US embassy cable - 02ABUJA306

C O N F I D E N T I A L ABUJA 000306 
 
SIPDIS 
 
 
E.O. 12958: DECL: 01/31/2012 
TAGS: ECON, PGOV, NI 
SUBJECT: NIGERIA: CHIEF ECONOMIC ADVISOR SAYS COMMUNAL 
VIOLENCE SHOULD NOT DETER FOREIGN INVESTORS 
 
 
Classified by Ambassador Howard F. Jeter; reasons 1.5 (b) and 
(d). 
 
 
1. (C) Summary. The Ambassador and EmbOffs met January 24 
with Chief Economic Advisor Magnus Kpakol who claimed that 
Nigeria's best hopes for future reform lay with the 
reelection of President Obasanjo.  Kpakol argued that recent 
communal conflicts throughout the country should not deter 
foreign investors from doing business in Nigeria.  End 
Summary. 
 
 
2. (C) On January 24, Ambassador Jeter met Chief Economic 
Advisor to the President Magnus Kpakol to discuss the 
structure of the new bilateral Economic Committee (septel). 
Kpakol also discussed prospects for the Presidential election 
and the impact of communal conflicts on foreign investment in 
Nigeria.  PolEcon Counselor and EconOff also attended. 
 
 
3. (C) The Ambassador told Kpakol that recent outbreaks of 
communal violence have created the perception of instability, 
sending the signal overseas that Nigeria might be in a stage 
of "unraveling."  As the 2003 elections  near, people fear 
the outbreaks will occur more frequently and could taint the 
election process.  The Ambassador added that it was critical 
for Nigerians to see that economic growth, although 
important, was not the only dividend from democracy.  The 
social and political benefits arising from freedoms of 
speech, press and association should be recognized as 
'democracy dividends', as well, he said. 
 
 
4. (C) Kpakol added that democracy dividends should also be 
divided between internal and external dividends.  Internal 
dividends would include economic reforms, political freedoms, 
improved access to services, and increased incomes while 
external dividends include stronger foreign direct 
investment, debt relief and other assistance.  Kpakol 
believed economic reforms were advancing as much as possible 
given the political constraints of Nigeria's young democracy, 
pointing to the privatization of NITEL, fuel price 
deregulation and exchange rate liberalization.  However, the 
federal government could not try to do too much, too fast, he 
said. If so the economic bite would be harsh and would sour 
the public on the expected fruits of democracy. 
 
 
5. (C) Kpakol felt that if Nigeria were able to survive 
through this difficult time (the elections) with the current 
Administration, then in his next term, President Obasanjo 
would be less restrained by electoral considerations and able 
to pursue significant economic reforms.  He worried that 
another Administration next term would "do things 
differently" and be less likely to walk the path of reform. 
Kpakol could not identify any other Presidential candidates, 
apart from Obasanjo, with reformist-minded ambitions. 
Moreover, he argued that while the GON was doing its part to 
realize the internal democracy dividends, the donor community 
was languid in helping Nigeria realize the external 
dividends. 
 
 
6. (C) Kpakol argued that the perception that Nigeria was 
unraveling was unjustified and inaccurate.  He pointed out 
that recent communal conflicts were not acts of random 
violence, but stemmed from historical rivalries between 
identifiable groups.  Kpakol argued that foreign investors 
were not targeted and, therefore, should not be deterred from 
doing business in Nigeria.  Kpakol claimed that people 
intimately familiar with Nigeria's socio-political 
environment (implying the Ambassador and Embassy officers) 
and who understand the difference between random violence and 
communal violence, should spread the word that Nigeria was 
not coming apart.  (Comment: On this point, Kpakol's argument 
became casuistry.  Too eager to prove his point, he 
uncharacteristically abandoned logic by implying that random 
violence, unless talking about pure anomie, was more a threat 
to internal stability than an increasing frequency of 
communal violence that affects thousands of people with each 
occurrence.  End comment) 
 
 
7. (C) The Ambassador agreed that the communal violence was 
not random or targeted at foreigners.  However, he stressed 
that the violence and the government's sometimes brusque 
manner to suppress it were raising concerns in Washington and 
other Western capitals.  Moreover, some influential U.S. 
lawmakers were justifiably concerned about the military's 
role in the Tiv-Junkun conflict in Benue.  Should another 
incident occur, we would have to take a very close look at 
our bilateral military-to-military relationship.  Kpakol 
understood this perspective and pointed out that the federal 
government would thoroughly investigate the Benue tragedy. 
Jeter