VZCZCXYZ0000
RR RUEHWEB

DE RUEHDR #1587/01 3480406
ZNR UUUUU ZZH
R 140406Z DEC 07
FM AMEMBASSY DAR ES SALAAM
TO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/SECSTATE WASHDC 7151
INFO RUEHJB/AMEMBASSY BUJUMBURA 2617
RUEHKM/AMEMBASSY KAMPALA 3105
RUEHLGB/AMEMBASSY KIGALI 1052
RUEHNR/AMEMBASSY NAIROBI 0871
RUEHDS/AMEMBASSY ADDIS ABABA 3272

UNCLAS DAR ES SALAAM 001587 
 
SIPDIS 
 
SENSITIVE, SIPDIS 
 
TREASURY FOR CLOWERY, VBRANDON 
DEPT AF/E FOR JLIDDLE, AF/EPS FOR ABREITER 
COMMERCE/ITA FOR BERKUL 
PASS TO USTR FOR FLISER, WJACKSON 
ADDIS FOR AU MISSION 
 
E.O. 12958:  N/A 
TAGS: ETRD EFIN EAID ECON PREL TZ
 
SUBJECT: TANZANIA:  SECRETARY PAULSON AND PRESIDENT KIKWETE DISCUSS 
CAPITAL MARKETS, BOEING AND GOOD GOVERNANCE 
 
Summary 
------- 
¶1. (U) President Jakaya Kikwete told U.S. Secretary of Treasury, 
Henry Paulson, on November 15 that he would welcome more capital 
market investment in Tanzania to accelerate economic growth and 
raise the per capita income.  Secretary Paulson expressed 
appreciation for both President Kikwete and Finance Minister Zakia 
Meghji's strong leadership.  He reminded President Kikwete that the 
Air Tanzania Company (ATC) needed to maintain high levels of 
transparency and accountability in deciding which aircraft to 
purchase or lease to expand its aging fleet.  Secretary Paulson 
pledged to continue to work closely with Tanzania's finance ministry 
and to advocate in Washington DC for policies to strengthen East 
African regional economic growth.  End summary. 
 
¶2. (U) During a cordial discussion at the conclusion of his two-day 
trip to Arusha, Tanzania, Secretary Paulson outlined for President 
Kikwete the highlights of his November 14 to 15 visit.  Paulson 
noted that the working lunch with the East African Finance Ministers 
had focused on capital markets and infrastructure needs within the 
region.  He commended the innovative USAID wildlife project he 
observed at Manyara Ranch as well an Arusha mosquito net factory he 
toured earlier in the day.  The Secretary highlighted the factory as 
an example of the USG and Government of Tanzania (GOT)'s joint 
efforts to fight poverty and eradicate malaria at the same time. 
 
¶3. (SBU) Secretary Paulson told President Kikwete he had emphasized 
to the EAC Finance Ministers as well as to the press, the strong, 
consistent support that President Bush has given to the fight 
against malaria and against HIV/AIDS Africa.  The Secretary also 
expressed his appreciation to President Kikwete that the draft 
Tourism Act 2007, which had raised serious concerns among U.S.-owned 
safari companies in Tanzania, would not be tabled in Parliament 
until early 2008.  This postponement would allow stakeholders enough 
time to forward their comments and discuss their concerns with 
officials at the Ministry of Natural Resources and Tourism. 
 
HIV/AIDS and Malaria Campaigns 
------------------------------ 
¶4. (U) President Kikwete thanked the Secretary for his visit and 
emphasized that the relationship between Tanzania and the U.S. is 
"better than ever."  He noted that during his two meetings with the 
President last year: "President Bush expressed appreciation for our 
growing bilateral relationship; we intend to continue to cooperate 
in many areas." 
 
¶5. (U) President Kikwete outlined the progress that has been made in 
Tanzania in the fight against both HIV/AIDS and malaria.  He said 
that nationwide HIV/AIDS testing campaign had reached 1.9 million 
persons to date in 2007, as compared to only 250,000 Tanzanians 
during the same time period in 2006.  In the anti-malaria campaign, 
Kikwete stressed that the GOT is working closely with the United 
States and other partners to reach 26 critical areas in Tanzania 
where the malaria infection rate is the highest. 
 
¶6. (SBU) President Kikwete noted that the signing of the MCC compact 
would initiate critical projects to improve Tanzania's road, water 
and power networks.  He reiterated that his administration is 
committed to good governance. "We listen to our friends: if they say 
you need to go this way, we take note," President Kikwete affirmed. 
He added, "In some areas we are not doing as well as in others, but 
our government is committed to respect human rights, rule of law, 
transparency and accountability."  Ambassador Green stressed that 
the MCC compact opened up a unique opportunity to make substantial 
progress in economic development as well as transparency and 
accountability. 
 
Boeing 
------- 
¶7. (SBU) While encouraging President Kikwete to keep up the fight 
against corruption, Secretary Paulson noted the USG's concern that 
the ongoing deliberations of Air Tanzania to expand its fleet by 
purchasing or leasing planes from either Boeing or Airbus did not 
appear transparent.  Paulson emphasized the importance of following 
internationally accepted standards.  President Kikwete replied he 
had received reports that the acquisition process "may not have been 
handled properly" and subsequently asked for a briefing from the 
Permanent Secretary of Infrastructure.  He had learned that the 
Board of Air Tanzania Company (ATC) chose not to carry out an open 
 
tender, but rather had requested proposals directly from three 
companies.  Only Boeing and Airbus had responded with business and 
financial proposals.  He understood that key factors in the ATC 
Board deliberation was the delivery dates of the aircraft and 2) the 
commercial offers. 
 
¶8. (SBU) President Kikwete said when he had met with Assistant USTR 
Florie Liser on November 12, she had voiced similar concerns over 
ATC's acquisition process.  He thus gave instructions for the ATC 
Board to meet AUSTR Liser on November 13 and to be open and answer 
all her questions about what had transpired to date.  Kikwete 
explained that ATC had decided to lease, then purchase Airbus planes 
for the shorter, regional routes.  For the longer routes to the 
United Kingdom or China, the ATC Board preferred Boeing aircraft. 
However, since the delivery date for larger Boeing aircraft was not 
until 2018, plans were currently being discussed to lease Boeing 
planes in the near future to cover the longer routes. 
 
¶9. (SBU) Secretary Paulson expressed appreciation for President 
Kikwete's close involvement in this and other important economic 
decisions.  The Secretary suggested, however, that such high-level 
acquisition decisions needed to be handled properly, not just from a 
GOT internal perspective, but equally, if not more importantly, in a 
manner to assure the process is transparent to all bidders and to 
the public.  "When there is good governance," Paulson stressed, "the 
entire process would be open and allow all parties to know the 
criteria through a Request for Proposals."  Also, once a decision is 
made, the award should be publicly announced so that both the winner 
and the loser know the basis for the final decision. 
 
Capital Markets 
--------------- 
¶10. (SBU) Kikwete expressed his "impatience" that the capital market 
flows into Tanzania and the region were not adequate. "We need a 
variety of capital markets," he stated.  Secretary Paulson assured 
him that the USG was ready to work with the East African region.  He 
pointed out that the Department of Treasury has a resident regional 
expert from its Office of Technical Assistance (OTA) based in 
Nairobi who is working throughout the East African Region to advise 
in this area. 
 
¶11. (U) Kikwete remarked that during his 2006 trip to New York he 
had visited NASDAQ and the New York Stock Exchange; both 
organizations were ready to assist and deepen the relationship with 
Tanzania.  The President added: "I realize that Tanzania's capital 
markets are still small, but we are ready to work with others to 
restructure our institutions."  Kikwete noted that Tanzania still 
has a very low per capita income of less than USD 370: "Many 
countries have been as poor as we are, but now they are better off." 
 
 Secretary Paulson emphasized that his discussions with the EAC 
finance ministers had been highly encouraging.  He would report back 
to Washington and recommend programs to deepen cooperation with the 
GOT and other regional governments. 
 
¶12. (U) President Kikwete reiterated his appreciation for the close 
cooperation with President Bush's administration: "We would like to 
keep it that way; our relationship has never been this close to the 
United States before."  Secretary Paulson concluded with the 
assurance that the Treasury Department will work closely with 
Tanzania's Finance Minister, Zakia Meghji, and with the other EAC 
finance ministers and would continue to advocate in Washington to 
support East African economic growth. 
GREEN