US embassy cable - 03ABUJA905

C O N F I D E N T I A L SECTION 01 OF 03 ABUJA 000905 
 
SIPDIS 
 
 
CAIRO FOR MAXSTADT 
 
 
E.O.12958: DECL:1.6X6 
TAGS: PGOV, PREL, MASS, ETRD, EPET, EINV, KDEM, EAID, NI 
SUBJECT: NIGERIA: VP ON POLITICS, PROSPECTS FOR REFORM 
 
 
REF: Abuja 727 
 
 
Classified by Ambassador Howard F. Jeter.  Reason: 
1.5(d) 
 
 
1.  (C) Summary:  DCM 8 May met with VP Atiku Abubakar 
and others in Washington.  Atiku sought continued USG 
support for market-based economic reforms but 
volunteered that President Obasanjo remained 
uncomfortable about giving up State control.  Atiku 
hoped to make progress on AGOA and to lift fuel price 
subsidies.  He thought an Article 98 Agreement would 
be signed soon.  Nigeria's VP believed the election 
tribunals would call for new polls in some areas but 
that results would not change; he did not think there 
would be enduring negative consequences from electoral 
disputes because most people ultimately must line up 
with the winners.  Comment at para 14.  End Summary. 
 
 
2.  (U) DCM 8 May called on Nigerian Vice President 
Alhaji Atiku Abubakar at the Potomac, Maryland 
residence he shares with an AmCit wife of Nigerian 
origin, Jennifer (aka Jamila).  Also present at 
various points during the evening were former 
Ambassador to the U.S., businessman Hassan Adamu, 
ThisDay publisher Nduka Obaigbena, Nigerian Charge 
Augustine Agada, and several members of Atiku's 
personal staff. 
 
 
3.  (C) DCM arrived to find Obaigbena with the VP, and 
the first half-hour of the conversation was 
unremarkable, save for Obaigbena's observation that 
the U.S. attitude toward Nigeria appeared to have 
cooled since September of 2001.  DCM replied that the 
Administration had been compelled to confront the 
threat of global terrorism and to focus on homeland 
security.  Atiku found this explanation reasonable. 
 
 
--------------------- 
ENDING FUEL SUBSIDIES 
--------------------- 
 
 
4.  (C) Once Obaigbena had left the room, DCM 
congratulated Atiku on the effectiveness of the PDP 
campaign and offered that signs pointed to Nigerians 
fervently hoping for tangible betterment of their 
circumstances.  DCM remarked that his own man-in-the- 
street interviews indicated that most people were not 
impressed by the transparency of the recent elections 
but were very pleased with their peaceful conduct (in 
most areas) and continuing relative tranquillity. 
Many of the motorists waiting for fuel with whom DCM 
had spoken (reftel) said they were praying for 
Nigeria's God-chosen leaders to better their lot. 
While they wanted gasoline, people waiting at a clinic 
might desire medicines, and parents might want 
classrooms and books for their children. 
 
 
5.  (C) Atiku said the GON needed to take quickly a 
number of the hard steps that had been deferred during 
the first term.  Had the motorists DCM had engaged 
indicated readiness to pay more money for more 
reliable fuel supplies?  DCM said he had not asked 
that question specifically, offering that the official 
price was fiction in much of the country.  The last 
official price increase had reduced real prices in 
much of the North; resistance would come from the 
relatively few able to purchase at the official price. 
Atiku emphatically agreed, saying that the President 
had concurred in lifting fuel price subsidies o/a 1 
June.  Atiku added that meetings he and Obasanjo had 
held with NLC President Adams Oshiomhole suggested 
that organized labor would not resist strongly. 
Implying that there existed a risk Obasanjo might 
change his mind at the last minute, Atiku said his 
fingers were crossed that the subsidies would, indeed, 
be abolished as scheduled. 
 
 
---------------------- 
OTHER ECONOMIC REFORMS 
---------------------- 
 
 
6.  (C) Broader and deeper economic reforms would be 
needed to get Nigeria's economy going again, Atiku 
continued, but he was unsure how far President 
Obasanjo was willing to go.  The President was 
uncomfortable with markets making decisions and 
fundamentally preferred State control.  DCM noted the 
low price-to-dividend ratios of many public companies 
listed in Nigeria and offered that Nigerian capital 
markets appeared to have the potential to take off 
once international investors became more comfortable 
with Nigeria's economic prospects.  Had the GON 
thought of floating perhaps ten percent of NNPC on the 
stock exchange?  Atiku laughed and exclaimed, "Not 
with this President.  No way!"  Atiku also held out 
little hope for near-term reform of NNPC's major 
downstream operations, noting that keeping the 
refineries crippled provided irresistible 
opportunities for well-connected rent-seekers. 
 
 
7.  (C) However, Atiku emphasized, reforms that 
reoriented Nigeria's economy toward market-based 
outcomes were essential, and USG partnership and 
support would be required.  The time had come to push 
forward on AGOA, Atiku offered.  An echoing sentiment 
came from former Ambassador Adamu, who had just joined 
the conversation.  Atiku said all impetus had gone out 
of Nigeria's AGOA-related efforts since the departure 
of Mustapha Bello, the former Commerce Minister. 
Nigeria needed to appoint an "AGOA Coordinator," Atiku 
continued, someone who would make sure the necessary 
steps were taken.  DCM offered that Nigeria's failure 
to take such steps meant it could not take advantage 
of AGOA's textile provisions.  Atiku said he would 
ensure early National Assembly passage of the required 
legislation and that he looked forward to working with 
DCM to move the process forward. 
 
 
8.  (C) DCM cautioned that some tariffs and bans 
Nigeria had put in place before the elections seemed 
not consonant with WTO obligations and might affect 
AGOA eligibility.  DCM noted that bans obviously could 
be revised or revoked.  Atiku did not respond to the 
implied question but remarked that the bans on 
spaghetti and certain baked products had not taken 
these items from supermarket shelves. 
 
 
--------------------------------- 
SECTION 557, ARTICLE 98 AND LIBYA 
--------------------------------- 
 
 
9.  (C) DCM noted that Minister of State for Foreign 
Affairs Dubem Onyia's misrepresentation of the 
circumstances that led to suspension of some aspects 
of U.S. security assistance to Nigeria had indeed 
irritated Washington.  The beginning of a new 
Administration in Nigeria offered an excellent 
opportunity to restore some lost warmth to a 
fundamentally sound bilateral relationship.  Nigeria 
could help us stop Libya's UNSC bid and look seriously 
at concluding an Article 98 agreement.  Atiku did not 
commit on Libya but said he understood our interests. 
The term "Article 98 Agreement" did not initially 
register with him, but when DCM explained what it was, 
Atiku said he thought an agreement was being prepared 
for signature. 
 
 
10.  (C) COMMENT:  Atiku plays a leading role in 
economic affairs but does not normally engage on 
politico-military issues with us.  We take some heart 
from his understanding of the Article 98 issue and its 
importance to us, but we would not want to be unduly 
optimistic without confirmation from another source. 
END COMMENT. 
 
 
11.  (C) DCM clarified for Atiku and Adamu the 
circumstances that led to Congress's decision to 
insert Section 557, as well as the fact that it did 
not preclude expenditure of prior-year FMF already in 
the pipeline.  Atiku wondered if the provision might 
be lifted for FY 04.  DCM replied that Congress could 
take that step but that, as long as the concerns 
remained, it likely would not happen.  Atiku commented 
that he had brokered a meeting between Obasanjo and 
Tiv leaders and implied that the Zaki Biam massacre 
was no longer an issue for most Tivs.  It was his 
perception that the "Tiv lobby in the U.S." wielded 
considerable influence over a particular Hill staffer, 
who in turn influenced her boss.  DCM responded that 
the Senator most concerned had long-standing concerns 
about human rights in Nigeria and elsewhere and that 
it would be too simplistic to attribute Section 557 to 
the work of Tivs residing in the U.S. 
 
 
------------------- 
Elections Tribunals 
------------------- 
 
 
12.  (C) Atiku was adamant that opposition parties 
would get little or nothing from appeals to the 
elections tribunals.  He thought tribunals would order 
new elections in some areas but averred that the 
ultimate result would be the same in every case -- 
victory for the ruling PDP.  He did not rebut DCM's 
assertion that elections had not even taken place in 
some areas but stated that the results were an 
accurate reflection of popular will; the PDP had met 
with community leaders and obtained their support. 
The people did not reject the results and would follow 
their leaders' recommendations. 
 
 
13.  (C) Atiku did not anticipate significant unrest 
as a result of eventual tribunal decisions that left 
the opposition parties with no more National Assembly 
seats and governorships than INEC awarded them 
initially.  "Incumbency confers great advantage in our 
system and here in Africa.  Not very many people want 
to be in the opposition," he remarked. 
 
 
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COMMENT 
------- 
 
 
14.  (C) We continue to believe that Nigerians' 
quiescence represents acquiescence more than 
acceptance.  However, most Nigerians will accept the 
second Obasanjo/Atiku Administration as long as their 
lives improve materially.  This happening will be the 
key to enduring democracy in Nigeria.  In this 
respect, Atiku and his advisors may have a better idea 
of how to proceed on a macro-economic level than does 
Obasanjo, the man who created many of the publicly- 
owned enterprises that now need to be dismantled.  At 
the same time, however, Obasanjo's approach to 
economic reform (assuming he is serious) likely will 
resonate more with Nigerians.  The President would 
prefer to fix what is broken (everything from Nigeria 
Airways to the structures of State support to 
agriculture) than to give the market much freer rein. 
Atiku's approach might make more economic sense, but 
it would prove more difficult politically to pursue 
and implement than would Obasanjo's.  An early test of 
direction will be whether fuel costs go up just a 
trifle on June 1 or are allowed to rise to near the 
world market price.  Atiku's frankly expressed 
impatience with his boss indicates that tensions 
between the two men continue little abated. 
JETER