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RR RUEHWEB

DE RUEHSP #0144/01 0852007
ZNR UUUUU ZZH
R 252007Z MAR 08
FM AMEMBASSY PORT OF SPAIN
TO SECSTATE WASHDC 9065

UNCLAS PORT OF SPAIN 000144 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
STATE FOR WHA/CAR 
 
E.O. 12958: N/A 
TAGS: PREL EPET SENV PGOV PTER TD
SUBJECT: SCENESETTER FOR VISIT OF WHA DIRECTOR OF CARIBBEAN AFFAIRS 
VELIA DE PIRRO 
 
SENSITIVE BUT UNCLASSIFIED; PLEASE PROTECT ACCORDINGLY 
 
¶1. (U) Embassy Port of Spain warmly welcomes your April 5-9 visit to 
Trinidad and Tobago (T&T).  Your trip presents an opportunity to 
reinforce engagement with T&T, building on the goodwill generated by 
last June's Conference on the Caribbean and in advance of next 
year's Summit of the Americas meeting.  T&T is important to 
America's energy security, having supplied more than two-thirds of 
U.S. imports of liquefied natural gas (LNG) over the last five 
years.  It also has been expanding its political and economic 
influence in the region, leveraging its dynamic and prosperous 
economy.  Trinidad, however, also is coping with an upsurge of crime 
driven, at least in part, by narcotics trafficked from the South 
American mainland.  While T&T sometimes differs with the USG on 
foreign policy matters, it is a friend, ally and strong supporter of 
hemispheric free trade. 
 
¶2. (U) This cable provides a brief overview of the country and look 
at potential topics that will be covered during your stay.  Meetings 
with the Ambassador and Country Team shortly after your arrival will 
provide further information and the opportunity to discuss issues at 
length. 
 
------------------ 
POLITICAL SNAPSHOT 
------------------ 
 
¶3. (U) Prime Minister Manning' People's National Movement (PNM) 
party retained its parliamentary majority when the citizens of 
Trinidad and Tobago voted on November 5, 2007.  The PNM won 26 seats 
to the opposition United National Congress' (UNC) 15 slots.  The 
year-old Congress of the People (COP) party contested the election 
as well, but won no seats.  The PNM and UNC parties are heavily, but 
not exclusively, based on ethnicity, with the PNM supported largely 
by Afro-Trinidadians and the UNC by Indo-Trinidadians.  The COP also 
draws mostly from Indo-Trinidadians, though it consciously sought 
(as did the other parties) in the last election to cross ethnic 
lines. 
 
¶4. (SBU) Manning first served as Prime Minister from 1991 to 1995, 
when the PNM lost its parliamentary majority to the UNC and Basdeo 
Panday became Prime Minister.  An electoral deadlock in 2001 
eventually led to the return of Manning and the PNM. With a secure 
majority in Parliament, Manning need not call another election until 
¶2012. 
 
----------------- 
ECONOMIC SNAPSHOT 
----------------- 
 
¶5. (U) T&T has a vibrant industrialized economy, buoyed by 
relatively large natural gas reserves.  It is our largest trading 
partner in the Caribbean and the leading beneficiary of Caribbean 
Basin Initiative trade preferences.  T&T is experiencing strong GDP 
growth, averaging 9.8% over the last five years, as a result of high 
prices for oil and gas.  While fiscal policy has generally been 
restrained, rising spending coupled with a tight labor market have 
contributed to rising inflation, which reached 10 percent 
year-on-year in October 2006, moderated to 7.9 percent in  August 
2007, and climbed back to 10 percent as a result of wage agreements 
concluded on the eve of November's national elections.  T&T is 
considered a low-risk investment destination.  The T&T dollar 
remains stable in value against the U.S. dollar (at about 
6.25/dollar), contributing to the country's attractiveness to 
foreign investment.  Standard & Poor's raised its credit rating for 
T&T to A- in 2005 and confirmed that rating in 2006 and 2007.  GOTT 
regularly courts foreign investors, with U.S. companies often taking 
the lead. 
 
----------------------- 
A CLOSER LOOK AT ENERGY 
----------------------- 
 
¶6. (U) Oil was discovered in Trinidad in the mid-19th century, and 
the local energy industry is celebrating the 100th anniversary of 
commercial oil production in 2008.  After riding the oil boom and 
bust cycle of the 1970s and 1980s, Trinidad and Tobago has made a 
major transition over the last ten years to an economy driven 
largely by natural gas, both for export and for consumption in 
domestic industries, attracting major foreign-investment projects in 
liquefied natural gas (LNG), petrochemicals and steel.  T&T also 
continues to play a role in regional energy security, supplying 
refined petroleum products to the rest of the Caribbean, although 
competition from Venezuela backed by concessionary financing is 
eroding its regional market share. 
 
¶7. (SBU) USG interest in energy security centers on imports of LNG 
from Trinidad, which has supplied two-thirds of U.S. LNG imports 
over the past five years.  While LNG accounts for only 10 percent of 
 
U.S. overall natural gas imports, T&T's supply plays a critical role 
in East Coast markets from New England to Louisiana.  For this 
reason, USG agencies recently conducted a vulnerability assessment 
aimed at improving protection of critical infrastructure in T&T's 
energy sector, an initiative that enjoyed full cooperation from the 
GOTT and energy sector companies.  The GOTT is also working with DOE 
and SouthCom to host a regional energy infrastructure protection 
conference in Port of Spain, currently planned for May 14-15. 
 
¶8. (U) Atlantic LNG, the country's sole producer, is a consortium of 
companies including BP (which absorbed Amoco several years ago), 
British Gas, Repsol, Suez (which bought out Cabot's interests in 
2000), and the local National Gas Company (NGC).  In 2005, Atlantic 
LNG completed Train 4, the largest ever built, expanding ALNG's 
production capacity from 10 million to 15 million tons per year. 
U.S. construction company Bechtel International was the primary 
contractor on the Train 4 project, and GE Oil & Gas has an ongoing 
service contract. 
 
¶9. (U) While the GOTT is studying the feasibility of constructing a 
fifth LNG train, possibly to supply Caribbean and other regional 
markets, prospects depend on developing new gas reserves.  2006 and 
2007 saw few significant discoveries and limited interest from 
international energy companies in bidding for rights to explore 
unassigned deep water blocks, fueling concerns that new discoveries 
are not keeping pace with utilization.  These concerns increased 
with the August 2007 release of an independent audit of gas reserves 
showing the ratio of proven reserves to current production at 12 
years as of January 2007, down from previous estimates of 15-20 
years.  In January 2008, two Canadian companies announced 
discoveries in T&T waters, with additional reserves estimated at 
roughly one more year's worth of gas consumption.  The GOTT is 
optimistic that other planned exploratory wells will find more gas; 
at the same time it is preparing to offer more favorable financial 
terms in the offshore bid rounds it has scheduled for 2008 and 
¶2009. 
 
¶10. (SBU) The best near-term prospect for raising production is from 
several large gas fields that cross T&T's maritime border with 
Venezuela.  Talks between the two governments on joint development 
made significant progress in 2006-07, culminating in the signing of 
a framework unitization agreement on March 20, 2007, during a visit 
to Caracas by Prime Minister Manning.  The agreement sets out the 
legal terms for ownership and development of the cross-border 
fields, but it does not specify on which side of the border the gas 
will be monetized, nor for what purpose.  The largest of these 
fields is estimated at 10 trillion cubic feet (TCF), of which 2.7 
TCF are assigned to T&T.  Chevron has interests in this field on 
both sides of the border.  Progress on reaching a field-specific 
accord with Venezuela has been stalled since June 2007; the T&T 
Minister of Energy stated publicly in February 2008 that efforts are 
under way to revive negotiations. 
 
¶11. (U) The government also is focused on developing gas-based 
downstream industries, in order to diversify the energy and metals 
industries and facilitate the growth of manufacturing.  Trinidad and 
Tobago is already a world-class producer of ammonia and methanol, 
with significant U.S. investment in several plants.  New projects 
would add steel, aluminum, ethylene and polypropylene production. 
However, ALCOA's proposal to construct a 341,000 ton/year aluminum 
smelter met with unprecedented resistance from local environmental 
activists, culminating in the Prime Minister's late 2006 
announcement that the smelter had been put on hold pending agreement 
on a new site.  Anti-smelter activists have since turned their 
energies toward blocking Alutrint, a smaller proposed aluminum 
smelter with 60% GOTT and 40% Venezuelan private ownership, as well 
a new steel mill to be constructed by India's Essar Steel.  It 
remains to be seen whether U.S. company Westlake Chemical will meet 
similar resistance to its proposed $1.5 billion ethylene plant, 
slated for completion by 2011. 
 
---------------------- 
LABOR AND TRADE UNIONS 
---------------------- 
 
¶12. (SBU) Trade unions have at times been at odds with GOTT efforts 
to increase competitiveness.  In one example, after years of 
thwarted negotiations with the airline workers' union, the GOTT took 
the drastic step in 2006 of closing down BWIA, the unprofitable 
national carrier, and creating a new, downsized entity.  It is still 
unclear if the new national carrier, Caribbean Airlines, will be 
unionized.  The Prime Minister suggested last year that the GOTT may 
try a similar tactic with the far more powerful Oil Workers Trade 
Union (OWTU) in an effort to create a new, unified national 
petroleum company to replace the state-owned Petrotrin. 
 
--------------------- 
NARCOTICS TRAFFICKING 
--------------------- 
 
 
¶13. (SBU) The country's location just seven miles off the coast of 
Venezuela makes drug trafficking a major challenge.  Narcotics from 
South America transit T&T's waters or move through its airports. 
Illegal drug use and trafficking are on the rise.  The narcotics 
trade is likely linked to the persistently high number of murders 
and other violent crimes that plague the country.  The government 
faces an uphill battle in trying to control these problems, 
exacerbated by inadequate border controls, corruption in the police 
service and a slow judiciary.  T&T's vibrant petrochemical industry 
has the potential to provide diverted precursor chemicals for use in 
illegal drug production.  The country's growing economy and 
well-developed banking, communications and transportation systems, 
facilitate a significant number of sizeable financial transactions 
that can obscure money laundering. 
 
----- 
CRIME 
----- 
 
¶14. (SBU) Violent crime has been one area of particular concern over 
the last several years.  T&T saw significant increases in murders 
and kidnappings from 2000 until present.  In 2007 there were 388 
murders, the highest number recorded in any one year. For the first 
quarter of 2008, T&T has realized a staggering 93 murders which is 
twice as many first quarter 2007. The GOTT has widely been viewed as 
unable to effectively address the serious crime problem, partially 
due to corrupt and inefficient police, inadequate disciplinary 
systems, a slow-motion court system and political intransigence. 
This, coupled with perceptions that some criminal organizations 
operate relatively freely, has led to a loss of confidence in the 
GOTT's ability to solve the crime problem.  To date, the crime 
situation has not affected foreign direct investment or tourism, 
though several local business families have fled the country and 
each day, local merchants raise more concern. 
 
--------- 
TERRORISM 
--------- 
 
¶15. (SBU) T&T has no significant indigenous terror groups, but some 
criminal Muslim organizations remain a concern.  T&T has a 
considerable Muslim minority, comprising roughly six to ten percent 
of the total population, though estimates vary widely.  The majority 
of Muslims are represented by moderate Islamic organizations, but a 
few radical Islamic fundamentalist leaders have reportedly advocated 
for actions to be taken against the United States.  The most famous 
of Trinidad's radical organizations is the Jamaat al-Muslimeen, a 
local Afro-Trinidadian group that launched a violent failed coup 
attempt in 1990.  Over the last few years, however, several radical 
splinter groups have emerged.  Anti-American sentiments are 
sometimes heard even from moderate Muslims, and several of the major 
mainstream groups helped to organize protests against U.S. actions 
in Iraq in early 2003.  T&T is party to eleven of the twelve UN 
anti-terror conventions, and in September 2005 passed anti-terrorism 
legislation.  Elsewhere, T&T has come into compliance with the 
International Ship and Port Facility Security Code (ISPS), and the 
T&T Central Bank cooperates with post in alerting financial 
institutions to potential sources of terrorist finance. 
 
---------------------------------- 
REGIONAL INFLUENCE AND INTEGRATION 
---------------------------------- 
 
¶16. (SBU) PM Manning, bolstered by greater energy revenues and a 
strong economy, is seeking to expand T&T's role regionally and 
internationally, for example by offering technical assistance to 
African oil and gas countries.  Closer to home, he is a strong 
backer of CARICOM integration and seeks US support for deploying T&T 
ships to help patrol the Eastern Caribbean.  A move toward regional 
integration took place in October 2006 in advance of the Cricket 
World Cup Tournament.  In his capacity as chairman of CARICOM's 
Security Committee, PM Manning signed a Memorandum of Agreement in 
Port of Spain with visiting Secretary of Homeland Security Michael 
Chertoff, paving the way for an Advance Passenger Information System 
(APIS).  APIS screened all travelers entering the region for the 
tournament. 
 
¶17.  (SBU)  In the wake of the brutal 2005 hurricane season, T&T 
donated nearly TT$40 million (US $6.67 million) in disaster relief 
to islands in the region.  It also contributed troops, relief 
supplies and volunteer workers almost overnight to the stricken 
island of Grenada following Hurricane Ivan.  Regional integration in 
the form of the Caribbean Single Market and Economy (CSME) is 
progressing but far from reality, however, as demonstrated by 
periodic political backlash in Jamaica and Barbados over the success 
of T&T businesses in penetrating those markets.  Furthermore, 
Venezuela, through its Petrocaribe program has now replaced T&T as 
the Caribbean's largest energy supplier.  For its part, T&T has been 
 
contributing US$67 million annually to the CARICOM Petroleum Fund it 
set up in 2004 to finance social development projects in 
oil-importing member countries. At the most recent CARICOM Heads 
meeting in the Bahamas, Manning announced an increase in T&T's 
Petroleum Fund contribution as well as US$38 million in new money 
for the CARICOM Regional Development Fund. 
 
¶18. (SBU) Manning also is raising T&T's and the region's profile 
internationally by hosting the Fifth Summit of the Americas (SOA) in 
April 2009 and the next Commonwealth Summit about six months later. 
T&T has assembled a capable team to manage these meetings, under the 
experienced leadership of Luis Alberto Rodriguez.  While the GOTT 
has not yet come to grip with the logistical challenges of the SOA, 
bilateral dialogue on themes and concepts for the Summit has been 
constructive.  T&T's focus on "human prosperity" offers scope for 
both U.S. priorities like competitiveness and Caribbean priorities 
such as crime and food security.  T&T also should be receptive to 
U.S. priorities in the two other thematic pillars it has put 
forward, energy security and environmental sustainability. 
 
------------------ 
POLICY DIFFERENCES 
------------------ 
 
¶19. (SBU) Though a friend to the U.S., there are areas of policy 
difference.  Due in part to former President Robinson's role as a 
"father" of the International Criminal Court (ICC), T&T was one of 
the first ICC signatories.  It has not signed an Article 98 
agreement with the U.S. and likely never will.  While not taken with 
the systems in either Venezuela or Cuba, T&T seeks to maintain 
positive ties with each of those nations and is an advocate of 
dialogue between Washington and Caracas and Havana.  T&T, along with 
its neighbors, did not recognize Haiti's interim government in the 
absence of a CARICOM consensus.  T&T also did not support the U.S. 
intervention in Iraq, and its media have been openly critical on 
this issue.  Its voting record at the U.N. also leaves much to be 
desired from a U.S. policy perspective, though it is roughly in line 
with its CARICOM partners. 
 
---------- 
CONCLUSION 
---------- 
 
¶20. (U) T&T remains an important ally, trading partner and regional 
leader.  It has a well-established and functioning democracy and 
regularly cooperates with the U.S. on energy and security matters. 
We look forward to facilitating a successful visit to T&T for you. 
 
Austin