FOR JRICHTER
STATE PASS USTR FOR ASST USTR SLISER
STATE PASS USAID FOR GWEYNAND AND SLAWAETZ

E.O. 12958: DECL: 09/20/2015
TAGS: EPET PGOV ASEC NI
SUBJECT: LONDON POLICE ARREST BAYELSA GOVERNOR, IJAW YOUTH
THREATEN RETALIATION; ASARI REPORTEDLY ARRESTED


Classified By: Consul General Brian L. Browne for Reasons 1.4 (D & E)

Summary
---------

¶1. (C) The Nigerian Economic and Financial Crimes
Commission (EFCC) confirmed its cooperation with UK
authorities on
Bayelsa State Governor Alamieyesiegha's September 15 London
arrest
in connection with allegations of money laundering.
The London Metropolitan police have reportedly
released the Governor, but seized his passport to
prevent his return to Nigeria, pending his appearance
at a November hearing. The Ijaw Youth Council (IYC)
threatened British oil interests and citizens in the
Delta region unless the Governor was allowed to
return home. The IYC renewed these threats upon
unconfirmed news of the arrest of Niger Delta People's
Volunteer Force leader Asari. The British High Commission
is advising British citizens and companies
operating in the Niger Delta to exercise caution, and
he private security firms contracted by
petroleum firms are advising vigilance.

Governor Alamieyesiegha's Arrest;
EFCC Worked with London Police on Case
--------------------------------------------- ----

¶2. (SBU) The Nigerian newspapers devoted their front page
to
Governor Alamieyesiegha's September 15 London arrest in
connection
with allegations of money laundering. The Nigerian Economic
and
Financial Crimes Commission (EFCC) noted in a public
statement,
"The EFCC wishes to state that the commission is fully in the
picture of the on-going investigation while it has a close
relationship with the Metropolitan Police and other law
enforcement agencies around the world." The EFCC also
indicated
seven London banks accounts have been traced to
Alamieyesiegha.
Some press reports indicate President Obasanjo is pushing
for Alamieyesiegha's trial in London, where he would not
enjoy
immunity from prosecution, as he does in Nigeria.
On September 20, Nigerian media reported President Obasanjo
had convened a meeting with the state governors to lecture
them on
the "consequences of continued involvement in corrupt
practices,"
pointing to its deleterious impact on Nigeria's
socio-economic development.

Bayelsa State Financial Officials Targeted, Questioned
--------------------------------------------- ---------

¶3. (SBU) Alamieyeseigha's arrest appears to
be the culmination of increased scrutiny of Bayelsa
state officials. In the last week, the Bayelsa Finance
Commissioner,
Accountant-General and Government House accountant,
reportedly have been questioned by the EFCC.

IYC Calls Arrest a Conspiracy Between British,
Nigerian Governments to De-Stabilize Ijaws
--------------------------------------------- -

¶4. (SBU) Press reports indicate the IYC President,
"Comrade" Oyeinfie Jon-Jon called the arrest "a conspiracy"
between the British authorities and Nigerian government and
"part of a grand plan to destabilize the Ijaws." The
Xinhua News Agency reported receipt of a press release from
President Jon-Jon, advising, "the British authorities and
their collaborators in the federal government of Nigeria to
immediately release our No. 1 citizen, otherwise we cannot
continue to guarantee the safety of their investment and
citizens in our territories."
Asari Arrest Spurs IYC Reversal; Threats to Brits Back On
--------------------------------------------- ------------

¶5. (C) According to an Ijaw youth leader, in response to
the
threats made against British interests and citizens in the
Delta,
police arrested Dokubo Asari, head of the Niger Delta
People's
Volunteer Force, in Port Harcourt. (Note: We have not
confirmed the arrest at this
point. End note.) He told us the threats against the
British were back in force,
as the GON was "not taking them seriously." The youth
leader claimed the Ijaw
people were now aligned against the GON in any attempts to
prosecute
Alamieyeseigha, and reiterated threats against the British.

British High Comissioner Responds to Arrest;
Emphasis on Cooperation with Nigerian Authorities
--------------------------------------------- ---

¶6. (C) British Deputy High Commission Trade Manager Debbie
Fern
told us the arrest is a "joint operation" between the
British and Nigerian Governments. Fern confirmed for us the
IYC issued a
seven-day ultimatum to release the governor from detention,
and a one-month ultimatum to repatriate him to Nigeria.
Fern's
statements confirm press reports of a statement by High
Commissioner
Grozeny that the arrest came at the GON's behest.

British HC, Armorgroup, Advise Caution for British Citizens
--------------------------------------------- --------------

¶7. (C) The security manager for the British High
Commission is advising British citizens and companies
operating
in the Niger Delta to exercise caution. The private security
firm Armourgroup,
which handles security for the British Mission as well as a
number of the petroleum companies, is monitoring
developments on the ground in Bayelsa. Armorgroup has
reported "tension and small protests," but does not expect
this to spread beyond Ijaw areas.

Industry Figures Concur on Governor's Reputation for
Graft, Close Connection to Ijaw Youth Groups
--------------------------------------------- --------

¶8. (C) Many in the public and the petroleum industry
would agree that Governor Alamieyeseigha has a reputation -
hardly unique among Nigerian governors - for graft.
Martin Hutchison, Managing Director of a potential
multi-billion investment in Bayelsa State, Brass LNG, told
us he has great difficulty meeting with the Governor, as
"he only seems to be in the state three days a month - the
day before the federal payment hits, the day the payment
hits, and the day after, when he divvies it up."
Hutchision also reported the industry view is
Governor Alamieyeseigha pays enormous sums to the Ijaw
youth groups for "protection." Hence, they are incensed at
his arrest and consequent threat to their livelihood.

Ijaw Threat Cannot be Ignored
---------------------------------------

¶9. (C) It remains a challenge to verify whether the
fractious Ijaw youth groups pose an imminent threat to
Nigeria's oil producing interests in Bayelsa state. We
would concur with a recent press analysis, which noted,
"Membership of Ijaw groups that fall under the umbrella of
the IYC remains fluid, and the continued proliferation of
renegade Ijaw groups in the Niger delta is likely to make
it difficult for the security forces to successfully track
and monitor their operations."

Comment
--------

¶10. (C) The arrest of Governor Alamieyeseigha breaks new
ground in the anti-corruption battle in Nigeria. However,
much of the Nigerian public believes the process is highly
politicized, almost exclusively aimed at President Obasanjo's
political opponents. Over the long haul, the EFCC must
be seen as a neutral party, investigating both those within
the President's circle of support, as well as the
Presidential
doghouse. Meanwhile, already irascible Ijaw youth groups
are agitated more than normal. Unless the EFCC gains ground
in its quest to be seen as neutral, it risks failure in its
core mission, but also widening the chasm between ethnic
groups, and inciting new bouts of violence. Meanwhile,
many in the public would give at least a modest
nod towards the IYC President Jon-Jon's demand to know why
Obasanjo is not investigating his own close associates and
children for sleaze.

BROWNE

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

C O N F I D E N T I A L SECTION 01 OF 03 WELLINGTON 000566

SIPDIS

STATE FOR D (CASTRO), EAP/FO, EAP/P AND EAP/ANP
STATE PASS DEPT OF AGRICULTURE
NSC FOR VICTOR CHA AND MICHAEL GREEN
SECDEF FOR OSD/ISA LIZ PHU
PACOM FOR J2/J233/J5/SJFHQ
USDA FOR SECRETARY JOHANNS AND FAS/MIKE CONLON

E.O. 12958: DECL: 07/22/2015
TAGS: PREL PGOV EAGR NZ
SUBJECT: THE SLEAZE HITS THE FAN: AN INCREASINGLY WORRIED
LABOUR CLAIMS NATIONAL IS U.S. PAWN


Classified By: Charge D'Affaires David R. Burnett,
for reasons 1.4 (b) and (d).

¶1. (C) Summary: Facing rapid losses in the polls, the ruling
Labour Party has apparently decided to play the anti-American
card, telling New Zealanders that a vote for the National
Party means a vote against New Zealand's independent foreign
policy. Embassy Wellington is in general keeping a low
profile on this and other election-related issues. However,
we released a press statement in response to veiled Labour
allegations that U.S. interests are funding and controlling
the National Party's campaign. We have also quietly warned
the Government that we will similarly respond to any further
baseless allegations. Labour's actions are not without risk
to its own interests: more than one media report has
expressed suspicions that the Government is trying to divert
attention from its problem-plagued domestic policies. In
light of Labour's actions, Ambassador Swindells strongly
recommends that Washington reconsider whether Agriculture
Secretary Johanns should visit New Zealand just weeks before

SIPDIS
the general elections (see para 13). End Summary.

------------------
THE MITTS COME OFF
------------------

¶2. (SBU) After months of appearing invulnerable to a series
of scandals and controversies, the Labour Government's armor
is apparently beginning to crack. A series of polls
conducted in recent weeks has shown support for the
opposition National Party is increasing at the same time as
Labour's is falling. The most recent polls, conducted over
the weekend, have shown National now leads Labor by between
three and five percentage points, although neither party has
majority support. (A One News/Colmar Brunton poll issued
July 18 showed National's support at 42 percent vs. Labour at
39 percent; a July 16 Fairfax New Zealand/AC Nielson poll
showed 42 vs. 37 percent, respectively.)

¶3. (C) It is now almost certain that elections will not be
held until mid-September rather than late August, and
Labour's worry over its recent slide is at least partly
responsible for the later date. But although the Prime
Minister is not likely to announce the election date formally
before August 20, campaigning is already well underway and is
becoming more personal and vicious. In a recent speech, Dr.
Brash called PM Clark "a petty, spiteful, deceitful leader
whose government was 'rotten to the core.'" Meanwhile, an
apparently worried Labour has made the decision to play the
anti-American card: senior Labour officials have begun to
imply that a vote for National would mean a vote against an
independent NZ foreign policy, and a vote for a U.S.-run NZ
government.

¶4. (SBU) On Tuesday, PM Clark and Michael Cullen each
claimed in separate speeches that the question of National
leader Don Brash's credibility would be a cornerstone of
Labour's campaign. At the same time, Labour began to run
advertisements in local newspapers and on buses that include
a statement Brash made about the Iraq War some time ago --
that given the evidence surrounding Saddam and weapons of
mass destruction, he too would have "done the same thing as
President Bush" i.e., sent New Zealand troops to participate
in Operation Iraqi Freedom. Young Labour also put up posters
showing side-by-side photos of Brash and the President,
together with the accompanying slogan "Can you spot the
difference?" Cullen also questioned in his speech where
National was getting it's money, claimed that the party had
much more money than Labour, and implied that some funds were
coming from overseas.

¶5. (SBU) In response, Brash told the media that Labour was
just trying to divert attention from the Government's
domestic policies. Obviously wishing to avoid the question
of the Iraq war, which remains deeply unpopular here, Brash
also stressed that the past was the past and it makes no
sense to talk about what he would have done two years ago.
Undaunted, Foreign Minister Goff issued an official statement
claiming that Brash's Iraq policies were a legitimate
question: Australia has recently decided to send more troops
to Iraq; would Brash as PM make a similar decision? After
repeated questions by the media, Brash later fleshed out his
stance, "In some circumstances we (i.e., a National-led
Government) might certainly go with the United States but we
make that judgment in the light of what's in New Zealand's
best interests."

-----------------
CROSSING THE LINE
-----------------

¶6. (SBU) On July 23, Education Minister Mallard upped the
ante. During a press conference that was ostensibly on the
Government's education policies, he alleged that "the lead
bag man" for Brash "is an American..." and that "we will name
him at the appropriate time." Mallard then went on to say
that "..if you say nukes gone by lunchtime and you have very
close relations on Iraq and may or may not have made promises
to send troops to Iraq the fact that an American is
collecting cash for you is I think pretty interesting." He
also said that "...Brash has indicated that he will act on
American lines more than any government in New Zealand ever
has in the past," and added that National's campaign is being
written by Americans. While claiming that his remarks were
not directed at Americans or the Bush Administration, Mallard
clearly meant to hint at U.S. Government connection to
National's financers, remarking, "...I think New Zealanders
expect our policies...to be written in Wellington not
Washington."

¶7. (SBU) Despite the fact that the Charge had hosted Mallard
to dinner the night before, the Embassy first learned about
the Minister's claims from a journalist who was reporting on
the story and wished to know the Embassy's response. (The
Charge had actually raised concerns about Young Labour's
poster campaign over dinner; the Minister did not respond but
looked very uncomfortable.)

------------------------------------
THE EMBASSY (VERY QUIETLY) WEIGHS IN
------------------------------------

¶8. (SBU) After learning of the press inquiries concerning
Mallard's innuendoes, the Charge called Ministry of Foreign
Affairs (MFAT) and Trade CEO Simon Murdoch, who was unaware
of Mallard's comments. (We then faxed the transcript to
him.) Murdoch contacted Minister Goff, who was on travel
within New Zealand and about to board a flight. Goff agreed
that a line had been crossed, and said he would call the
Charge once he returned to Auckland.

¶9. (SBU) Brash, meanwhile, was telling the media that this
was a low blow. National's policies are not for sale, he
said, and are written by New Zealanders for New Zealanders.
Although the media has speculated the financial backer in
question is Julian Robertson, a wealthy US property developer
who has been a part-time resident here for years, Brash
denied that National has gotten truly significant funding
from any single donor. TVNZ, in reporting the flap, implied
that Mallard's comments were driven by National's
hard-hitting criticism of Labour's education policies. TVNZ
also ran old footage of an obviously pleased Prime Minister
Clark meeting with President Bush, commenting that Clark
clearly relished the attention of the U.S. President. Radio
NZ said that Mallard will have to soon prove his accusations
or he will completely lose credibility.

¶10. (C) When, as promised, Goff called in, the Charge told
him that we recognize that New Zealanders have the right to
debate issues of substance during their election campaign,
even when the issues involve the United States. The Embassy
had not, for example, commented on Minister Goff's remarks on
Labour's vs. National's Iraq policies. But by hinting that
Washington was interfering in the elections and cutting
secret deals with National, Mallard's statements had gone

SIPDIS
over the line. Goff agreed, noting that "Mallard's wording
was not as careful as it should have been." The Charge
countered that, on the contrary, Mallard's words seem to have
been very carefully chosen to imply that there was U.S.
Government involvement without actually saying so. Goff was
silent at this.
The Charge also reminded Goff that Ambassador Swindells had
spoken in his July 4 speech of the failure of both
governments to deal with the legacy of mistrust that exists
between us. He added that Labour's tactics seemed designed to
increase that mistrust rather than to reduce it.

¶11. (C) The Charge told Goff that the Embassy would have
appreciated a head's up that Mallard would be making these
remarks. Goff said that as was well known, he (Goff) has
very favorable feelings towards the United States and close
family connections there. (Goff's sister is an Amcit and has
two sons serving in the U.S. military (one of who is in Iraq)
with a third on his way to West Point.) But, he went on, the
Government believes that these issues do resonate with the
New Zealand public and it would therefore be foolish not to
pursue them. There will be more campaigning on issues
related to U.S. policy in the weeks ahead, he cautioned. The
Charge said that was Labour's call to make, but if further
false claims were made the Embassy would respond. Goff
agreed that it was in the Embassy's right to do so, and
endorsed the idea of our making a press statement refuting
Mallard's claims. The Charge then released to the media the
following statement, which has also been cleared by
Washington:

"Our position is that the outcome of the upcoming election is
entirely a matter for the people of New Zealand to decide.
The U.S. Government has neither asked for nor received
assurances of any kind from any political party in New
Zealand. As Ambassador Swindells mentioned in his farewell
speech, we stand ready to work with whomever New Zealanders
choose to represent them in order to make this important
relationship all that both countries want it to be."

-------
COMMENT
-------

¶12. (C) The tepid media reaction to Mallard's comments shows
Labour's strategy might be a risky one. Many journalists are
questioning the accuracy of the claims and have picked up
with some sympathy National's view that this is a
diversionary tactic. (Embassy has e-mailed a summary of media
reports to EAP/ANP and others in Washington.) In addition,
we understand that our MFAT contacts have been counseling the
Government that there will be long-term impact on our
bilateral relations if Labour continues its baseless
diatribes and hints that a close relationship with the United
States is in general not in New Zealand's interests.
Meanwhile, we continue with our behind the scenes talks with
MFAT and other key decision makers in government, the private
sector, and the media about ways we can improve the bilateral
relationship after the elections (septel).

¶13. (C) But if Labour wins, its campaign may impact our
ability or desire to build bridges. Ambassador Swindells,
who is on travel but has been kept abreast of the latest
flap, also strongly recommends that Washington reconsider
whether or not late August is a good time for Agriculture
Secretary Johanns to visit New Zealand. Ordinarily such a

SIPDIS
visit would be a positive message of support for bilateral
ties. However, we question whether a Cabinet-level visit
just weeks before the elections might not be seen as
interference in domestic politics or be used to undermine
broader U.S. interests.

Burnett

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

UNCLAS SECTION 01 OF 03 ISTANBUL 000526

SIPDIS

SENSITIVE

TREASURY FOR INTERNATIONAL AFFAIRS - MMILLS AND CPLANTIER
NSC FOR BRYZA AND MCKIBBEN

E.O. 12958: N/A
TAGS: KCOR ECON EFIN TU
SUBJECT: CORRUPTION: TURKEY'S 800-POUND GORILLA?

REF: ANKARA 1728

Sensitive but unclassified. Not for internet distribution.
This message was coordinated with Embassy Ankara.

¶1. (SBU) Summary: Public attention has returned to the
subject of corruption in Turkey in recent weeks with
publication of a country survey by the "Economist" magazine
blaming the problem for Turkey's failure to attract more
foreign investment. The survey coincided with the
publication of Transparency International's Global Corruption
2005 report, which focused on the construction sector. That
organization's 2004 perceptions index confirmed Turkey's
negative reputation with a 3.2 score, reflecting observers'
belief that the country's environment verges on "rampant
corruption." Our contacts, however, are inclined to view
this single-minded focus on corruption itself as a mistake,
believing instead that the problem is broader, and that there
are a number of other factors that contribute to the
"opaqueness" of the Turkish economy. These views find
support in the World Bank's newly-released World Development
Report 2005, which asserts that Turkish companies pay 6
percent of their turnover for bribes, but nonetheless finds
that most investors view high taxes, tax administration, and
legal problems as bigger obstacles. End Summary.

¶2. (U) Public Indictment: In a series of Istanbul and Ankara
seminars aimed at disseminating the "Economist's" recent
survey on Turkey, author Tim Hindle repeatedly reiterated
that he views corruption as perhaps the most pressing issue
facing Turkey today. Citing the example of corrupt
politicians, he argued that Turkey is a "fish that has rotted
from the head," and that "sleaze and authorized theft" have
undermined Turkey's economic life. In particular, he
suggested, corruption is a key reason why foreigners have
steered clear of the Turkish economy. Given its present
situation, he elaborated, Turkey may be able to attract
investment from "equally or more corrupt nations" such as
Russia and the Ukraine, but not from Western Europe or North
America. The "Economist's" indictment was given wide press
play in Turkish media, and has sparked discussion about just
how pervasive and important the issue is.

¶3. (U) On the Edge: By chance, the "Economist" survey
coincided with release by Turkey's local Transparency
International chapter of the organization's report on Global
Corruption 2005. An accompanying index of "Corruption
Perceptions, completed in 2004, also emphasized the
perception problem Turkey faces. The index is a poll of
polls, drawing on 18 surveys conducted by 12 institutions
between 2002 and 2004. A score above 9 reflects a relatively
clean environment; a score less than 3 reflects rampant
corruption. As in the past, Turkey found itself relatively
lowly rated, with a score of 3.2. While the score left
Turkey in 77th place among 146 countries, only Romania among
EU candidate or member countries ranked lower. The
accompanying report listed deficiencies in Turkey's
legislative framework, including failure to fully reform
public procurement practices, the absence of an independent
corruption fighting agency in a new draft anti-corruption
statute, and the absence of aims or guiding principles for a
new public servants ethics commission. The local chapter
drew particular attention to the problem of corruption in the
construction sector, where contractors rig bids and evade
zoning requirements by bribing inspectors, often with
potentially deadly results.

¶4. (SBU) A problem, but: Our Istanbul contacts concede that
corruption is an ever present facet of Turkish life, but
argue that its scope and impact have been exaggerated, and
that it is more a result of other deficiencies than a
principle actor in its own right. Price Waterhouse Cooper's
(PWC) Senior Partner Adnan Nas, who has studied the issue for
a number of clients, characterizes corruption as just one
aspect of the larger problem of the "opacity" of the Turkish
economy. Corruption, he argued, is "easier for the media to
talk about and more sensational," and hence attracts more
attention, but leads observers to miss other underlying
factors, which can be more important. These include such
other deeply rooted problems as the absence of an assured
legal environment, with effective legislation and
enforcement, macro-economic instability, and the lack of
internationally accepted accounting standards. Nas notes
that PWC conducted its own study in 2001 of "opacity," and
concluded that these problems were the equivalent of a 36
percent increase in Turkey's already high corporate tax
rates, and estimated the amount of foreign investment they
kept away at 1.8 billion USD.
¶5. (SBU) Bureaucratic Obstacles: Nas argued that corruption
results from a nexus of shortcomings in the Turkish system,
including bureaucratic inertia, an ineffective legal system,
and a tendency of Turkish corporations to compensate for
their lack of competitiveness by rent-seeking behavior. Nas
pointed to the attitude of civil servants in Turkey, noting
that the vast majority find it preferable to do nothing
rather than to take proactive action. "Action leads to
investigation" by inspecting authorities," he suggested,
noting that while cases are frequently taken to court under
Article 240 of the Civil Service Code for misuse of
authority, cases are almost never brought under the article
covering negligence (230). The natural tendency for civil
servants is thus to do nothing, which can lead companies
seeking government action to utilize corrupt means. Nas
conceded that elements of Turkish tradition can lend
themselves to this, though they are often not perceived that
way by civil servants themselves. Giving of presents is seen
as normal in government offices, he argued, and often these
can involve substantial amounts. Little control is
exercised, as was evident earlier this year when the
controversy surrounding the gifts presented to the Prime
Minister and his wife in Russia showed that no effective
monitoring or tracking system existed within the government.

¶6. (SBU) Little Disincentive: TUSIAD Board Member Pekin Baran
noted that in and of itself Turkey's bureaucratic complexity
lends itself to corruption, even if most civil servants are
honest. While company registration procedures have been
streamlined, other procedures have not. If one must deal
with 23 desks in order to clear a particular action, Baran
argued, the odds are that 2 or 3 may make illegal requests.
Baran argued that the legal system provides little
disincentive to committing such illegal acts, since few if
any civil servants or politicians have been punished or tried
for such actions. Bank of New York Representative Neslihan
Tombul echoed that view, suggesting that currently in Turkey
there is "no fear or respect for the law." Currently "greed"
wins out over "fear" every time, she said, and corruption can
only be effectively addressed when that equation is reversed.

¶7. (SBU) Legal System/Rent-seeking: Additional incentives to
corruption include Turkey's dated and inadequate legal
system, which in itself is a key obstacle to foreign direct
investment. Indeed, Nas believes these legal problems are
the number one contributor to corruption in Turkey. An
additional contributor is a lack of private ethics among some
Turkish companies, which are "not ready to compete" and
instead are opportunistic and seek to profit from government
connections. Nas (himself a former Chief Inspector at the
Ministry of Finance) characterized that Ministry as highly
ethical, but suggested that staff at the other "spending
ministries" are less highly qualified and ethical, and
instead are susceptible to the
bureaucratic/political/business nexus through which
government favors are distributed. Nas suggested that the
top-tier of Turkish companies no longer relies on this
system, but argued that second tier companies are in big
trouble, and will either lose their position or undergo a
significant transformation. Almost in passing, Nas conceded
the existence of political corruption, which looms largest in
the public consciousness, but argued that political parties,
which are most often blamed for the problem, are not its
drivers. Instead, they are being used by a culture in which
people contantly seek favors from their deputies. Only the
EU, he said, will be able to break these habits.

¶8. (SBU) A Balanced View: TUSIAD's Baran concurred that
corruption is an endemic reality in Turkish life, but echoed
Nas's view that such other problems as taxation, the
judiciary, and bureaucracy are bigger obstacles to foreign
investment. He noted that TUSIAD is undertaking a major
study of the issue, however, focusing initially on the civil
service. Succeeding chapters will focus on parliament and
the judiciary. The key, he argued, is for such "legal
exceptions to responsibility" as parliamentary immunity to be
lifted. Only when that is done, he believes, will the
problem be effectively tackled. Tombul added that another
contributor to the problem is the inadequate pay scale for
some civil servants, particularily in the law enforcement
area. "If you paid these guys properly," she suggested,
there would be less incentive for such transgressions.

¶9. (SBU) World Bank View: These more nuanced appraisals find
support in the World Bank's newly released World Development
Report, though it is the study's assertion that 6 percent of
the turnover of Turkish companies is devoted to "bribes" and
"gifts" aimed at greasing the wheels of Turkish bureaucracy
that has garnered headlines. Investors identified Turkey's
extremely high taxes and complex tax administration, together
with legal uncertainty, as even more important problems.
Equally striking was the study's conclusion that in those
cases where legal proceedings are opened, they last for an
average of 2.9 years.

¶10. (SBU) Comment: Discussions of corruption are a popular
pastime in Turkey and this will undoubtedly remain true. But
Turkey's difficulties are more complex than blaming
corruption alone would indicate, and the fixation on that one
aspect of the problem conceals the more important systemic
reforms that need to be undertaken to attract the foreign
investment that will sustain Turkey's recent economic growth
over the long term. End Comment.

ARNETT

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

C O N F I D E N T I A L SECTION 01 OF 04 SANTO DOMINGO 005777

SIPDIS

STATE FOR WHA/CAR, WHA/EPSC, EB/OMA, INR;
NSC FOR SHANNON AND MADISON;LABOR FOR ILAB; USCINCSO ALSO
FOR POLAD;TREASURY FOR OASIA-LCARTER
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION
USDOC FOR 3134/ITA/USFCS/RD/WH; DHS FOR CIS-CARLOS ITURREGUI

E.O. 12958: DECL: 10/17/2009
TAGS: PGOV PINR DR
SUBJECT: DOMINICAN POLITICS #6: THE PRD: IT'S BROKE. FIX
IT.

REF: A. SANTO DOMING 5302
¶B. SANTO DOMINGO 5468
¶C. SANTO DOMINGO 5605

Classified By: ECOPOL Counselor Michael Meigs for Reason 1.5 (b) and (d
).

¶1. (SBU) This is #6 in our current series on politics in the
Dominican Republic:

The PRD: It,s Broke. Fix It.

(U) ** Without Hipolito Mejia to hold it together, the
venerable populist PRD is not mounting a coordinated response
to Leonel Fernandez's PLD administration. We look at the
contending personalities and the efforts to heal the wounds
-- and identify some potential PRD leaders in the upcoming
generation. **

(U) Now in opposition, the Dominican Revolutionary Party is
fragmented. Former president Hipolito Mejia shows little
interest in the party, and its lesser leaders snipe in the
media. Followers of ousted party president Hatuey de Camps
continue to squat in the party headquarters, forcing the
"legitimate" PRD to meet at another location. There are at
least two candidates to head the party, but the political
committee on October 19 decided to limit a November 28
convention of delegates to revising the party statutes and
postpone an "ordinary convention" (national balloting to
elect party officers) until February.

(U) On paper the PRD dominates Congress, with 29 of 32
senators and 72 of 150 representatives. But party discipline
has virtually disappeared, leaving the PRD as legislative
opposition rudderless.

Senators Refuse to Be Whipped

(U) On September 21 and 23, party leaders Tony Raful and
Vicente Sanchez Baret pressed senators to exclude from tax
reform legislation an anti-trade protectionist tax favoring
sugar interests, directly counter to the free trade agreement
signed with the United States and Central American countries
just six weeks before. Sanchez Baret,s talk of expelling
dissidents from the party angered PRD senators and was taken
as a challenge to the leadership of Senate President Andres
Bautista (PRD). On a first reading, 14 senators defied
Sanchez Baret; on the second, 19 did so.

(C) Apprised the previous day of the threat to the bilateral
trade agreement, Mejia had told the Ambassador that with a
few days of work he could counter it. He then he left town.
That same evening the senators approved the tax package,
complete with the offending tax.

What Must Be Done?

(U) The PRD political committee met October 6 to begin
organizing a party referendum and convention. As
vice-president of the party Mejia made his first public
appearance since leaving office, sitting alongside aging
former president Salvador Jorge Blanco. He blustered in
jocular fashion with the press, as usual, but offered no cure
for the party,s disorganization. He disclaimed any interest
in seeking the party presidency.

(U) Other PRD figures have called for "renovation" or
"restructuring" of the PRD, and some acknowledge mistakes
under Mejia,s leadership. But as the Fernandez
administration moves smartly to investigate charges of
malfeasance, many in the PRD are feeling vulnerable. The
party as a whole is on the defensive, complaining that the
new administration has failed to respect Mejia appointments
to permanent positions, insisting that last-minute pension
decisions be respected, and denying that PRD rowdies are
contributing to the perceived "crime wave" across the
country.

(C) Without Mejia,s rough charisma, his "PPH" faction no
longer has any coherence. Acting PRD president Tony Raful on
September 28 expressed doubt to poloff the party could hold
its balloting for party officers ("ordinary convention") in
November as scheduled. On October 20, the PRD Political
Committee announced a decision, to be confirmed, to postpone
the party election until February 27; as an innovation, all
registered party members -- not just local and provincial
leaders -- will be able to vote. A convention of delegates
November 28 will be limited to revising the party statutes.
PRD vice president Tirso Mejia-Ricart, on the organizing
committee, told poloff October 14 that he favored using the
November convention to elect new electoral precinct
committees,

(U) There is no clear path to reunification. Former VP
Ortiz-Bosch reminded the press that the PRD has bounced back
before, from equally divisive confrontations in the 1980s
between Jose Francisco Pena Gomez and Jacobo Majluta. But
many, including Senate vice-president Cesar Matias, refuse to
reach out to Hatuey De Camps and his followers, who were
expelled in May for openly campaigning alongside the PLD
against Mejia,s re-election. To develop options for the
future, former vice president Milagros Ortiz-Bosch -- who
chairs a committee to organize the convention and modernize
the party -- directed that a 40-question referendum of PRD
members be held nationwide starting October 16-17, an
undertaking that she characterized as a
"consultation-self-criticism" on the party's errors and what
is to be done.

The Tired, The Discredited, and The Contentious

(C) New faces are needed. Senior leaders are familiar,
spent, or beyond stump politics.
Ortiz-Bosch was indecisive and then half-hearted in
campaigning for Mejia. PRD secretary-general Rafael "Fello"
Subervi has a reputation for sleaze, not offset at all by his
belated acceptance of the VP slot on Mejia,s ticket. On
October 15, Subervi told the press he "does not aspire to a
position as a party officer." Former labor minister Milton
Ray Guevara, amending the party statutes, is a fine legal
scholar and smooth operator, praised for his chairmanship of
the ILO annual general meeting in June. But he lacks a wide
or deep following in the party.

(C) Other rivals last year for the presidential nomination
are regional barons or simply pretenders. These include
Senator Ramon Alburquerque of Monte Plata, Jose Rafael
Abinader, and Emmanuel Esquea, who has just announced his
candidacy for party president -- evidence that perpetual
optimism overlooks hard facts.

(SBU) PRD congressional leaders have good reputations within
and outside the PRD. Senate president Andres Bautista showed
in the tax reform standoff that he will insist on respect,
however many years he has supported Mejia and the PPH.
Chamber of Deputies president Alfredo Pacheco won re-election
without opposition this past August, demonstrating his
effectiveness across party lines. Both will have a voice in
the party,s revival; neither shows ambition for higher
elective office.
(C) That leaves the devil they all know -- Hatuey De Camps,
still recognized by his clique as party president. Hatuey
met last week with a small faction of friendly PRD senators
who think that, with his handsome tiger face and offer of an
"olive branch," he can be sold as a figure of principle
capable of winning back the presidency in 2008.
Mejia-Ricart, another aspirant to be party president,
commented privately that Hatuey is no more likely than Mejia
to unify or modernize the PRD.

(U) Hatuey assembled his faction on October 9 to announce to
the public a plan for PRD reunification. He has strength
within provincial party commands across the country. He
speaks of holding his own "convention," in disregard of the
structures of the mainline PRD.

A New Generation

(SBU) Eventually the PRD will have to hand off to a new
generation, but to whom?

- - (SBU) Orlando Jorge Mera, son of President Jorge Blanco
(1982-86), served as director of the Dominican
Telecommunications Agency (INDOTEL) and coordinator of the
Commission on Intellectual Property Rights. He is young,
smooth, and English-speaking. But he has yet to leap from
the role of competent technocrat to that of politician. His
recent op-ed piece on "challenges to the PRD" lapsed into
platitudes.

- - (C) Miguel Vargas Maldonado, former minister of public
works, is a possibility, but will have to "prove himself
innocent" of graft to skeptical Dominican voters.

- - (SBU) Julio Cury, a young and well-spoken hatueycista
attorney, has been prominent recently on television talk
shows, expressing indignation about corruption and urging the
new administration to "save the party system of democracy" by
vigorously prosecuting Mejia administration officials. His
may not be a strategy for short-term victory, but in a
country tired of corruption he may be building a reputation
for the future.

- - (SBU) Senator Alejandro Santos, chairman of the industry,
trade, and free zones committee, could be positioned for
influence. He also chairs the special committee to examine
Fernandez,s proposed revocation of the protectionist tax on
fructose drinks. Santos was briefly on the Foreign Ministry
staff before serving as appointed governor of rural Salcedo
province, 2001-2002.

The Short Haul

(SBU) Modernizing the PRD,s organization and procedures may
be a way to rebuild its strength, currently stuck at the
traditional 30 percent of the electorate with a formal
membership of 1.2 million. Ortiz-Bosch's committee is
discussing a proposal to select party officers by direct vote
of members, a sharp turn away from the custom of following a
"caudillo" like Mejia or the late Jose Francisco Pena Gomez.
Another proposal would be to restructure so that PRD local
committees coincide with electoral precincts.

(SBU) The party expects to lose some and perhaps many of its
Congressional seats in the 2006 legislative elections. Its
comeback strategy will target the next presidential contest
in 2008. The longer the PRD takes to reconstruct itself, the
more likely it is to stay out of power - - the last time the
electorate voted out a PRD presidential candidate, the party
remained in opposition for 14 years.

Life without Effective Opposition

(SBU) Meanwhile, the country as a whole suffers from PRD
division. Ongoing national crises exert great pressures on
society and demand a constructive, coherent opposition. The
PRD must prove itself capable of negotiating with the
Fernandez administration and finding consensus on approaches
to reform, trade, rule of law, and strengthening of
institutions. But since losing the election, the PRD has
been less than the sum of its increasingly self-interested
members.

¶2. (U) Drafted by Bainbridge Cowell, Michael Meigs.

¶3. (U) This piece and others in our series can be consulted
on our classified SIPRNET site
http://www.state.sgov.gov/p/wha/santodomingo/ along with
extensive other material.

HERTELL

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