VZCZCXRO3928
PP RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHDK #1035/01 1340748
ZNR UUUUU ZZH
P 140748Z MAY 07
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 8285
INFO RHEHNSC/NSC WASHDC
RUEHLMC/MCC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHZO/AFRICAN UNION COLLECTIVE

UNCLAS SECTION 01 OF 03 DAKAR 001035 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR F - ACTING DIRECTOR OF U.S. FOREIGN ASSISTANCE AND ACTING 
USAID AMINISTRATOR HENRIETTA H. FORE FROM AMBASSADOR 
STATE ALSO FOR AF, E, EB, AF/EPS AND AF/W 
NSC FOR AF SENIOR DIRECTOR PITTMAN 
AID/W FOR AA/AFR WNORTH AND AFR/WA NFREEMAN 
MCC FOR JBLOOM 
TREASURY FOR OASIA - D. PETERS 
 
E.O. 12958: N/A 
TAGS: EAID ECON PREL KMCA PGOV SG
SUBJECT: DEEP CUTS IN DEVELOPMENT ASSISTANCE WILL HARM SENEGAL'S 
POPULATION AND OUR BILATERAL RELATIONS 
 
DAKAR 00001035  001.2 OF 003 
 
 
¶1.  (SBU) Having recently been apprised of possible significant cuts 
to USAID/Senegal's operating (OE) budget and development program, 
perhaps as early as the current fiscal year, I feel compelled to 
provide an initial reaction in the hope that there is still an 
opportunity for this Mission, as well as impacted embassies 
globally, to influence the decision-making process.  As I understand 
the current discussion, USAID/Senegal stands to become a small 
mission with a scaled-back program in order to free up resources for 
the seven priority missions and regional offices.  Part of reason 
lies in Senegal's eligibility for a Millennium Challenge Account 
(MCA) Compact.  However, almost three years after Senegal submitted 
its MCA proposal to construct an industrial platform at Diamniadio, 
much more work remains to be done before a Compact can be signed. 
Therefore, I would like to make eight points that I hope will be 
fully considered before any final decision about USAID/Senegal's 
future is made. 
 
-- A.  Senegal needs, receives and utilizes U.S. assistance across a 
wide range of programs.  According to the 2006 UNDP Human 
Development Index, Senegal ranks 156 out of 177 countries.  Adult 
illiteracy is high (60.7 percent) and the percentage of underweight 
children (ages 0 - 5) is over 23 percent.  Furthermore, for the 
third straight year, Senegal's immunization rate is below the median 
for MCC countries. 
 
For the past three years, this mission's top strategic priority has 
been to encourage and support enhanced economic growth.  Though 
viewed as a regional success story, Senegal has badly underperformed 
in GDP growth, job creation, productivity, private sector 
development, expanded trade, economic diversification, public 
procurement rules, property rights reform, environmental protection, 
and a wide range of related government transparency issues.  Senegal 
is not going to escape from widespread poverty quickly or easily. 
With a growing population and a marked lack of engagements into 
globalized economic systems, one can understand how Senegal's 
positive example of a stable, tolerant, democratic, U.S. ally could 
be at risk without significant U.S. assistance towards fostering a 
growing and responsive economy. 
 
In the area of education, USAID and the Government of Senegal are 
just beginning to make significant inroads at providing children, 
especially girls, in rural areas with access to middle school 
education in recognition that a primary school education alone will 
not sufficiently prepare Senegalese youth to be productive members 
of society.  In health, we have just launched the President's 
Malaria Initiative, which aims to reduce malaria infections by 50 
percent over the next three years, and we continue to work with the 
Global Fund and other donors to keep Senegal's HIV sero-prevalence 
rate the lowest in Africa at 0.7 percent. 
 
-- B.  Notwithstanding that Senegal is not among the seven priority 
counties, our assistance programs are effective in helping Senegal 
meet priority development goals in areas where the Senegalese 
Government cannot.  For example, although Senegal ranks above the 
median on most of the ruling justly indicators used by the MCC, lack 
of good governance and transparency continue to undermine prospects 
for an improved investment environment and accelerated growth.  If 
these issues are not addressed through development programs that 
support and pressure institutions and leaders to operate more 
transparently, the success of plans for accelerated growth, 
including the proposed MCC-financed industrial platform, could be in 
serious jeopardy. 
 
-- C.  Tying a precipitous drop in other assistance efforts to a 
county's MCC eligibility could drastically hollow out our ability to 
help the country meet critical development needs.  While Senegal's 
proposed MCA compact for a major new industrial platform -- and 
perhaps assistance with a much needed national toll road -- is 
squarely targeted to enhance economic opportunities and job 
creation, it is no substitute for a robust bilateral program that 
addresses other critical needs.  The proposed MCA Compact will not 
touch on important economic growth requirements, including natural 
resources management, enhancing sanitary and phyto-sanitary capacity 
to increase agriculture and food exports under AGOA, commercial law 
reform, budget effectiveness, and many other areas where the U.S. 
can and should effectively engage.  Nor will an MCA Compact address 
the country's pressing needs in other sectors such as health, 
education and conflict resolution. 
 
-- D.  A "MCC connection" to any near-term reduction in other 
 
DAKAR 00001035  002.2 OF 003 
 
 
official assistance, sends the wrong message about the MCC program 
and will likely put a significant strain on our bilateral relations. 
 As you know, the requirements that must be fulfilled leading to the 
signing of an MCA Compact are detailed and rigorous, especially for 
a complex proposal like Senegal's -- essentially to build a new 
city.  Though the Senegalese side has not always been responsive or 
thorough in its efforts to support the necessary due diligence, over 
the past two years we have frequently heard complaints that the 
compact process has entailed examples of "moving the goalposts," 
especially in relation to how the program was initially described 
during its launch in 2004. 
 
At the same time, senior Senegalese officials, including Senegal's 
Ambassador to the United States, have frequently requested and 
received assurance, based on their understanding of the President's 
vision for the MCA, that compact eligibility will reward responsible 
public policy and not disadvantage a country for the wider range of 
aid and partnership.  I believe that Senegal would have chosen a 
different approach to its MCA proposal -- one to address immediate 
needs rather than a commitment to a long-term strategy of economic 
modernization -- if there was an understanding of the potential 
decrease in other economic growth assistance now being discussed. 
 
Working through the compact process can be a battle, but one where 
we can encourage, and at times prod, the host country to dedicate 
time, top technical experts, and their own budget resources, because 
of the MCA promise of a new avenue for significant and focused 
assistance. 
 
-- E.  MCC compacts rest on a broad floor of assistance.  In 
Senegal's case, maintaining eligibility by meeting increasingly 
stringent indicator standards is not a given.  In fact, Senegal is 
at risk of losing MCA eligibility particularly because of poor 
performance under "Investing n People."  Those education and health 
indicators benefit from the programs and training that are a part of 
USAID's programs.  Other assistance under economic growth programs 
is vital for promoting the kind of private sector-led growth that 
will be a determining factor in the MCC's concept's long-term 
success or failure in Senegal. 
 
-- F.  Our multi-sector assistance program keeps us at the donor 
roundtable, where we lead the discussions on governance, encouraging 
private-sector development, and the effective use of budget 
resources.  Our robust economic growth program is the most effective 
in Senegal.  I chair the donor-coordinating Private Sector Working 
Group because of our commitment to helping Senegal achieve economic 
growth.  Through this forum we press the GOS on a range of 
governance and transparency issues that are key to effective 
implementation of donor assistance from other countries, 
international organizations and NGOS, and are critical to improving 
the country's private sector investment climate. 
 
-- G.  The U.S. and Senegal enjoy one of Africa's most comprehensive 
and effective military cooperation partnerships -- to the tune of 
USD 8.2 million in FY-2007.  Senegal welcomes a vast array of U.S. 
military training exercises and receives U.S. training for its 
soldiers to complement a range of military missions, including 
pre-deployment training for the country's 2,600-plus international 
peacekeepers.  While I fully support this robust military 
engagement, I wonder if the United States wants to have mil-mil 
activities dominate the bilateral relationship with Senegal.  This 
would not only   create a public relations risk, but would also 
significantly reduce the scope of effective, professional contacts 
necessary to carry USG foreign policy priorities. 
 
-- H.  In our battle to encourage good governance and public 
resources transparency, an increase or decrease in our funding 
levels could, perhaps, be a useful instrument.  However, absorbing 
the significant OE cuts and accompanying reductions in program 
funding currently being discussed without first effectively engaging 
the GOS on its responsibilities in this equation seriously limits 
our ability to influence policy makers and public opinion.  There is 
possibly room for additional "conditionality" in our assistance to 
Senegal.  Unfortunately, the proposed cuts would effectively 
eliminate any opportunity to discuss the utility of such an 
approach. 
 
¶2.  (SBU) I am aware of the serious budget constraints underlying 
many of the painful decisions faced by both Washington and the 
field.  My hope is that we can face this challenge together. 
 
DAKAR 00001035  003.2 OF 003 
 
 
Ideally, decisions about where our precious assistance funds can 
effectively be utilized, both in terms of countries and priority 
sectors, can be developed with the active contribution of embassies 
and USAID missions, and with a view to achieving long-term U.S. 
foreign policy goals.  I look forward to working with you and your 
staff on these issues. 
 
JACOBS