VZCZCXRO8808
PP RUEHPA
DE RUEHDK #1251/01 1581758
ZNY CCCCC ZZH
P 071758Z JUN 07
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 8512
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHBR/AMEMBASSY BRASILIA 0243
RUEHLC/AMEMBASSY LIBREVILLE 0953
RUEHLI/AMEMBASSY LISBON 0794
RUEHLU/AMEMBASSY LUANDA 0420
RUEHTO/AMEMBASSY MAPUTO 0456

C O N F I D E N T I A L SECTION 01 OF 02 DAKAR 001251 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR AF/W, AF/RSA, INR/AA AND INL/AAE 
ACCRA FOR USAID/WA 
PARIS FOR POL - D'ELIA AND SECRET SERVICE 
 
E.O. 12958: DECL: 06/06/2017 
TAGS: PGOV ECON EAID SNAR PU
SUBJECT: GUINEA BISSAU: NEW GOVERNMENT TAKES RIGHT STEPS, 
STILL HAS NO BUDGET 
 
Classified By: DCM Robert P. Jackson for reasons 1.4 (b) and (d) 
 
SUMMARY 
------- 
¶1.  (U) The government of Prime Minister Martinho N,Dafa 
Cabi has taken bold moves toward transparency of budgets, 
against corruption, petty crime, and drug trafficking.  It is 
cleaning up the streets and harbor and has earned the trust 
of the World Bank, which is restarting the multi-sectoral 
program suspended due to unethical contract procedures under 
Aristides Gomes' government.  Unfortunately, the right steps 
have not improved Guinea-Bissau's budget gap and civil 
service salaries have not been paid since January.  The GOGB 
will need to request donor support to fill budget gaps.  END 
SUMMARY. 
 
NEW GOVERNMENT WORKS TO IMPRESS 
------------------------------- 
¶2.  (U) Bissau-Guinean Prime Minister Martinho N,Dafa Cabi's 
government continues to make the right moves to win potential 
donors' confidence.  The World Bank has agreed to restart the 
USD 15 million multi-sectoral assistance grant targeting 
energy, water, and sanitation in the City of Bissau that was 
put on hold due to the granting of a less-than-transparent 
contract to a Nigerian firm by Aristides Gomes' government. 
Cabi wooed back the Bank with promises of transparency and 
together with Minister of Finance Iussuf Sanha, has agreed to 
open the books to a full audit of all ministries for 2006 and 
¶2007.  The audit will be conducted by an outside firm and be 
financed by the European Union. 
 
¶3.  (U) Cabi's government is showing it can get work done 
even with limited resources.  A massive effort to clean up 
the streets and gutters in Bissau is underway.  Also, 
long-rusted boat carcasses are being broken down and cleaned 
out of the harbor area.  Thanks to Interior Minister Baciro 
Dabo's bulldoggish tactics, there is more order and a bit of 
fear on the streets at night.  His motorcycle cops go out en 
masse to apprehend people without identity cards and harass 
others engaging in minor infractions like poor parking.  This 
has netted 98 illegals including Colombians, Puerto Ricans, 
Nigerians and other West Africans and according to what Dabo 
told the press, an unspecified amount of cocaine and almost 
one million in counterfeit U.S. dollars. 
 
¶4.  (C) In spite of Dabo's alleged links with narcotics 
traffickers, this government says it is concerned about 
drugs.  An inter-ministerial commission is interviewing 
members of the former government about the disappearance from 
the coffers of the Finance Ministry of 674 kg. of cocaine 
seized in a September police operation.  PM Cabi asked PolOff 
for counter-narcotics assistance, citing the need for 
communications and surveillance equipment, training, and 
technical assistance.  A top priority continues to be a 
prison.  Justice Minister Carmelita Barbosa Rodrigues Pires 
said one plan under consideration is to renovate the current 
headquarters of the Judicial Police to hold maximum security 
detainees and move the Judicial Police to another location. 
 
BUDGET GAP CONTINUES 
-------------------- 
¶5.  (C) A budget has not been completed yet for 2007, which 
is half over.  Budget Director Romao Varela told PolOff that 
revenues are low; so the GOGB will have to rely on donor 
support to cover the budget gap from 2006 and the gap that 
will exist for 2007 once the budget is completed.  Head of 
the visiting IMF delegation from Washington Catherine 
McAuliffe agreed with his assessment.  She reiterated that 
IMF post-conflict assistance would only be available to 
Guinea-Bissau if the gap could be covered.  She noted that 
even with the World Bank's promise of USD 10 million for 
budget support, more would be needed.  McAuliffe said she had 
not seen any other country in this big of a budgetary hole 
before.  According to IMF's balance sheet, the best case 
scenario still has the GOGB over USD 22 million in the red. 
 
¶6.  (C) Varela told PolOff that civil servant salaries have 
not been paid since January.  The Finance Ministry has plans 
to reduce the civil service payroll by some 2,000 positions, 
but the GOGB needs donor support to provide severance 
packages. 
 
 
DAKAR 00001251  002 OF 002 
 
 
¶7.  (U) A renewed fishing agreement with the European Union 
will bring in about 7.5 million Euros but the first dividends 
will not arrive until next year.  Meanwhile, the GOGB is 
struggling to pay off past due private loans and late fees 
which may undercut its ability to get additional financing 
even with a promissory note from the EU on future fishing 
revenues. 
 
¶8.  (C) Revenues from cashew exports have not started to come 
in yet but when they do, they are expected to be lower this 
year than last.  One reason is the lack of competition since 
the previous Finance Minister Victor Mandinga's bribe 
requests from the largest buyer, Olam International, resulted 
in that company's departure from Bissau.  New Finance 
Minister Sanha is currently in negotiations with Olam, 
according to Varela, to resolve complaints and hasten the 
company's return, which should increase competition among 
buyers and intermediaries and  improve prices for growers. 
 
COMMENT 
------- 
¶9.  (C) Dabo's crack down on undocumented people and drug 
traffickers should be viewed skeptically given allegations of 
his past involvement with traffickers.  He may be trying to 
curry favor with donors or simply be asserting his new power 
over rival drug gangs.  The inter-ministerial commission is 
also good theater for donors, but without a functioning 
judiciary or prison, no one is likely to be held accountable 
for the missing drugs. 
 
¶10. (C) The Cabi government seems to be held in higher regard 
by the diplomatic corps and for good reason.  It remains to 
be seen whether it can raise any more money than its 
predecessors, however.  The GOGB made another pitch for cash 
to diplomats in Dakar at a joint IMF briefing on June 7.  The 
hastily planned meeting did not have good participation from 
the donor community and no concrete pledges were made.  END 
COMMENT. 
 
¶11. (U) Visit Embassy Dakar's SIPRNet site at 
http://www.state.sgov.gov/p/af/dakar. 
JACOBS