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R 160201Z APR 09
FM AMEMBASSY KOLONIA
TO RUEHC/SECSTATE WASHDC 2257
INFO RHMFISS/CDR USPACOM HONOLULU HI
RUEHBJ/AMEMBASSY BEIJING 0081
RUEHGP/AMEMBASSY SINGAPORE 0025
RUEHKN/AMEMBASSY KOLONIA 2620

C O N F I D E N T I A L SECTION 01 OF 03 KOLONIA 000051 
 
SIPDIS 
 
E.O. 12958: DECL:  4/16/2019 
TAGS: PREL ECON EAID FM CH
SUBJECT: MOBIL ACCOMPLISHES OBJECTIVES IN MICRONESIA, SHARES TIPS FOR 
SUCCESS 
 
REF: 08 KOLONIA 103 
 
CLASSIFIED BY: Miriam K. Hughes, Ambassador, Amembassy Kolonia, 
State. 
REASON: 1.4 (b), (d) 
¶1. (C)  SUMMARY.  Where two previous Mobil executives failed, 
Guam Mobil President Kamal Singh succeeded in piloting a smooth 
withdrawal of Mobil from an unprofitable market in the Federated 
States of Micronesia (FSM).  In a farewell breakfast with the 
Ambassador, he shared valuable tips that enabled him to guide 
the Micronesians to launch their own national petroleum company. 
 Against all odds, this fledgling company, Petro Corp, has 
become a viable entity.  Singh said he steered the Micronesians 
away from Chinese loans, which he viewed as entangling.  He 
emphasized the need to deal firmly but respectfully with the 
Micronesians on their home turf, building informal relationships 
and showing them painstakingly "how to get from A to Z." 
Lessons learned have broad applicability, including for Compact 
administration.  End Summary. 
 
 
 
AGAINST ALL ODDS 
 
 
 
¶2. (SBU)  At breakfast with Ambassador Hughes on March 21, Guam 
Mobil President Kamal Singh (Fijian) announced that he had 
received an unexpected promotion.  Singh will transfer shortly 
to Singapore, where he will take charge of Mobil operations 
throughout the Asia-Pacific region.  Singh acknowledged that the 
promotion was recognition of his successful efforts in the FSM. 
Where his two predecessors had failed, Singh succeeded in 
negotiating a graceful exit from Micronesia's relatively 
insignificant market.  At the same time, he did not abandon this 
traditional and vulnerable Pacific customer of over forty years. 
 Mobil will continue to sell fuel to the FSM for the next five 
years and to oversee quality assurance and technical personnel 
for one year. 
 
 
 
¶3. (SBU) Step by step, Singh guided the Micronesians to launch a 
national petroleum company of their own, Petro Corp, which is 
now working well.  Few observers thought this could happen in a 
nation of low managerial capacity and considerable political 
disunity. 
 
 
 
¶4. (SBU) Singh said the last holdout in the FSM, the State of 
Kosrae, which has long purchased its fuel independently, had 
finally come on board to comply with Petro Corp's central 
purchasing authority.  (Kosrae had been receiving a cheaper 
purchase rate from South Korean tankers.)  Singh negotiated the 
agreement in which Mobil will remain the sole provider of 
petroleum to the FSM for the next five years with the aim of 
easing the FSM's transition.  The agreement requires Petro Corp 
to deposit full payment for fuel deliveries in the Bank of Guam 
before a Mobil supply tanker departs from Singapore.  Through 
computer graphics, Mobil monitors current storage levels in all 
FSM fuel storage tanks.  Mobil also agreed to oversee 
maintenance and quality assurance for the first year of Petro 
Corp operations. 
 
 
 
¶5. (SBU) Singh convinced the Micronesians to hire an expatriate 
chief executive officer for a period of three to five years. 
CEO Jared Morris (Fijian) is a petroleum adviser and expert in 
the Pacific region.  Singh emphasized that only a foreigner 
could maintain objectivity and steer a clear course for the 
benefit of the enterprise itself.  Otherwise, extended family 
obligations and political entanglements distort professional 
activities in the FSM, he said. 
 
 
 
¶6. (C) Singh additionally emphasized the need to engage with the 
Micronesians constantly, consistently and informally in order to 
make progress.  He observed that all the Micronesians with whom 
he dealt were intelligent, subtle and articulate, including FSM 
President Mori, Vice President Alik and Secretary of Resources 
and Development Peter Christian.  "They all had smart vision," 
Singh said.  However, he lamented, these leaders of a fragile 
and immature nation "did not know how to get from A to Z."  He 
counseled, "You must guide them closely."  To achieve his 
objectives, Singh said that for 18 months, he arrived in the FSM 
capital island of Pohnpei every Friday afternoon and devoted all 
his weekends to negotiating.  He used a private dining room at 
the Cliff Rainbow Hotel (owned by Secretary Christian) to meet 
informally with Micronesians, often separately from one another, 
in order to build confidence.  Singh described his Micronesian 
interlocutors as "eloquent but obfuscatory."  He emphasized the 
 
KOLONIA 00000051  002 OF 003 
 
 
need to "tease out their intentions."  Every Monday, Singh flew 
back to Guam. 
 
 
 
AVOIDING SWEET DEALS FROM CHINA 
 
 
 
¶7. (C) Throughout the delicate process of Mobil's divestiture, 
Singh said the People's Republic of China was extremely active 
with counter-offers (reftel).  China funded various trips to 
China of Secretary Christian and others and offered concession 
loans at a rate of 3 percent interest to cover the purchase of 
FSM fuel storage tanks, maintenance services and provision of 
fuel.  At a certain point, the Micronesians confided in Singh 
and allowed him to review draft contracts from China.  Singh 
said the loan agreements contained clauses that could have 
locked the FSM into a web of obligations that the Micronesians 
would be unable to fulfill. 
 
 
 
¶8. (C) When Singh explained these pitfalls, the Micronesians 
demonstrated comprehension.  They eventually rejected the offers 
from China.  Petro Corp purchased the fuel storage tanks in all 
four states with the benefit of a loan from the Bank of Guam at 
8 percent interest.  Singh additionally obtained a commitment 
for the FSM to purchase fuel from Mobil only with advance 
payments to the Bank of Guam.  "Our fuel tankers will not 
disembark from Singapore (for the FSM) until the money is in the 
bank," Singh said.  Mobil also tracks the capacity and storage 
levels of all FSM fuel tanks by means of computer graphics. 
 
 
 
HOW TO WIN INFLUENCE WITH THE MICRONESIANS 
 
 
 
¶9. (SBU)  Singh summarized the lessons he learned through the 
trial and error of intense negotiations, which may be useful to 
others, including: 
 
 
 
--Listen Carefully.  Micronesians frequently do not say what 
they mean.  Perhaps owing in part to their experience with 
various colonial masters, they tend to smile, express agreement 
or acknowledge statements impassively without registering 
disagreement.  "Don't assume they are with you," Singh said. 
Their expressed views must be massaged, tested and shaped over 
time. 
 
 
 
--Engage on the Ground.  "Be there for them," Singh said, 
explaining that influence is exerted only through persistent, 
personal contact, which helps build relationships among a very 
insular people.  When attempted by long distance, confidence 
building invariably suffers. 
 
 
 
--Choose an Informal, Private Setting.  Micronesians are 
cautious in the office and in the company of one another.  Meet 
in the privacy of a home or a restaurant. 
 
 
 
--Help the Micronesians Connect the Dots.  In the traditional 
island cultures, best efforts are generally aimed at achieving 
consensus rather than getting results.  While the Micronesians 
frequently articulate astute visions, Singh observed they lack 
the practice of delineating and implementing follow-up steps. 
"Help them connect the dots," he said. 
 
 
 
--Put an Expatriate at the Steering Wheel, for the Time Being. 
Do not hand off a new project or enterprise at too early a 
stage.  An untested Micronesian at the helm of a weak 
institution may be subject to family, cultural and political 
pressures that undermine objectives. 
 
 
 
--Respect and Patience are Keys to Cooperation.  While messages 
must be consistent and firm, respect is the cornerstone of 
successful communication with the Micronesians.  In the 
 
KOLONIA 00000051  003 OF 003 
 
 
Micronesian context, dignity, patience and consensus-building 
are most important.  "Respect, respect, respect," Singh 
emphasized as a key to success. 
 
 
 
COMMENT: GUIDING PRINCIPLES FOR COMPACT ADMINISTRATION 
 
 
 
¶10. (SBU) The Mobil President's tips, which he shared 
forthrightly, track with the Embassy's perceptions.  These 
lessons are not easily learned or practiced, especially with the 
time constraints and pressure for results that most westerners 
face.  However, they are worth the attention of anyone who seeks 
to achieve objectives in the FSM. 
 
 
 
¶11. (SBU) Implementation of the amended Compact, which 
predominates in the bilateral relationship, has been 
particularly arduous and fraught with frustrations, arising in 
part from the Micronesians' inability to easily design programs, 
grasp performance measurement concepts and adhere to U.S. 
federal fiscal procedures that they find very complicated.  We 
urgently need development specialists on the ground to build 
relationships, accountability, and confidence day by day, 
helping the Micronesians get from A to Z to make adjustments 
that are vital to their modernization and stability. 
HUGHES