US embassy cable - 05ABUJA2142

UNCLAS SECTION 01 OF 02 ABUJA 002142 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EFIN, EAIR, ETRD, EINV, NI 
SUBJECT: A/S FRAZER MEETING WITH NIGERIAN FINANCE MINISTER 
 
 
1. (SBU) Summary: On October 24, Assistant Secretary Frazer 
and Nigerian Finance Minister Ngozi Okonjo-Iweala discussed 
Nigeria's completed Paris Club deal and Nigeria's efforts to 
improve its budget process and promote increased trade and 
investment.  The Minister urged favorable U.S. action on 
Virgin Nigeria's application to open direct service between 
Nigeria and the United States, highlighted Nigeria's recent 
implementation of ECOWAS tariffs, and solicited State 
Department support for a Nigeria Investment Promotion 
Commission trade and investment promotion tour to the United 
States during the week of November 7.  The Minister also 
asked about the status of Nigeria's G8 Transparency Compact 
and emphasized that the Finance Ministry must have adequate 
information regarding proposed USG assistance. End Summary. 
 
 
2. (SBU) On October 24, Assistant Secretary for African 
Affairs Jendayi Frazer met with Nigerian Finance Minister 
Ngozi Okonjo-Iweala, accompanied by Ambassador Campbell, 
Nigeria desk officer Dan Epstein and economic Counselor Necia 
Quast.  They briefly discussed the tragic crash of a Bellview 
Airlines flight.  In response to the Minister's statement 
that Nigeria might ask for assistance in investigating the 
crash, Assistant Secretary Frazer assured the Minister that 
the U.S. was ready to respond to Nigeria's requests.  A/S 
Frazer offered condolences on the death of the First Lady, 
and the Minister said it was a tragedy, but affirmed that 
nothing would sidetrack the reform momentum. 
 
Virgin Nigeria 
-------------- 
 
3. (SBU) Minister Okonjo-Iweala stated that she hoped it was 
possible to secure the required approvals for Virgin 
Nigeria's forthcoming application to open a route between 
Nigeria and the United States.  She noted that airline 
representatives were unsure about USG's reaction to the 
proposal, but that it was clear that both countries would 
benefit from the new service. Dan Epstein said that promoting 
strong cooperation in the aviation sector has been an 
important bilateral priority since 1999.  He stated that he 
did not believe that Virgin Nigeria had submitted an 
application to the Department of Transportation (DOT), but 
preliminary meetings left the impression that Virgin, a 
British corporation, would maintain effective control over 
the airline.  Epstein said that it could be difficult to 
secure the required DOT approval if it was determined that 
Virgin maintained effective control, but DOT had not yet 
reviewed a formal application.  Responding to the Minister's 
suggestion that Nigeria would likely approve Continental 
Airlines' application for operating authority for a 
U.S.-Nigeria route in the event that the Virgin Nigeria 
application won DOT approval, Ambassador Campbell replied 
that Continental was no longer pursuing the Nigeria project 
and had shifted its resources elsewhere.  The Finance 
Minister said she hoped that another U.S. airline would then 
apply. 
 
Debt Relief Deal 
---------------- 
4. (SBU) The Minister thanked A/S Frazer for the strong U.S. 
support for Nigeria's Paris Club debt treatment. She stated 
that it was important to quickly complete the requisite 
bilateral agreements with individual creditors as soon as 
possible. She noted that she would send an appropriations 
bill to the National Assembly on that very day to secure 
funds required for Nigeria's initial payments. She noted that 
the process would be politically challenging, given that half 
of the money belonged to the states and not the federal 
government.  She stated that the GON had $6 billion in hand, 
but needed an additional $400 million more for the first 
tranche and additional appropriations for the later tranches. 
The first payment was due on October 31, giving the bill a 
short time frame for passage.  She noted that Central Bank 
Governor Saludo was concerned about the possible impact on 
the currency of a large transfer of foreign exchange.  The 
Minister stated that money would go into escrow and 
subsequent payments would be automatically transferred to 
creditors as each bilateral agreement was signed. 
 
5.  (SBU) In response to A/S Frazer's question about whether 
she was satisfied with the final deal, the Minister said she 
was pleased, although she acknowledged it would be hard to 
sell to the public.  She noted that a documentary and 
pamphlets had been prepared as part of a public relations 
campaign.  The Minister agreed with Ambassador Campbell that 
Nigeria would never have gotten a deal without a civilian 
government and posited that the Nigerian people recognized 
that fact, but she argued that it was vital that the Nigerian 
people received immediate benefits from the arrangement. The 
Minister reported that an IMF team would arrive in Abuja in 
January to assess Nigeria's performance under its Policy 
Support Initiative (PSI) through December 31 and a 
satisfactory report would trigger the second tranche of 
forgiveness. 
 
G-8 Transparency Initiative 
--------------------------- 
 
5. (SBU) The Finance Minister then asked where things stood 
with the G8 Transparency Initiative. The U.S. side said a 
team had recently visited Nigeria to do an assessment and the 
bulk of our technical assistance would probably go the 
Economic and Financial Crimes Commission (EFCC).  The 
Minister said her Ministry planned to take over the 
coordination of donor assistance from the National Planning 
Commission. The Ministry also was requesting trade and 
investment data from the governments of major partners.   A/S 
Frazer agreed that good coordination was necessary but 
cautioned against creating roadblocks by forcing donors to 
provide all assistance through one agency. The Minister said 
assistance would not go through the Finance Ministry, though 
they would need to be informed. This was especially important 
when counterpart funding was required. Regarding the EFCC, 
she wanted donors to understand that the agency did not 
depend on donor funding and had received a 150% increase in 
its budget this year. 
 
Tariffs 
------- 
 
6. (U) The Minister noted that Nigeria had moved to the 
ECOWAS Common Economic Tariff (CET), although some trade bans 
would remain in place until January 1, 2007.  In the 
meantime, Nigeria had restored the Manufacturers-In-Bond 
Scheme (MIBS), which the President had cancelled, for several 
weeks until the CET was fully implemented. 
 
Africa Action Plan 
------------------ 
 
7. (SBU) A/S Frazer asked if the Minister, who was on the 
Partnership Committee, had received a letter proposing a way 
forward with sectoral working groups. She was concerned that 
this would make the process project-based rather than provide 
strategic oversight as originally intended. The Minister had 
not seen the letter, but agreed that sector experts should be 
called to assist the committee on an as- needed basis only. 
 
Nigerian Investment Road Show 
----------------------------- 
 
8. (SBU) The Minister said she hoped A/S Frazer would be able 
to receive the Nigeria Investment Promotion Commission (NIPC) 
trade and investment promotion tour to the United States 
during the week of November 7 that the Minister was leading. 
Frazer said she had looked forward to hosting the group, but 
she would most likely be in Africa during that week. The 
Minister said she would ask NIPC about moving the dates, but 
the timing was probably fixed at this point. 
CAMPBELL