This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 ABUJA 001215 
 
SIPDIS 
 
 
STATE PASS USTR, EXIM, OPIC 
ABIDJAN ALSO FOR USED/AFDB 
 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ETRD EINV PGOV NI
SUBJECT: NIGERIA: GON STRATEGY FOR THE U.S. BILATERAL PARIS 
AGREEMENT 
 
 
REF: ABUJA 1194 
 
 
¶1. Summary: Director General of the Debt Management Office 
(DMO) Akin Arikawe April 8 explained that Nigeria no longer 
wanted to sign its bilateral Paris Club agreement with the 
USG until negotiations (with more favorable terms for 
Nigeria) were completed with the UK and Japan.  Arikawe 
stressed the logic of the GON's delaying tactics for Paris 
Club Agreements, and repeated his interest in exploring 
debt-for-nature swaps with the USG.  End Summary. 
 
 
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THE WAITING GAME 
----------------- 
 
 
¶2.  Econ Officer April 8 called on DMO's Director General 
Akin Arikawe to discuss the April 5 Supreme Court Decision on 
Resource Allocation (reported reftel).  Arikawe produced a 
copy of a March 19, 2002 letter to Mrs. F. M. Yemidale, 
Secretary of the Nigerian Debt Conversion Committee, from 
 
SIPDIS 
Michael Kaplan of the Treasury Department's Office of 
International Debt Policy. Kaplan wrote, "there are some 
outstanding issues that hinder our efforts to move forward on 
the debt swap.  U.S. and Nigeria have not yet signed the 
bilateral agreement implementing the terms of the 2000 Paris 
Club rescheduling for Nigeria.  In addition, Nigeria has 
accumulated payments arrears to the U.S. Government." 
 
 
¶3.  Arikawe saw the letter as a terse brush off, and that 
Nigeria -- for ecological as well as political reasons -- 
wanted to pursue environmental debt swaps.  EconOff reminded 
Arikawe that Ambassador Jeter had already raised with him (as 
well as the Minister of Finance and the Vice President) USG 
concerns about delays with the bilateral agreement.  If 
Nigeria's real goals were debt rescheduling and eventually a 
significant debt write off, current dilatory tactics holding 
out for the most optimal term was costing the Nigerian 
government money and the opportunity for progress on a number 
of fronts including debt swaps. 
 
 
¶4. The DMO DG claimed satisfaction with the USG terms on the 
bilateral debt agreement, but did not want to complete the 
agreement until Nigeria had reached better terms with the 
U.K. and Japan on these debts.  If the U.S. agreement were 
filed in Paris now, the Europeans would insist on similar 
terms.  He noted  the size of Nigerian debt to the USG was 
relatively small, about a seventh the size of the UK's and 
only half the amount owed to the Dutch, one of the smaller 
European donors.  He insisted terms of the agreement with the 
U.S should not be the ruler by which the other agreements are 
measured. 
 
 
¶5. Arikawe felt the UK and Japanese agreements should come 
soon.  With the Japanese and UK on board in the near future, 
and the German agreement already in the final stages, more 
than 60% of the debt would have been negotiated.  At that 
point, Nigeria would look to finishing the U.S. bilateral. 
 
 
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GON STILL WANTS DEBT FOR NATURE SWAP 
------------------------------------ 
 
 
¶6.  Nigeria was still very interested in a debt for nature 
swap; Arikawe repeated his assertion that securing a 
private-sector third party would not be a problem.  He asked 
that we contact Michael Kaplan and see if he could arrange 
meetings at Treasury for Mrs. Yemidale on the margins of this 
year's IMF/World Bank spring meetings.  She wanted to begin 
work on a Nigerian plan to be ready when, "in the near 
future," Nigeria returns to normal relations with the Paris 
Club and the IMF. 
 
 
---------------------------- 
JAPANESE AND UK PERSPECTIVES 
---------------------------- 
 
 
¶7. The Japanese Embassy informs us that an agreement on 
Overseas Development Assistance (ODA) debt is ready to sign, 
and they are preparing an Exchange of Notes to split that 
agreement from Japanese commercial debt.  This would allow 
for a formal signing on ODA debt while the two sides continue 
to negotiate a mutually acceptable interest rate for the 
commercial loans. 
 
 
¶8. A British High Commission Economics Officer reports 
progress in negotiating interest rates and grace periods. 
The remaining sticking point is Nigerian insistence on 
applying payments to principal before interest.  Arikawe told 
UK negotiators that the GON would make payments only to those 
countries with which it had signed bilateral agreements. 
Were Nigeria to honor its debt payments in full, the UK would 
receive $550 million this year.  This obviously is not going 
to happen, but the UK is inclined to "cut their losses and 
move forward" with an agreement that brings in something. 
 
 
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COMMENT 
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¶9.  In the wake of our insistence on adhering to the standard 
terms of the bilateral agreement, the Nigerians evidently 
have done a negotiation volte-face.  Previously, Arikawe had 
execution of the U.S agreement at the head of the list, now 
it is the tail. 
 
 
--------------------------------------- 
WHEN MIGHT THE U.S. BILATERAL BE READY? 
--------------------------------------- 
 
 
¶10. The international donor community and IFIs are convenient 
targets for venting nationalistic spleen, and President 
Obasanjo has recently taken a few rhetorical shots at the IMF 
in the local and international press.  At the same time, one 
of candidate Obasanjo's selling points in 1999 was his 
stature with the international community.  He may want to 
package these mostly technical agreements as diplomatic 
accomplishments in the build up to the election. 
 
 
¶11. Even if the Administration wants to accelerate the 
process, it may not go as fast as they want.  On Christmas 
Eve Arikawe held a press conference announcing signings with 
three countries: Germany, Austria and Switzerland.  Today, 
two of those countries have still not signed.  Added to this 
is the DMO's new task of assigning external debt to 
individual states (reported septel).  Assuming Arikawe is 
sincere that the GON will stop stalling as a tactic (which is 
uncertain -- and certainly not within his control), his shop 
may still lack the capacity to conclude agreements as quickly 
as he may hope. 
 
 
Andrews