VZCZCXYZ0005
OO RUEHWEB

DE RUEHPO #0034/01 0301926
ZNR UUUUU ZZH
O 301926Z JAN 08
FM AMEMBASSY PARAMARIBO
TO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUEHRC/DEPT OF AGRICULTURE WASHDC IMMEDIATE
RUEHC/SECSTATE WASHDC IMMEDIATE 9935

UNCLAS PARAMARIBO 000034 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
WHA/CAR JACKIE ROSHOLT 
USDA/CREDIT PROGRAMS DIVISION FOR MARK ROWSE AND JONATHAN 
DOSTER 
EEB/IFD/OMA FOR MARLENE SAKAUE AND DAVID FREUDENWALD 
STATE EEB PLEASE PASS TO TREASURY 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ETRD PREL NS
SUBJECT:  HOW TO RESOLVE THE LONGSTANDING ISSUE OF 
SURINAMESE DEBT TO THE UNITED STATES 
 
REF: A. A) 07 PARAMARIBO 554 
     ¶B. B) 06 PARAMARIBO 206 
     ¶C. C) 05 PARAMARIBO 684 
     ¶D. D) 05 PARAMARIBO 514 
 
¶1. (SBU) This is an action message.  Please see paragraph 6. 
 
¶2.  (SBU) Summary: By his own account, in recent years 
Suriname's Central Bank Governor, Andre Telting, has made it 
a high priority to pay down Suriname's foreign debts through 
a combination of direct payments and/or successful 
negotiations for more favorable arrangements with GOS 
bilateral creditors.  With respect to the United States, 
after years of non-payment the GOS has finally cleared its 
PL-480 arrears, and now wants to pay down its outstanding 
GSM-102 debt, starting with outstanding principal and 
interest, but excluding late payment penalties and interest. 
Telting continues to press for flexibility from the USG 
regarding late penalties, and has repeatedly engaged the 
Ambassador and USDA on this issue.  Post recognizes that debt 
forgiveness is not an option for Suriname.  Nevertheless, 
Post remains convinced that the USG must demonstrate some 
degree of flexibility, to reward recent good performance and 
to encourage the Central Bank to continue to place a high 
priority on paying down its bilateral debt.    Consequently, 
Post requests permission to convey to the GOS sufficient 
information so that the USG intent to demonstrate 
"flexibility" is evident, and the benefit to Suriname of 
rapidly coming to agreement with the USG on an acceptable 
repayment schedule is clear.  End Summary. 
 
¶3.  (SBU) In recent months, and in some cases after years of 
inaction, Central Bank Governor Andre Telting has made it a 
priority to pay down Suriname's foreign debts.  To achieve 
this ambitious goal, by his own account Telting has 
successfully negotiated flexibility, including debt 
forgiveness, from most of the GOS' major creditors -- except 
the United States.  With respect to its debts to the United 
States, after years of non-payment the GOS has finally 
cleared its PL-480 arrears, and now wants to pay down 
Suriname's outstanding GSM-102 debt, starting with 
outstanding principal and interest, but excluding late 
payment penalties and interest.  With respect to the latter 
only, the GOS requests flexibility.  The Central Bank 
Governor has discussed this issue extensively with Ambassador 
Schreiber Hughes, arguing that Suriname should not be 
penalized now for debts accrued during a turbulent period in 
the county's history following the 1982 military coup by 
strongman Desi Bouterse and the December 7, 1982 
assassination of 15 prominent members of the opposition. 
Essentially, Telting argues that the USG hardline position on 
repayment violates the spirit of goodwill under which the 
original loans had been granted. 
 
¶4. (SBU) Ambassador Schreiber Hughes raised the GOS position 
during an inter-agency (State, Treasury, and USDA) discussion 
hosted by EEB/OMA in September, 2007.  At that time, it was 
clear that the USG was unlikely to support debt forgiveness 
for Suriname and that the inter-agency considered Suriname's 
GSM-102 late payment penalties and interest to be part of the 
debt that could not be forgiven.  The Ambassador subsequently 
communicated the inter-agency position to Telting, who 
nevertheless continued to press the Ambassador, and USDA 
directly via letters and emails, for flexibility with respect 
to the late penalties.  In a written response dated December 
31, 2007, USDA advised Governor Telting that, "because 
Suriname is not facing a balance of payments or debt 
sustainability crisis, the United States is unable to provide 
a ...reduction in the amounts Suriname owes on its defaulted 
GSM-102 guarantees."  Unfortunately, on January 19 that 
passage was paraphrased in the English language version of 
"de Ware Tijd," Suriname's daily newspaper-of-record, with 
the following headline: "USA Thinks Suriname Too Rich To Let 
Off Debts."  Moreover, frequent media reports quote the 
Central Bank and Finance Ministry as being in "negotiations" 
with the USG to resolve the bilateral debt issue.  (Although 
inaccurate, the GOS often characterizes as "negotiations" its 
requests for flexibility on the late penalty payments.) 
 
¶5.  (SBU) Despite Telting's entreaties, Post recognizes that 
debt forgiveness is not an option for Suriname. 
Nevertheless, Post remains convinced that the USG must 
demonstrate some degree of flexibility, to reward recent good 
performance and to encourage the Central Bank to continue to 
 
place a high priority on paying down its bilateral debt. 
Post is concerned that publicity surrounding the USG "hard 
line" posture will discourage continued GOS progress with 
respect to its bilateral debt to the United States.  Post 
understands that the aforementioned December 31 letter from 
USDA to Telting, in addition to declaring Suriname "too rich" 
for debt forgiveness, also states that, "if Suriname would 
like to propose a repayment schedule, the U.S. Government 
would carefully consider your proposal and respond in a 
timely manner," and that this invitation to "propose a 
repayment schedule" is intended to show USG flexibility in 
that it allows the GOS to propose a repayment schedule for 
the full amount of GSM-102 debt due (principal, interest, 
plus the disputed late penalties), as opposed to demanding 
immediate payment. However, this hint at USG flexibility, 
particularly since it also makes clear the USG flat refusal 
to engage the GOS in its request for flexibility on late 
penalties, appears too ephemeral to be perceived by the GOS 
as any flexibility at all.  Moreover, the inter-agency has 
given Post no leeway to share with the GOS any clarifying 
information with respect to the USG position, including what 
possible incentives exist (e.g., an improved credit rating) 
to encourage the GOS to abandon its attempts to "negotiate" 
for flexibility on late penalty payments and proceed instead 
to expeditiously propose a repayment schedule with the USG 
under terms that appear to be dictated by the United States. 
 
6 (SBU) On January 17, Ambassador Schreiber Hughes navigated 
a cautious path in her conversation with Governor Telting 
(during which he continued to insist that Suriname should not 
be penalized with late penalties).  The Ambassador could make 
no stronger case for the inter-agency position than to 
"strongly urge" Telting to propose a repayment schedule "as 
soon as possible".  Not surprisingly, to date the GOS has 
proposed no repayment schedule.  It is a Post priority to 
come to resolution on the issue of Suriname's outstanding 
debt to the United States.  To do so, however, Post must have 
some latitude to share more information, in the form of 
inter-agency cleared talking points, with the GOS.  Post must 
convey to the GOS sufficient information so that the USG 
intent to demonstrate "flexibility" is evident, and the 
benefit to Suriname of rapidly coming to agreement with the 
USG on an acceptable repayment schedule is clear. 
SCHREIBER HUGHES