VZCZCXRO7751
RR RUEHROV
DE RUEHDS #0697/01 0830456
ZNR UUUUU ZZH
R 240456Z MAR 09
FM AMEMBASSY ADDIS ABABA
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INFO RUCNIAD/IGAD COLLECTIVE
RUEHLO/AMEMBASSY LONDON 3339
RUEHFR/AMEMBASSY PARIS 1872
RUEAIIA/CIA WASHINGTON DC
RUEPADJ/CJTF HOA
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEWMFD/HQ USAFRICOM STUTTGART GE
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RUEKJCS/JOINT STAFF WASHINGTON DC
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RUEKJCS/SECDEF WASHINGTON DC

UNCLAS SECTION 01 OF 03 ADDIS ABABA 000697 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV PREL MOPS ECON ET
SUBJECT: MELES TOUTS "GREAT VICTORY" IN SOMALIA, CONCEDES 
FOREX PRESSURES 
 
Summary 
------- 
 
¶1. (SBU) Answering questions from Parliament, Prime Minister 
Meles' touted Ethiopia's "great victory" in Somalia.  Meles 
said that Ethiopia had achieved its objective of greatly 
reducing the threat to the Ethiopian "system" posed by the 
"conspiracy" of Eritrea, Somali extremists and "anti-peace 
elements" within Ethiopia.  Meles acknowledged that the 
threat of terrorist incidents continues, but assured 
Parliament that broad pressure on the Ethiopian state, both 
internal and external, had been alleviated.  Meles also 
asserted that a number of hard-liners in Somalia had moved 
away from extremism and into the "peace camp."  Meles 
provided a sobering view of Ethiopia's forex crisis, 
conceding that the situation is worsening and noting that the 
problem will not end soon.  Meles said Ethiopia is focused on 
boosting exports and tightening access to forex in Ethiopia 
to ensure that the country has adequate reserves to meet 
on-going demand requirements.  End Summary. 
 
¶2. (U) Prime Minister Meles took prepared questions from 
Members of Parliament (MPs) at the Ethiopian Parliament on 
March 19, 2009.  Approximately 400 MPs attended, constituting 
a quorum for the purposes of conducting parliamentary 
business.  The event was open to the local and international 
press and the diplomatic corps and was broadcast live on 
Ethiopian television. 
 
Somalia: A Great Victory 
------------------------ 
 
¶3. (SBU) Meles, responding to a question from an opposition 
parliamentarian, touted Ethiopia's military intervention in 
Somalia as a "great victory."  Noting that Parliament 
approved of the intervention, Meles said the goal had been to 
disrupt a "conspiracy" of hard-liners in Somalia and Eritrea 
and anti-peace elements in Ethiopia who wanted to harm the 
Ethiopian state.  "We intervened to reduce the threat of 
these disturbing elements," Meles said, and we won a "great 
victory."  Alluding to the violence in the wake of Ethiopia's 
2005 national elections, Meles said that "anti-peace elements 
working in Ethiopia against our citizens, and working with 
(Somali extremists) and Eritrea" were "pressuring Ethiopia 
inside and out."  Now, Meles explained, "these anti-peace 
elements cannot harm the Ethiopian government."  Meles added 
that Eritrea cannot invade Ethiopia.  "Our steps," Meles 
said, "significantly weakened the anti-peace elements." 
Meles explained that Ethiopia's victory in Somalia cannot be 
quantified by numbers of the enemy killed or weapons seized, 
as both people and weapons can be replaced.  Rather, Meles 
said "'significantly weakened' means that the system in 
Somalia and the region is not as conducive to hard-liners. 
When we intervened in Somalia, the Islamic Courts Union had 
established a system where everyone followed the hard-liners. 
 Now, fundamentally, this has been changed.  Many members of 
the courts no longer support the hard-liners and have moved 
into the 'peace camp.'" 
 
¶4. (SBU) Referencing Somali unity Transitional Federal 
Government (TFG) President Sharif by title only, Meles said 
that Sharif has been "separated from hard-liners and 
disturbances" and now cooperates with Ethiopia and regional 
partners.  Meles noted that Sharif has been to Ethiopia for 
consultations.  Meles added that the hard-liners thought they 
had tribal support in the middle of Somalia, but now "this 
tribe" has "set itself free from al-Shabaab."  "This is a 
great defeat for the hard-liners," Meles emphasized, 
"although we don't say they have been completely removed, but 
they are no longer a credible threat to control all of 
Somalia.  Even though they can create danger in Ethiopia and 
East Africa (with terrorist acts), they cannot significantly 
disturb the system we live in now.  We have removed the 
problem of the conspiracy of Eritrea, the Islamic courts and 
anti-peace elements from our system."  Meles said he believed 
that the United Nations, the African Union and the 
Inter-governmental Authority on Development (IGAD) would have 
preferred Ethiopia to stay in Somalia, but all lauded 
Ethiopia's actions.  Meles said Ethiopia's relations with 
each of these entities has been strengthened by the 
 
ADDIS ABAB 00000697  002 OF 003 
 
 
intervention.  Meles declined to give Ethiopia's casualty 
figures for the intervention, stating that "the details are 
not useful for Parliament and I have no responsibility" to 
provide them. 
 
FOREX: The Problem is Worsening 
------------------------------- 
 
¶5. (SBU) Meles acknowledged that foreign exchange (forex) is 
critical to Ethiopia's growth, but said that over the past 
ten years Ethiopia had little ability to generate forex and 
has been forced to take loans.  "The structural need must be 
solved fundamentally," Meles said, "but we won't solve it 
this year."  NBE reserves stand at USD 850 million, Meles 
said, adding that Ethiopia needs approximately USD 1.3 
billion in forex to service its USD 9 billion demand for 
imported capital goods and services. Ethiopia will continue 
to develop forex-generating sectors, such as the coffee 
export market, Meles said, but has been forced to purchase 8 
million quintals of wheat, 6 million tons of cement and a 
great deal of steel, in the first instance, to stabilize 
domestic prices, and, in the latter, to meet domestic needs. 
"The pressure on our (forex) reserves is due to domestic 
demand," Meles said, noting that the NBE has been forced to 
reduce disbursements of its forex to local companies that 
need it in order to boost its reserves.  Meles acknowledged 
problems in export growth due to demand destruction stemming 
from the global financial crisis, but added that some 
Ethiopian sectors are hampered by the malfeasance of 
exporters.  Meles cited the problem of hoarding of coffee 
beans by producers and/or exporters as they wait for global 
prices to rebound, a problem which has undermined the 
effectiveness and efficiency of the new Ethiopian Commodities 
Exchange, and pledged that the GoE would seize coffee from 
hoarders and sell it on the international market to generate 
forex.  "The (forex) problem is worsening," Meles concluded. 
 
 
¶6. (SBU) Meles said that non-performing loans are a worldwide 
problem but that Ethiopia is in line with international 
norms.  Meles said that only 10.1 percent of Ethiopian bank 
loans were non-performing in 2008, and the rate has dropped 
to 6.6 percent in 2009 (and only 4 percent at the Commercial 
Bank of Ethiopia).  Ethiopia's central bank is working to 
further reduce the problem, Meles added. 
 
Concern Over Religious Rifts 
---------------------------- 
 
¶7. (SBU) Ethiopia is known for religious tolerance, Meles 
said, but some very small groups of Muslims and Christians 
are working against peace.  The Ethiopian government (GoE) 
has raised awareness of religious tolerance and pursues legal 
steps to ensure that Muslim-Christian tensions do not flare 
up.  The GoE holds ongoing discussions with religious leaders 
and asks them to promote tolerance within their communities. 
"The police are working to safeguard against (religious 
violence)," Meles stressed, "but society must do its part." 
 
Meles Sees No Media Bias 
------------------------ 
 
¶8. (SBU) The GoE knows that radio and television are not able 
to reach maximum audiences due to infrastructure challenges 
and government regulatory capacity, Meles said.  Reform 
programs have been designed, Meles said, but he added that 
"some organizations" are working to prevent community access 
to radio, although he said he does not think such 
organizations will be successful.  Responding to a question 
about biased coverage in favor of the government, Meles said 
"I don't think impartiality is a problem." 
 
GoE Looks to Improve Opportunities for Women 
-------------------------------------------- 
 
¶9. (SBU) Meles addressed gender discrimination within the 
Ethiopian government and particularly the judiciary, which 
has only one female judge.  Meles acknowledged societal 
discrimination against women, noting that "qualified women 
may face political challenges due to the backward attitudes 
 
ADDIS ABAB 00000697  003 OF 003 
 
 
of our men," but he added that many women lack the 
qualifications to fill current jobs within government.  As a 
result, the GoE is focused on building capacity for women. 
Meles said the GoE was working to "demolish men's wrong 
attitudes" and emphasized that priority in hiring "should" be 
given to qualified women, "although enforcement will vary 
from place to place." 
 
Meles Addresses IPR and Drug-related Law Enforcement 
--------------------------------------------- ------- 
 
¶10. (SBU) In response to a question on copyright protection 
for Ethiopian artists, Meles said the GoE is committed to 
protecting intellectual property rights (IPR) and noted that 
the GoE has an intellectual property office, and has been 
establishing a legal framework for IPR protection, and has 
been raising awareness of the issue through public campaigns. 
 Meles said that Ethiopia has few IPR "transgressors" but has 
"put them before the law" whenever they have been caught. 
Meles noted that "more work has to be done to pursue 
transgressors." 
 
¶11. (SBU) In response to a question on drug and alcohol use 
by minors (under 18), Meles responded that the GoE is worried 
about the problem and knows that the issue is not the absence 
of relevant laws, but the capacity to implement relevant 
laws.  "The problem in Addis Ababa in particular is very 
serious," Meles said, adding that "there are drinking 
facilities in schools and we remove them whenever we find 
them."  Still, Meles contended, the GoE (and specifically the 
Addis Ababa city administration) has made significant 
progress in addressing the problem by expanding access to 
education, establishing youth clubs and otherwise presenting 
youths with alternative choices to drugs and alcohol, and 
working closely with local and national law enforcement. 
Meles pledged to "do stronger work in the future, and 
especially (seek to prevent the growth in the use of) 
marijuana." 
YAMAMOTO