VZCZCXRO3248
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0106/01 0460849
ZNR UUUUU ZZH
R 150849Z FEB 09
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 8267
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHNR/AMEMBASSY NAIROBI 1160
RUEHKM/AMEMBASSY KAMPALA 3323
RUEHLGB/AMEMBASSY KIGALI 1251
RUEHJB/AMEMBASSY BUJUMBURA 2807
RUEHLMC/MCC WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEWMFC/HQ USAFRICOM STUTTGART GE
RHMFIUU/CJTF HOA//J3//

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000106 
 
SENSITIVE 
SIPDIS 
 
AF/E FOR JLIDDLE, INR/AA FOR FEHRENREICH 
 
E.O. 12958:  N/A 
TAGS: EAID PGOV TZ
SUBJECT: KIKWETE TOUR D'HORIZON WITH CDA PART II: MCC AND OTHER 
BILATERAL MATTERS 
 
REF: A. 2008 Dar es Salaam 839, B. Dar es Salaam 71, C. Dar es 
Salaam 66 
 
DAR ES SAL 00000106  001.2 OF 002 
 
 
¶1. (SBU) SUMMARY.  At President Kikwete's request, on February 11 
MCC Country Director briefed him on latest progress and obstacles in 
Compact implementation.  Kikwete displayed a keen interest and 
awareness in Compact issues and offered assistance, both to provide 
resources if necessary and to follow up with the Ministry of Finance 
on tax-exemption issues.  During the meeting, CDA raised other 
issues of bilateral interest, including an ongoing tax dispute and 
the upcoming naval ship visit. END SUMMARY. 
 
¶2. (U) MCC Resident Country Director (RCD) told Kikwete that the 
Compact was generally on track, but that the timeframe was tight. 
2009 would be a year for finalizing designs, procurement and 
contracting - necessary preliminary work.  CDA stressed the 
importance of implementing the Compact with high standards.  MCC RCD 
acknowledged that some deadlines have been missed and that 
implementing partners, particularly Tanroads and Tanesco (the power 
parastatal), were stretched thin. 
 
¶3. (SBU) Kikwete said he understood the need for MCC to proceed 
carefully, but also noted the complaints he received from MPs who 
expected results in advance of the 2010 elections.  He said that the 
MPs would be satisfied if contracts were in place and mobilization 
had begun by the end of 2009.  After MCC RCD explained that the GOT 
would be responsible for any cost overruns beyond the USD 698 
million Compact, Kikwete said resources would be found if there were 
a shortfall.  He cited a Kiswahili saying to the effect that at 
times one must cut the nose to heal the face (i.e., to take 
necessary but difficult steps). 
 
¶4. (SBU) On compensation and resettlement, MCC RCD noted MCC was 
educating local authorities and the public.  He said the Compact 
called for compensation of those resettled even beyond the 
requirements of Tanzanian law, in particular for people who were 
settled on land without legal title.  Kikwete said he shared this 
view, insisting that the government "must have a human face" and 
relating a personal story of a friend whose house was demolished 
without compensation.  Kikwete noted the issue of compensation in 
Tanzania was based on a 1934 British ordinance and said the GOT was 
seeking modalities to address the issue.  Kikwete also related that 
a friend in Tanga gave him a "thumbs up" on the progress of the road 
in that region, where already some mosques had been demolished after 
replacements were built. 
 
¶5. (SBU) Kikwete said that when he was on Zanzibar, he told people, 
"Our friends the Americans have come forward" to assist with the 
energy situation.  He said Zanzibaris only realized the urgency of 
their problem when the current cable failed in mid-2008.  He said 
that the greater pressure came from Pemba, where power depends on 
very old generators. (Note: Norway is placing a submarine power 
cable from Tanga to Pemba - see ref a. End Note.) 
 
¶6. (SBU) MCC RCD also raised a current potential delay in Compact 
implementation, namely contractor concerns over tax exemptions. 
Although the Compact is governed by the 1968 U.S.-Tanzania agreement 
on assistance, individual contractors are skeptical that in practice 
the Tanzania Revenue Authority will honor an international treaty. 
Already one contractor has delayed signing a contract until the 
Ministry of Finance issued a formal Government Notice explicitly 
confirming that work under the Compact will be tax-exempt for that 
contractor.  MCC has proposed that the Ministry of Finance issue a 
single set of comprehensive Government Notices that clearly describe 
the tax exemptions already made legally available to all contractors 
under the Compact.  Kikwete said the proposal was a good idea and 
promised to follow up. 
 
¶7. (U) Turning to other matters, CDA expressed appreciation to 
Kikwete for ordering a review of the tax dispute between APR Energy 
and the GOT (ref b) and mentioned the interest of Senator Nelson in 
the matter.  CDA provided Kikwete with a final report of the Volcano 
Disaster Assistance Project (VDAP) team that visited Tanzania in 
January at Kikwete's request (ref c).  CDA relayed that the VDAP 
team had been impressed with their colleagues in the Geological 
Survey of Tanzania and intended to maintain the links made during 
the visit. CDA also alerted Kikwete to the upcoming visit of the USS 
Bradley, which would provide opportunities for Civil Affairs 
projects, training for the TPDF, and U.S. service members to 
experience Tanzania. 
 
DAR ES SAL 00000106  002.2 OF 002 
 
 
 
ANDRE