US embassy cable - 02ABUJA787

C O N F I D E N T I A L SECTION 01 OF 02 ABUJA 000787 
 
SIPDIS 
 
 
E.O. 12958: DECL: 02/28/2007 
TAGS: PGOV, ECON, EFIN, ECPS, KCRM, NI 
SUBJECT: NIGERIA: WEEKLY NEWS REVIEW #2 
 
 
Classified by Ambassador Howard F. Jeter.  Reasons 1.5 (b) 
and (d). 
 
 
1.  (U) This is the second edition of what will be a weekly 
roundup of significant developments in Nigeria. 
 
 
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BENUE COMMISSION OF INQUIRY FINALLY ESTABLISHED 
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1.  (U) On March 6 President Obasanjo inaugurated a 10-person 
Judicial Commission of Inquiry to review communal violence in 
Benue, Nassarawa, Plateau and Taraba states.  The Commission 
will be chaired by Justice Okechukwe Opene, and includes 
Alhaji Mohammed Liman, Micleans Dikwal, Daniel Agogo, Alhaji 
Haruna Ahmadu, Ambassador Yahaya Abdullahi, Alhaji Yahaya 
Hamza, Chief Patrick Okon, Ruth Akafa and Dr. Sani Suji.  As 
part of its mandate, the commission will investigate the 
October 2001 execution of 19 soldiers by Tiv militiamen and 
the reprisal attacks by angered soldiers that killed over 200 
Tiv villagers. 
 
 
2.  (U) According to media reports, the committee's terms of 
reference are: 1) Examine the proximate causes of the 
conflicts; 2) Identifying the basic issues underlying tension 
between communities and providing strategies for peace; 3) 
Identify groups and individuals involved in the crises; 4) 
Recommend appropriate sanctions; 5) Examine the roles of 
states and local governments and traditional authorities; 6) 
Provide recommendations to improve existing security 
arrangements; and 7) Provide recommendations on other 
measures to secure peace and facilitate reconciliation 
between communities. 
 
 
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NITEL Privatization Rocky 
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3.  (U) This is the third week of a six-week extension 
provided International Investors Limited (IIL), the winning 
bidder for 51 percent shares of NITEL.  The extension was 
granted to give IIL time to raise the USD 1.3 billion due to 
complete the bid.  However, IIL seems no closer to finding 
the needed capital.  Observers speculate that the extension 
was granted not so much for IIL but to give GON time to 
figure out an alternate course given the possibility of IIL 
falling on its face. 
 
 
4.  (U) IIL may be forced to drop its NITEL bid, despite the 
non-refundable USD 132 million paid to Bureau of Public 
Enterprise (BPE), because the financial markets lack stomach 
for the deal and will not provide the cash.  If IIL fails to 
raise the funds by March 26, the consortium must be 
disqualified and the sale reopened to the alternate bidders. 
The second bidder Telnet, which offered only USD 7 million 
less than IIL, has lost interest in the deal.  However, the 
third bidder Newtel, at USD 1.017 billion, has expressed 
continued interest. 
 
 
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IMF Mission Concludes No Formal Program Possible 
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5.  (U) The IMF mission to Nigeria departed March 7 after 
concluding that Nigeria's macroeconomy faced too many 
uncertainties to establish a formal IMF program at this time. 
 Despite fourth quarter 2001 progress reducing GON spending, 
slowing money supply growth, stabilizing inflation and 
raising petroleum prices, agreed targets in the informal 
program were not met.  In the absence of a finalized 2002 
budget and the lack of political commitment to hold spending 
below 2001 levels, the IMF and GON concluded that an IMF 
program in 2002 was unsustainable.  The IMF, however, will 
retain staff in Nigeria and will provide technical assistance 
and capacity-building, as the GON requests. 
 
 
6.  (C) The GON wanted an IMF program but one with much less 
belt tightening.  Trying to turn this economic failure into 
political victory, the GON publicized "its decision" to 
forego an IMF program before the IMF itself could announce 
that Nigeria had failed to conclude an agreement. 
Administration critics have complained that Obasanjo has been 
too eager to follow IMF's strictures and has been too 
insensitive to the hardship imposed on the average Nigerian 
by IMF economic remedies.  By ending the formal tie with the 
IMF, Obasanjo hopes to strike a populist chord and pick up 
some electoral support because he stood up to the IMF. 
 
 
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POLICE CHIEF FIRED/ POLICE STRIKE STILL ON? 
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7.   (U) Ineffectual Police Inspector General Musilu Smith 
was sacked on March 7. Smith had been in trouble after 
incorrectly telling the President that the Police would not 
strike in January over their salary and allowance arrearages. 
The January strike ended only after Government jailed its 
leaders while promising to pay the arrearages. However, the 
money has not been dispersed and many officers feel they have 
been duped. Strike threats have resurfaced with March 11 seen 
as a possible strike date. Our Police sources say that Police 
support for a renewed strike is divided. Roughly half the 
officers are sympathetic to a strike but it is unclear how 
many will actually answer the call. 
8.  (C) Comment: To a certain degree, Smith has been  made a 
scapegoat.  The allowance arrears are not entirely his fault. 
 Nonetheless, the Administration probably reasoned that 
jettisoning Smith now would douse support for a strike. Since 
Smith lacked a political base and because his generally 
lackluster performance made him expendable, the decision to 
remove him was inevitable. End comment. 
Jeter