VZCZCXYZ0003
PP RUEHWEB

DE RUEHPO #0180/01 1232000
ZNR UUUUU ZZH
P 022000Z MAY 08
FM AMEMBASSY PARAMARIBO
TO RUEHC/SECSTATE WASHDC PRIORITY 0151
RUEHRC/DEPT OF AGRICULTURE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS PARAMARIBO 000180 
 
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: SURINAME CENTRAL BANK GOVERNOR TELTING ON GSM-102 
DEBT REPAYMENT:  "INFLEXIBILITY" ON BOTH SIDES 
 
REF: A. PARAMARIBO 34 
 
     ¶B. 07 PARAMARIBO 554 
     ¶C. 06 PARAMARIBO 206 
     ¶D. 05 PARAMARIBO 684 
     ¶E. 05 PARAMARIBO 514 
 
¶1. (SBU) Summary.  Central Bank Governor Andre Telting told 
the Ambassador he understands the U.S. government position is 
not to reduce or forgive portions of the outstanding GSM-102 
debt.  Given U.S. "inflexibility" on this issue, he will 
proceed first on negotiations on Brazilian debt, the only 
other remaining outside debt, before dealing with the GSM-102 
debt arrears.  Although the Central Bank has the liquidity to 
pay off the GSM-102 debt arrears in a lump payment, due to 
negotiations with the Brazilians and the potential reaction 
of Suriname's government and public, politically he cannot 
make that payment now.  Telting still plans to repay all 
outstanding foreign debt, including the GSM-102 debt arrears, 
before his 2010 retirement.  End Summary. 
 
¶2. (SBU) On April 28, the Ambassador personally conveyed to 
Central Bank Governor Andre Telting that the U.S. government 
position stated in the December 31, 2007, USDA letter to the 
Central Bank remains the U.S. position on GSM-102 debt; 
namely, the United States will not provide debt relief on the 
GSM-102 debt arrears, nor will the United States accept a 
break-down of repayment of outstanding principal and interest 
versus the late payment penalties and interest.  The 
Ambassador had conveyed this same message during her April 2 
meeting with visiting IMF economists, requesting that they 
share her information with the Central Bank Governor during 
their outgoing brief.  However, when queried, Telting claimed 
ignorance of the message.  He went on to debate what 
percentage of the debt was composed of late payment and 
penalties.  He also referred to the chart included with the 
November 8, 2007, letter, questioning whether the amounts 
listed were accurate.  He suggested the U.S. government had 
reimbursed the four private creditor banks after the 
Hakrinbank defaulted; therefore, the chart's accumulating 
late payment penalties and interest were conjecture rather 
than reality and could be negotiated.  The Ambassador 
responded that Mark Rowse remains the Central Bank's 
counterpart, and referred him to Rowse to resolve these 
questions as to the amount of the outstanding debt. 
 
¶3. (SBU) Governor Telting said while the Ambassador's message 
was not what he had hoped to hear, it remained his aim to 
clear all of Suriname's debts.  "The inflexibility of the 
United States in this case is somewhat surprising to us; we 
had not expected this inflexibility," Telting shared.  He 
further suggested that in light of how the Central Bank came 
to be paying off this originally private commercial debt, he 
had expected greater U.S. flexibility.  The Ambassador 
responded that the U.S. government was in fact demonstrating 
flexibility, since the timing of the repayment was open to 
negotiation. 
 
¶4. (SBU) Governor Telting shared his view on the history of 
the GSM-102 debt.  He suggested that due to a lack of U.S. 
trust in the Government of Suriname (which had suffered 
military coups and undemocratic leadership), the United 
States provided aid only through the private sector.  Only 
the Central Bank had foreign exchange at the time, he 
continued, so the United States must have been aware that 
Hakrinbank did not have foreign exchange with which to repay 
the loan.  The Hakrinbank was prepared to pay on the loan, he 
continued, but the Central Bank did not have the foreign 
exchange to give despite Hakrinbank's repeated requests.  As 
a result, the Hakrinbank defaulted on the GSM-102.  The 
Central Bank decided to take responsibility for this default, 
and Telting committed himself to clearing the debt.  Based on 
the Central Bank's stepping up to the plate to resolve the 
Hakrinbank's default, and considering that the Central Bank 
did not sign any of the original loan agreements, he had 
hoped for greater flexibility from the United States. 
 
¶5. (SBU) The Ambassador responded again that the United 
States was showing flexibility in that the U.S. government 
had not demanded immediate repayment on the outstanding 
portion of the debt, and was willing to discuss a repayment 
schedule.  A repayment schedule is unnecessary, Telting 
responded, because the Central Bank has the liquidity to pay 
of the GSM-102 arrears in a lump sum.  It would be difficult, 
however, to explain to the National Assembly and the 
 
country's citizens why, when every other creditor had given 
Suriname a reduction in debt, the Central Bank was willing to 
pay off the full amount to the United States.  He regretted 
that while funds existed to pay off the debt, the Central 
Bank would not do so, and interest, as well as late payment 
penalties and interest, would continue to accumulate. 
Telting also confirmed the Central Bank had no plans to apply 
for debt reduction via the Paris Club. 
 
¶6. (SBU) The Central Bank is preparing to start negotiations 
on Brazilian debt, Telting shared; the first meeting had been 
scheduled for January 2008 but was postponed.  If the Central 
Bank finalizes U.S. debt repayment conceding the U.S. 
position on the amount of the debt, it would damage 
Suriname's position with the Brazilians, since Telting claims 
that all other creditors have been "flexible" with debt 
forgiveness.  Once the negotiations with the Brazilians are 
completed (Brazil is Suriname's only remaining bilateral 
creditor), "we'll come back to this inflexible option," 
Telting said.  Although the Ambassador countered that it 
would be in Suriname's best interest to at least begin 
repayment of the GSM-102 debt now, Telting himself displayed 
inflexibility on beginning any U.S. repayment simultaneous 
with that of the Brazilians. 
 
¶7. (SBU) In the end, the loan from the United States will be 
paid.  "We owe an amount of money and we want to pay that 
amount of money," Telting confirmed, perhaps significantly 
without mentioning how much "that amount" was.  Telting will 
serve two additional years as Central Bank Governor before 
retiring in 2010, and the GSM-102 debt arrears will be paid 
before his retirement, Telting assured the Ambassador.  An 
open question remains whether he intends to pay the "full 
amount" according to U.S. government calculations or the 
"full amount" as the Government of Suriname continues to see 
it. 
SCHREIBER HUGHES