R 241602Z OCT 08
FM AMEMBASSY PRAIA
TO SECSTATE WASHDC 1598
INFO AMEMBASSY RABAT 
AMCONSUL JOHANNESBURG 
AMEMBASSY PRETORIA 
AMCONSUL CAPE TOWN 
AMCONSUL DURBAN 
AMEMBASSY PRAIA

UNCLAS PRAIA 000265 
 
 
AF/W FOR EMILY NARKIS, H FOR DIANE RICH 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON MARR OTRA ASEC CV
SUBJECT: SCENESETTER FOR CODEL LEWIS' TRIP TO CAPE VERDE, NOVEMBER 
6-8, 2008 
 
¶1. (U) Welcome to the Republic of Cape Verde, one of Africa's 
success stories.  It is an island nation, approximately the size 
of Rhode Island, located in the north Atlantic Ocean 
approximately 300 miles due west of Senegal off Africa's west 
coast.  Cape Verde has a population of 450,000 people spread 
over nine inhabited islands.  Politically stable, Cape Verde 
enjoys excellent relations with other countries in the region 
and has played an important mediator role in the peace keeping 
process in the sub-region; it has one of the continent's highest 
literacy rates, per capita incomes, and health indicators.  It 
also enjoys one of the region's best human rights records. 
There are no political prisoners, freedom of religion is 
respected, and there is an active media and internationally 
recognized freedom of expression.  In 2007, Cape Verde obtained 
a special partnership status with the European Union, which will 
assist the country to modernize its institutions and provide 
more market access. Cape Verde's good governance and human 
rights indicators have earned the country important political 
and economic benefits.  Its impressive economic growth 
performance has raised it to the ranks of lower middle-income 
countries, with a per capita income of approximately $2,000. 
Bilateral relations between the United States and Cape Verde are 
excellent.  The United States and Cape Verde are drawn together 
by a shared commitment to democracy and by strong family ties. 
¶U. S. diplomatic activities in Cape Verde include strengthening 
security and rule of law, including combating drug trafficking, 
supporting the consolidation of democracy, creating economic 
opportunity so as to enhance the archipelago's viability, and 
providing quality consular services to our many consular clients. 
 
POLITICAL OVERVIEW 
 
¶2. (U) Cape Verde is strongly committed to democracy.  Cape 
Verde has had seven rounds of elections since independence in 
1975, all considered free and fair, and has one of the best 
records in Africa in terms of good governance.  Cape Verde held 
municipal elections on May 18, 2008.  The voter participation 
rate was 78%.   The main opposition party, the MPD (Movement for 
Democracy) won in 12 of the 22 municipalities and the governing 
PAICV (African Party for the Independence of Cape Verde) 
accepted defeat. The National Electoral Commission judged these 
elections free and fair. An independent audit found that the 
voter registration process was credible.  All parties are, 
however, aware of the need to improve the electoral system and 
further revisions to the electoral code will continue, including 
discussion of the voting process and the voting regime for the 
Diaspora, a large percentage of whom resides in the United 
States. 
 
¶3. (U) In 2007 and 2008 several hundred illegal migrants 
attempting to reach the Canary Islands were intercepted in Cape 
Verdean waters.  Cape Verde is seeking international cooperation 
with a view to solving the human rights, economic and social 
issues that could arise from increased illegal migration. 
 
MILLENNIUM CHALLENGE ACCOUNT 
 
¶4. (U) The size and depth of the Millennium Challenge Compact 
program, one of the first Compacts to be signed, is recognition 
of Cape Verde's strong record of democratic governance, 
intolerance of corruption, commitment to supporting and 
promoting agricultural development, private sector activity, and 
effective use of limited resources to address the needs of its 
people in a sustainable way.  The $110 million Compact, now in 
its third year of implementation (as of July 2008), supports 
Cape Verde's national development goal of transforming its 
economy from aid-dependency to economically and socially 
sustainable growth. This funding by MCC makes the U.S. one the 
largest donors in Cape Verde. MCC funds are being applied to 
improve the country's infrastructure to support increased 
economic activity, improve access to credit, and provide access 
to markets, employment, and social services; increase 
agricultural productivity; as well as carry out key policy 
reforms for sustained development and economic growth. At the 
completion of the Compact, the program is expected to increase 
Cape Verde's annual income by at least $10 million. 
 
ECONOMIC TRANSITION AND PROGRESS 
 
¶5. (U) Cape Verde's status as a small open economy, with a 
relatively high level of external public debt and heavily 
dependent on emigrants' remittances and external aid, makes it 
vulnerable to external shocks.  As an archipelago, the country 
faces large internal transportation and communication costs; it 
has no energy resources or tradable raw materials.  Its 
agriculture sector is susceptible to frequent droughts, making 
the country over-reliant on food imports.  Cape Verde has high 
levels of poverty and unemployment, partly attributable to a 
lack of obvious economic growth opportunities and a scarcity of 
resources, particularly water.  The warm climate and lack of 
rain, combined with the country's stable political environment, 
has encouraged the development of a dynamic tourism industry. 
Cape Verde seeks to diversify its economy into other services, 
in particular international maritime and air transport. It is 
aided in this area by its strategic geographical position and 
its excellent relationships with the United States and Europe. 
Services represent over 70% of Cape Verde's economy. 
Agriculture, though still significant in employment terms, 
contributed only 8 percent of GDP in 2004.  The country has been 
able to develop a successful economy based on tourism, 
transport, and other services and, to a lesser extent, on light 
manufacturing industries. 
 
¶6. (U) Since 2007, Cape Verde signed an agreement of special 
partnership with the European Union, acceded to World Trade 
Organization (WTO), and graduated from Least Developed Country 
(LDC) status. The United States provided technical assistance 
during accession negotiations, and the European Union also 
provided strong support.  The country's macroeconomic evolution 
continues to be monitored by the IMF under a Policy Support 
Instrument, signed in July 2006.  The Cape Verde currency, the 
Escudo, is pegged to the Euro at a rate of 110.27 escudos to 1 
Euro. Cape Verde benefits from the absence of exchange-rate risk 
in relation to the Euro.  The Cape Verde Central Bank is 
studying the possibility of adopting the Euro as local currency. 
 This is expected to be a lengthy process and will not be 
completed in 2008. 
 
FOOD SECTOR 
 
¶7. (U) Cape Verde imports over 90 percent of its food 
consumption.  Water shortages and successive droughts have 
greatly weakened its crop production capacity over the last 
century.  Any decline in Cape Verde's import capacity as a 
result of the price increases or grain shortages would have 
serious implications for the food security of the country where 
corn, rice and bread represent the basis of the dietary 
consumption.  In response to the international food crisis, the 
National Assembly approved the reduction in import duty on 
wheat, and the exemption from value-added tax for maize, wheat, 
milk products and cooking oils. 
 
ENERGY SECTOR 
 
¶8. (U) Current energy generation is insufficient to meet current 
needs and projected growth of the tourism industry, which is 
highly dependent on stable provision of electricity and fresh 
water.  The country has studied various solutions to overcome 
its major development burden including a floating Russian 
nuclear energy station.  However, it has strategically decided 
to invest in alternative energy resources.  The announced goal 
is to produce 25% of energy needs from renewable sources by 2011 
and 50% by 2020.  There are also plans to make the island of Sal 
fully reliant on renewable energy (a combination of solar, wind, 
wave, and biofuel) in the next 5 to 10 years.   Until then, Cape 
Verde will remain highly vulnerable to exogenous shocks in both 
the energy and food markets. 
 
AVIATION SECTOR 
 
¶9. (U) Aviation is an area where the United States and Cape 
Verde have cooperated very effectively.  Cape Verde has received 
high ratings for its civil aviation services.  On September 9, 
2003, Cape Verde became the first of the Safe Skies countries to 
meet ICAO safety standards and achieve Federal Aviation 
Authority (FAA) Category 1 as a result of the technical 
assistance provided under the Safe Skies Program.  With the 
upgrading of the international airport on Sal, the recent 
inaugurations of Praia and Boavista International Airports and 
finally, with the imminent inauguration of a fourth 
international airport on the Island of Sao Vicente, Cape Verde 
can expect a boom of its tourism industry. 
TACV, the state owned airline is undergoing restructuring to 
stem losses and privatization has been promised every year for 
the last 5 years.  Recently a new private airline Halcyonair has 
started operations with a limited fleet of only one aircraft. 
The company expects to soon reinforce the fleet with additional 
aircraft. 
 
HUMANITARIAN PROGRAMS 
 
¶10. (U) Our Peace Corps Volunteers are active in English 
language teaching; English teacher training; working with youth 
on HIV/AIDS prevention throughout the islands; and supporting 
municipal offices, youth centers, and local NGOs with 
Information Technology training.  There is no USAID presence in 
Cape Verde.  The Embassy's Special Self-Help Program and 
Democracy and Human Rights Funds have become important and 
highly desirable funding mechanisms, enabling the Ambassador to 
respond quickly to the growing needs of local communities. 
These projects and other U.S. assistance efforts in Cape Verde 
generate much public awareness and goodwill towards the United 
States.  Whether it is access to potable water, income 
generation, or equipping local schools, the projects selected 
exemplify the philosophy of these funds by assisting grassroots 
organizations to play a role in their development. 
 
¶11. (U) The Embassy coordinates U.S. DoD Humanitarian Assistance 
donations that have helped build community centers in 22 
municipalities around Cape Verde.  Five additional community 
centers and fire stations are planned for the near future. 
Excess property including water trucks, dump trucks, generators, 
patrol boats and supplies have also been donated.  Additional 
projects include building classrooms and renovating schools in 
impoverished districts.  Many of these projects are located on 
islands that can be reached only by ship, so these humanitarian 
construction projects are of great significance and value. 
 
MILITARY AND SECURITY ASSISTANCE 
 
¶12. (U) The Armed Forces of Cape Verde is a limited force of 
approximately 1,300 personnel, recently reorganized into the 
National Guard and the Coast Guard.  The National Guard consists 
of the military police corps, the Marine Corps, the artillery 
corps, and additional support units.  It is organized 
territorially and is the main component of the Armed Forces 
designed for country-wide military defense, through territorial 
and amphibious operations, as well as internal security support. 
 The Coast Guard consists of naval, aerial, and ground forces 
units.  It defends and protects the nation's territorial waters 
through aerial, terrestrial, and amphibious operations.  The 
Security Assistance Program, coordinated by the Embassy, assists 
the Cape Verdean Armed Forces to enhance its professional 
Officer Corps, particularly at the middle management level.  It 
also promotes cooperation in areas of joint interest, including 
counter-terrorism, maritime law enforcement, search and rescue, 
disaster preparedness, and the interdiction of narcotics shipped 
through Cape Verde waters. 
 
THE GROWING DRUG PROBLEM 
 
¶13. (U) Cape Verde's strategic location on the maritime and 
aerial routes between Africa's mainland, Europe, and South 
America makes it an attractive location for transshipments of 
illegal drugs from the Caribbean, Colombia, Brazil, Venezuela, 
Europe and possibly the United States.  The Embassy is 
monitoring closely the increase in drug trafficking that is 
taking place in Cape Verde.  Police seizures of cocaine destined 
for Europe have increased greatly in the last year, and there is 
increased domestic drug use as well as drug-related crimes. 
There are also suspicions of organized crime involvement in 
money laundering and trafficking activities.  Police in Cape 
Verde seized 43,257 kg in 2006 and 509,358 kg of cocaine in 
2007; most of these drugs were being smuggled to Europe.  We 
have seen no indication that cocaine is being smuggled to the 
United States from Cape Verde, though now with direct flights, 
we cannot rule out the possibility. 
 
CONSULAR RELATIONS 
 
¶14. (U) Cape Verde has a long history of immigration to the 
United States, and this pattern of immigration continues today. 
The Cape Verdean community in the United States is estimated 
between 350,000 to 500,000 with the overwhelming majority in 
Massachusetts and Rhode Island.  The Cape Verdean population in 
the United States rivals the total number of Cape Verdeans in 
the archipelago of Cape Verde itself.  There are an estimated 
2,000 to 3,000 Americans permanently residing in Cape Verde. 
During the summer months, there may be more than 10,000 Cape 
Verdean-Americans in country.  Nearly all Americans resident in 
Cape Verde are dual nationals, or have access to dual 
nationality.  Most of the senior citizen Americans in Cape Verde 
are naturalized Americans who have returned to their home 
islands of Fogo and Brava for retirement. 
 
USG FOOTPRINT IN CAPE VERDE 
 
¶15. (U) The American Mission to Praia is comprised of Department 
of State, the Peace Corps, and the Millennium Challenge 
Corporation (MCC).  Our direct-hire American contingent is 
composed of the Qassador, Deputy Chief of Mission/Management 
Officer, MCC Resident Country Director, Peace Corps Director, 
Peace Corps Assistant Director, Consular Officer, 
Political/Consular Officer, and Office Management Specialist. 
Our locally engaged staff includes 95 FSN/PSAs (MCC, Peace 
Corps, and State), some of whom are American citizens, and 11 
Contractors (Peace Corps).  As of September 2008, 52 Peace Corp 
Volunteers serve on seven of Cape Verde's islands.  Our mission 
also enjoys regional support from other USG agencies located in 
Dakar, Lisbon, Cairo, and Frankfurt. 
 
 
MYLES