VZCZCXYZ0001
PP RUEHWEB

DE RUEHNR #0383/01 0371202
ZNR UUUUU ZZH
P 061202Z FEB 08
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 4576
INFO RUEHXR/RWANDA COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS NAIROBI 000383 
 
SIPDIS 
 
DEPT FOR AF/E, AF/EPS, EEB/IFD/OMA 
DEPT ALSO PASS TO USTR FOR BILL JACKSON 
DEPT ALSO PASS TO DEPT OF LABOR FOR MICHAL MURPHY, SUDHA HALEY, 
PATRICK WHITE AND MAUREEN PETTIS 
DEPT ALSO PASS TO USAID/EA 
DEPT ALSO PASS TO USITC FOR RALPH WATKINS 
TREASURY FOR VIRGINIA BRANDON 
COMMERCE FOR BECKY ERKUL 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON EFIN ELAB ETRD KE
SUBJECT: KENYAN CEOS CALL FOR PEACE, RECONCILIATION, REFORMS, AND 
RECONSTRUCTION 
 
REFS: (A) NAIROBI 380, (B) NAIROBI 353 
 
SENSITIVE-BUT-UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY.  FOR 
INTERNAL USG DISTRIBUTION ONLY. 
 
¶1. (SBU) Summary: Over 300 CEOs from firms employing 12 million 
Kenyans met on February 5 to issue a strong statement on the need 
for peace, security, reconciliation, reconstruction, and reform for 
Kofi Annan to deliver to Government-ODM negotiators.  Although the 
final text (para 8) of the CEO summit omitted figures on current and 
potential economic losses, the meeting and the document were widely 
publicized and should help keep the pressure on political leaders to 
reach agreement on power sharing.  End summary. 
 
Private Sector's Grim Forecasts 
------------------------------- 
¶2. (U) Encouraged by mediator Kofi Annan, Kenya Private Sector 
Alliance (KEPSA) Acting Chairman Steve Smith, Safaricom CEO Michael 
Joseph and the Kenya Association of Manufacturers (KAM) organized a 
Business Forum on February 5 to discuss the current situation and 
compile a statement to the government and ODM negotiators (Note: By 
coincidence, both Smith and Joseph are American citizens.  End 
note).  In a strong display of concern, over 300 CEOs of large and 
small firms that employ 12 million Kenyans and support another 24 
million, NGO reps, and diplomats filled a Nairobi hotel ballroom 
with grim faces to hear Kofi Annan ask them to speak out and provide 
leadership to help pull Kenya back from the brink.  Annan described 
the status of the Government-ODM talks and said that Kenya could be 
healed with support from all stakeholders. 
 
¶3. (U) Kenya Red Cross (KRC) Secretary General Abbas Gullet 
described Kenyan efforts to assist internally displaced persons 
(IDP) as fairly successful, but that security was still a major 
problem.  He said the Kenyan military has training from UN 
peacekeeping missions, and should be deployed to help set up, run, 
and guard consolidated camps that would also take in the many IDPs 
that cannot stay much longer with family or friends.  Gullet said 
the KRC was torn between the IDP's voluntary requests for 
transportation back to their ancestral homelands, and KRC's 
reluctance to support ethnic cleansing. 
 
¶4. (U) Steve Smith, who in addition to his KEPSA role is CEO of 
Eveready Kenya, stressed that the private sector is the engine of 
Kenya's economy, and that this success is based on human effort and 
geographic location.  The private sector, he said, needs political 
stability and acceptable governance for continued growth and job 
creation for the 500,000 young people entering the workforce each 
year.  He summarized the damage done to each sector of the economy 
(ref B), expressing concern Kenya could face serious food shortages 
in the coming months.  Smith warned that growth could drop to zero 
or lower in 2008 under the current conditions, but said 4%-5% was 
still possible -- if a political solution is found quickly and the 
violence stops.  He noted that the rest of the world is moving on, 
and firms could postpone or cancel investments, or even close their 
plants if the situation does not improve.  He stressed the 
importance of maintaining (tribal) diversity in Kenya's private 
sector, calling it a key strength in maintaining growth. 
 
¶5. (U) The closed-door discussion focused on the need to restore 
security, especially on the roads to permit free movement.  Some 
advocated harsh security measures that were not well received. 
Ideas that received general support but were not specifically 
mentioned in the text were tax breaks for investors and employers, 
government insurance for investments against civil strife, deploying 
the military to keep roads secure, building the justice system into 
a credible and effective institution, prosecuting perpetrators of 
violence to end impunity, ensuring diversity and relying on merit in 
personnel practices, threatening to withhold tax payments until the 
government and ODM reach some agreement, increasing the transparency 
of parliament and accountability of MPs, and using all company 
vehicles to display and deliver messages of peace and restoration of 
law and order.  There was disagreement over the utility or 
feasibility of a new election or recount. 
 
¶6. (U) The summit's statement (para 8) was delivered to Kofi Annan 
and the negotiating teams, and was widely reported in the print and 
broadcast media. Although the businessmen omitted the dire economic 
statistics from the statement, they were included in the press 
 
coverage of the event. 
 
Comment 
-------- 
¶7. (SBU) By speaking so loudly with one voice in this way, the 
private sector in Kenya is doing what it has always done, albeit 
more explicitly now: Providing leadership to help temper the worst 
tendencies of the country's political leaders.  The summit and the 
resulting statement should send a strong message to the political 
leadership of both sides, and help ratchet up the pressure now 
coming from all quarters for swift agreement on power sharing (ref 
A) as a first step towards returning Kenya to a path of peace and 
economic prosperity. 
 
Text of Kenya National Compact for Peace and Stability 
--------------------------------------------- -------- 
¶8.  (U) Begin text 
 
The Kenya National Compact for Peace and Stability 
 
A Brief from the Business Community Meeting in Nairobi on 5 February 
2008 
 
Preamble 
 
With the ongoing political crisis, Kenya has lost more than 1,000 
citizens to violence, more than 300,000 are displaced from homes and 
the Kenya business has suffered immense losses of staff, property, 
business and confidence. The country needs to urgently find a 
sustainable political settlement of the current crisis so that 
further loss can be forestalled. At present a contraction of the 
economy is imminent and business is fearful of further losses which 
could affect decisions on investment and employment. 
 
The business community welcomes and supports the international 
mediation efforts led by Mr. Kofi Annan and the team of eminent 
persons and urges all Kenyans to support his efforts to bring peace 
to our country. We are fully supportive of the efforts and desire 
success of the initiative. 
 
In the views of the Business community, there are several issues 
that require attention in order to provide confidence for the 
protection of life and property and conduct of business. 
 
¶1. Immediate Cessation of Hostilities and Violence 
We are concerned by the violence that has rocked the country for the 
past month.  To this end it is important that all political leaders 
affirm their commitment to ending of the violence.  It is imperative 
that the President and the Hon Raila Odinga and close political 
associates issue statements endorsing the mediation efforts.  In 
addition, business expects that both leaders should jointly visit 
the areas affected by the violence to preach peace.  All political 
and communal leaders should also visit the affected areas of the 
country to preach peace and to demonstrate their commitment to the 
mediation.  The Government must take immediate steps to disarm the 
armed militias that are terrorizing citizens in many parts of the 
country.  The communities and families from which these young people 
are drawn from should be encouraged to play a role in this regard. 
 
¶2. Restoration of Security 
No business can thrive where there is no security.  It is imperative 
that all efforts are made to ensure that there is effective 
security.  To this end, we commend the efforts made to enlist the 
services of the armed forces to ensure that security is delivered 
and urge continued deployment until situation normalizes.  We need 
effective policing and the police must act to combat crime and 
destruction of property. 
Expeditious prosecution of all criminals and facilitation of 
individuals in the demanding justice.  Accountability of all the 
police and public servants and must end culture of civil and 
criminal impunity.  We have a big responsibility to the region even 
as we focus on the internal affairs; we need to give the region a 
level of assurance through the opening of all transport corridors. 
 
¶3. Political Dialogue and Mediation 
In order to spur the confidence of society and the business 
community, it is important that a sustainable political settlement 
is arrived at from the ongoing mediation efforts.  To this the 
 
business community recommends a Broad based inclusive government 
that supports and builds on the diversity of the Kenyan people and 
promotes healing of the nation. 
 
¶4. National Reconciliation 
Kenya is a country of diverse peoples.  This has been negatively 
affected by the crisis which admittedly has brought to the fore 
long-standing grievances for which the election dispute acted as a 
trigger.  It will be necessary for the country to go through a 
process healing and reconciliation.  We need a comprehensive 
dialogue and a truth and reconciliation process.  This includes 
truth that would facilitate closure on the 2007 Presidential 
elections.  In addition we need to ensure that this does not recur 
in future and therefore the country will need to invest in a long 
term programme of national civic education on the need to maintain 
diversity of the nation.  We should explore criminalization of 
tribalism, promotion of diversity and issuance of new IDs with no 
tribal identity. 
 
¶5. Communication of a correct and positive image 
The Business community has urged its members from the media to act 
responsibly and to desist from airing images and messages that 
inflame the passions in the country.  In addition, however, business 
is also concerned about the quality and effectiveness of government 
communication.  Image-Kenya Brand reconstruction: The country and 
its image has suffered immensely from the ongoing crisis.  To this 
end, Business commits itself and wishes to work with Government in 
the reconstruction of the image and brand of Kenya. 
 
¶6. Economic Recovery and Reconstruction 
The Private sector in Kenya is the engine of growth.  The Business 
community commits itself to being part and parcel of the 
reconstruction efforts in order to get Kenya working again.  To this 
end it is imperative that Government works with the community to: 
Develop an economic stimulus programme that ensures no jobs are lost 
and secures both internal and external investment.  Such could 
include the establishment of a reconstruction fund as well as 
necessary fiscal and other incentives e.g. tax breaks. 
Establish a Reconstruction programme with a special focus on the 
SME. 
Create a public works corps that engages the unemployed in building 
and delivery of needed infrastructure. 
Facilitate resettlement of farmers on their land to minimize the 
possibility of food insecurity in the country. 
 
¶7. Constitutional - Legal reforms 
The issues that have arisen will need to be settled in a new 
constitutional settlement.  To this end the Business community 
believes that the country should agree and conclude fundamental 
reform that addresses equity, equality, justice and restoration of 
all Kenyans democratic and human rights.  Such reforms must provide 
for management of ethnic diversity in the management of public 
affairs as well as management of electoral disputes among others. 
 
End text. 
RANNEBERGER