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OO RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
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O 131751Z MAR 08
FM AMEMBASSY LUANDA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4660
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

UNCLAS SECTION 01 OF 03 LUANDA 000219 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
H, PLEASE PASS SOONEST TO STAFFDEL PHALEN 
 
E.O. 12958: N/A 
TAGS: PREL OREP ECON EPET EFIN AO
SUBJECT: SCENESETTER FOR STAFFDEL PHALEN'S MARCH 18-22 
VISIT TO ANGOLA 
 
¶1. (U) Embassy Luanda warmly welcomes the visit of 
Professional Staff Members from the Senate Committee on 
Foreign Relations Michael Phalen and Neil Brown on March 
18-22.  This is the first visit by Congressional Professional 
Staff to Angola and provides an opportunity to discuss key 
bilateral issues such as good governance, the upcoming 
legislative elections, fiscal transparency, and cooperation 
aimed at fostering diverse economic growth.  Your visit will 
move our bi-lateral dialogue forward with government 
officials, political party leaders, and other decision makers 
in Angola. 
 
Overview 
-------- 
 
¶2. (U) Six years after the end in 2002 of a 27-year civil 
war, Angola is at a pivotal juncture in its development and 
reconstruction.  A healthy, democratic, peaceful, secure, and 
prosperous Angola is vital to both regional stability and 
prosperity and US national security interests. Our principal 
goals are consolidating Angola's democratic transition and 
strengthening the country's ability to use more efficiently 
its vast natural resources to improve the well-being of all 
citizens. 
 
¶3. (SBU) Perhaps the greatest constraint to improving our 
ties with the Angolan government and the military in 
particular is our history with Angola.  President dos Santos 
has publicly chastised the powers that interfered in colonial 
and post-independence Angola for not helping rebuild the 
country after decades of civil war, and he includes the U.S. 
in that group.  Many of Angola's civilian and military 
leaders fought against rebels backed by the U.S. and blame 
the U.S. for the suffering inflicted by those rebels on their 
families.  Some Angolans seek to strengthen ties with the 
U.S., but many key political and military leaders continue to 
be wary of U.S. intentions. 
 
Politics and Elections 
---------------------- 
 
¶4. (SBU) While nominally a multi-party democracy, Angola is 
dominated by the Popular Movement for the Liberation of 
Angola (MPLA) and a very strong chief executive (now in 
office for 28 years) - Jose Eduardo Dos Santos.  Angola's 
only democratic elections since independence in 1975 were 
held in 1992.  The results were contested by Jonas Savimbi, 
leader of the opposition party Union for the Total 
Independence of Angola (UNITA), and resulted in the 
resumption of civil war for another decade.  Savimbi was 
killed in battle in February 2002, and a formal peace accord 
was signed shortly thereafter. 
 
¶5. (U) In December 2006, President Dos Santos and opposition 
parties reached agreement to hold legislative elections in 
2008 and presidential elections in 2009.  Initial voter 
registration was completed in September 2007 with over 8 
million Angolans registering to vote, a number that exceeded 
expectations.  On December 28th, 2007, President dos Santos 
announced that legislative elections would be held on 
September 5th and 6th 2008; while he must still formally 
"call" elections 90 days prior to the election, all signs 
indicate the oft-postponed elections are on track for 
September. 
 
¶6. (U) U.S. assistance for democracy-building and good 
governance in FY 07 was approximately $8.3 million.  Our 
programs are administered through USAID and executed by 
International Republican Institute (IRI), the National 
Democratic Institute (NDI), IFES, World Learning, Development 
Alternatives Inc., the Academy for Educational Development 
and CARE.  They focus on building civil society capacity, 
strengthening political parties, increasing fiscal 
transparency, improving delivery of social services, and 
providing limited technical assistance to the Angolan 
institutions and officials. 
 
Economics 
--------- 
 
¶7. (U) Angola's economy is one of the fastest growing in the 
world, driven by booming oil production.  Production, 
officially capped by OPEC at 1.9 million barrels per day 
(bpd), is projected to reach over 2.2 million bpd by the end 
of 2008.  Angola's economy grew by 19.5 percent in 2006 and 
23.4 percent in 2007, and is expected to match or beat that 
pace in 2008.  Inflation was reduced from triple digits near 
the end of the war to just under 12 percent last year. 
Thanks again to petroleum revenues, foreign exchange reserves 
 
LUANDA 00000219  002 OF 003 
 
 
are growing.  Angola is our seventh largest source of foreign 
oil.  With increasing oil revenues and extensive lines of 
credit supplied by the Chinese, Portuguese, Brazilian, and 
other governments, Angola is now in the midst of major 
infrastructure rebuilding. 
 
¶8. (U) Angola's tremendous oil wealth has allowed it to come 
out from under a severe debt burden generated during the 
civil war years.  The government deficit is under control and 
foreign reserve accounts are flush with capital from 
extractive industries, namely oil and diamonds.  Outside 
these industries, however, the Angolan economy continues to 
sputter.  Agriculture is slowly returning to the countryside, 
while manufacturing and service industries are scarce and 
generate few jobs to address the nation's burgeoning 
unemployment problem. 
 
¶9. (U) According to the World Bank's 2007 "Doing Business" 
index, Angola ranks 167 out of 178 countries in promoting an 
open and efficient business climate.  Angola's rankings in 
the categories of "starting a business" (173 out of 178) and 
"enforcing contracts" (176 out of 178) are of particular 
concern. 
 
Transparency 
------------ 
 
¶10. (SBU) Under pressure from the international community, 
the Angolan government has made strides towards greater 
transparency by publishing financial information and working 
to limit extra-budgetary expenditures.  Published budget 
documents have grown more detailed from year to year, but the 
2006, 2007 and 2008 budgets still place a substantial portion 
of expenditures under vague headings like "administrative 
costs."  The government has been implementing a 
government-wide accounting system, but the poor execution 
rate of budgeted expenditures remains a problem.  The 
accountability of budgeted yet unspent funds and oil revenue 
beyond the published reference price (USD 55) remains an area 
of concern.  The Court of Accounts (Tribunal de Contas) 
reviews cases of official financial misconduct, but the 
published case load shows few convictions.  Angola is a 
signatory to the UN Convention Against Corruption. 
 
¶11. (SBU) Angola lacks a conflict of interest restriction 
that would limit the participation of government officials in 
private sector opportunities related to their public 
responsibilities.  Petty corruption is a problem worsened by 
low civil service salaries and a proliferation of bureaucracy 
and regulations that present opportunities for rent-seeking. 
Complicated procedures and long bureaucratic delays sometimes 
tempt investors to seek quicker service and approval by 
paying "gratuities" and "facilitation fees".  Transparency 
International's 2007 Corruption Perception Index (CPI) placed 
Angola at 147 out of 163 countries. 
 
¶12. (SBU) Although Angola's public and private companies 
historically did not use transparent accounting systems 
consistent with international norms, IMF demands have spurred 
audits of Angola's largest public companies by major 
international accounting firms.  In 2007, the Government of 
Angola announced that it would not enter into a formal 
program with the IMF, but did agree to continue Article IV 
consultations with the IMF.  The Angolan Government does not 
participate in the Extractive Industries Transparency 
Initiative, although it has taken many of the steps necessary 
to qualify for the program.  The government approved an audit 
law in 2002 that requires audits for all "large" companies, 
but it has not yet been possible to enforce this rule due to 
the lack of a professional accounting oversight body.  The 
National Bank of Angola hopes to foster a professional body 
of accountants to enforce standards and certify qualified 
accountants.  US firms operating in Angola are required to 
adhere to the Foreign Corrupt Practices Act. 
 
Development and US Assistance 
----------------------------- 
 
¶13. (U) While Angola shows signs of growth and development, 
the country still has some of the worst social indicators in 
the world.  Although statistical data are imprecise, best 
international estimates are that sixty-eight percent of the 
population lives in poverty, 26 percent in abject poverty. 
Life expectancy is forty-seven years, more than 30 percent 
lower than the average for developing nations; infant 
mortality, maternal mortality and other measures of the 
quality of life are among the worst in the world. Fertility 
is very high - an average of 6.9 births per woman. 
 
 
LUANDA 00000219  003 OF 003 
 
 
¶14. (U) Our USAID programs are aimed at assisting Angola to 
address the many major challenges it faces to achieve 
long-term stability and progress in translating wealth into 
an appreciably improved quality of life for its citizens. 
Our flagship program is the President's Malaria Initiative 
(PMI), which seeks to halve by 2010 mortality from malaria 
among children under five - and we're on track to do that. 
The Angolan government, in particular the Health Ministry, 
has been closely involved in the program and collaboration 
with other donors is strong.  In FY07, the second year of 
implementation, PMI sprayed over 110,000 houses (reaching 
over 500,000 Angolans), distributed over 90,000 bed nets and 
furnished over 2.4 million treatments for malaria. 
 
¶15. (U) The USG is also highly visible in the fight against 
HIV/AIDS.  Angola presents a unique opportunity to combat the 
spread of HIV/AIDS.  According to CDC data, Angola has a 
relatively low prevalence rate (2.1% among adults in 2007), 
but areas bordering higher-prevalence countries have rates 
four to five times as large and are rising.  Many of the 
factors conducive to an increase in the prevalence rate of 
HIV/AIDS are in place: the early age of sexual debut, the 
frequent use of multiple concurrent partners, and improved 
transportation routes, which encourages interaction with 
neighboring countries which have significantly higher 
prevalence rates.  The USG - CDC, USAID, DOS and DOD - is 
working closely with the Angolan Ministry of Health, private 
partners and NGOs to implement the national plan against 
HIV-AIDS. 
 
¶16. (U) The U.S. promotes a prosperous, economically diverse 
Angola though programs which work to improve the policy 
environment for private sector entrepreneurship in the 
non-oil economy, with particular attention to developing 
Angola's rich agricultural potential.  Leveraging resources 
from multilateral lenders, other bilateral donors, and the 
government's own efforts, these programs include work with 
the National Bank to promote systemic reform and ensure 
sustained economic growth through sound monetary policy and 
credit reform in support of small and medium enterprises 
small and medium enterprises; agricultural development and 
finance; land tenure reform and strengthening; improving 
fiscal control and programming in the Ministry of Finance; 
and capacity building in youth through Junior Achievement 
Angola. 
 
¶17. (U) Angola also remains one of the most heavily 
land-mined countries in the world, and USG assistance 
provides around USD 6 million to support humanitarian 
landmine clearance and the destruction of excess and unstable 
weapons and munitions.  We also support capacity-building 
within the Angolan National Demining Commission to strengthen 
the Angolan capacity to manage the national demining program 
and take over the major role played by international NGOs in 
landmine clearance. 
 
Human Rights Improving, but Capacity a Constraint 
--------------------------------------------- ---- 
 
¶18. (U) Angola's human rights record remains poor.  The 
country's overburdened judicial system remains a poor 
protector of individual rights.  Several high-profile cases 
in 2007 drew attention to the role of the government in 
fueling self-censorship of the media and continuing 
restrictions on the freedom of movement within Angola for 
journalists and others.  Elements of the military and police 
security forces continue to disregard human rights and the 
government has failed to investigate allegations of abuse.  A 
high-profile report released in December 2007 by Doctors 
without Borders (MSF) accused Angolan security forces of 
severely abusing and systematically raping illegal Congolese 
immigrants during expulsion operations in the remote province 
of Lunda Norte; despite the Army Chief of Staff's promise 
that the allegations would be investigated, no further report 
has been issued. 
 
¶19. (U) Prisons are overcrowded with harsh conditions, 
especially in the provinces.  The NGO movement is still 
nascent, but there are some indigenous organizations tracking 
human rights abuses and working with the GRA to train the 
national police on human rights issues. 
 
¶20. (U) USG-funded programs have helped train police through 
the International Law Enforcement Academy (ILEA) Gaborone 
facility.  In addition, USG-funded international organization 
partners in Angola have provided training on specific issues 
such as trafficking in persons and child rights. 
MOZENA