VZCZCXYZ0015
PP RUEHWEB

DE RUEHDS #1617/01 1900544
ZNR UUUUU ZZH
P 090544Z JUL 09
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC PRIORITY 5409
INFO RUCNIAD/IGAD COLLECTIVE PRIORITY
RUEPADJ/CJTF HOA PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEKDIA/DIA WASHINGTON DC PRIORITY
RHMFIUU/HQ USCENTCOM MACDILL AFB FL PRIORITY
RUEWMFD/HQ USAFRICOM STUTTGART GE PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY

UNCLAS ADDIS ABABA 001617 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR D(LEW) - DHYDE, AND AF/E 
USAID FOR AFR - EGAST, CTHOMPSON, AND GANDERS 
USAID ALSO FOR GH - GSTEELE 
 
E.O. 12958: N/A 
TAGS: EAID PREL PGOV ET
SUBJECT: DEPUTY SECRETARY LEW HIGHLIGHTS U.S. FOREIGN POLICY AND 
ASSISTANCE ISSUES 
 
REF: (A) ADDIS 1526 
 
SUMMARY 
------- 
 
¶1. (U) Deputy Secretary of State Jacob Lew's visit to Ethiopia on 
June 29-30 signaled the importance the new Administration is placing 
on how U.S. foreign policy and foreign assistance is working in 
Ethiopia.  Deputy Lew held discussions with the Country Team, met 
with the Prime Minister (reftel), influential Government of Ethiopia 
(GoE) and business leaders, and held a press conference with 34 
international and local press.  He visited USAID food security and 
economic growth activities, a CDC-supported hospital and held a 
roundtable with USAID democracy/governance partners.  The major 
theme running through the visit was a commitment to a continued 
strong U.S.-Ethiopia relationship and "a more productive and 
sustainable assistance program that meets the fundamental needs of 
the Ethiopian people."  End Summary. 
¶2. (U) On June 29, Ambassador Yamamoto and the Country Team (CT) 
briefed Deputy Secretary Lew on U.S. humanitarian, development and 
military assistance to Ethiopia, and domestic and regional security 
issues.   Deputy Lew said that two of the Obama administration's 
areas of focus in foreign assistance are building  sustainable 
agricultural sector growth that increases farm productivity and 
expanding the PEPFAR program to include an emphasis on health 
systems development and maternal and child health.  Deputy Secretary 
Lew said the Obama administration was also committed to providing 
more country ownership for U.S. assistance funding.  In general, CT 
members agreed there was weak capacity in Ethiopia, so it made sense 
to maintain our current approach, largely through NGO partners, but 
begin to channel some funding directly through some of the more 
efficient ministries -- such as Health -- although we should not 
expect technical and accountability standards that rival those of 
our current partners.  Deputy Secretary Lew said that as the form of 
U.S. assistance shifts, such growing pains can be expected.  (Note: 
Another suggestion for the new Administration to consider is 
restarting university exchanges, historically one of USAID's most 
successful programs for building African capacity. End note.) 
 
¶3. (U) The Ambassador hosted a lunch with Health Tewodros Adhanom; 
Minister of Finance and Economic Development, Sufian Ahmed; Minister 
of State for Agriculture, Aberra Deresa; and Girma Wake, CEO of 
Ethiopian Airlines.  The discussion focused on the Ethiopian 
officials' views of development issues.  Minister Sufian said that 
Ethiopia's three priority areas for foreign assistance are: 1) 
health, 2) education, and 3) agriculture.  Minister Sufian said 
capacity building at all levels of government was critical. 
Enticing the diaspora to return is an important component of 
increasing capacity: A successful USAID loan guarantee program is 
focused on helping diaspora to start businesses.  Minister Tewodros, 
although acknowledging there are more Ethiopian doctors in the U.S. 
than in Ethiopia, said that the number of doctors in Ethiopia has 
increased four-fold due to the requirement for locally-trained 
doctors to do several years service in Ethiopia. 
 
¶4. (SBU) The Ambassador also hosted a dinner in honor of Deputy 
Secretary Lew with ten prominent Ethiopian business leaders.  Guests 
included leaders of the American Chamber of Commerce, Addis Ababa 
Chamber of Commerce, Seattle American Chamber of Commerce and 
pioneers in the sectors of horticulture, coffee, textiles/garments 
and shoes.  The participants highlighted the fact that Ethiopia is a 
relatively new free-market economy - just 18 years young.  The 
participants discussed a variety of constraints to growth, from the 
lack of skilled manpower, to the lack of a corporate accounting 
standards body, to low levels of manufacturing productivity.  The 
textile industry participants praised the African Growth and 
Opportunity Act (AGOA) and expressed a desire to see the program 
continue.  The business leaders discussed the dynamic business roles 
of China (Ethiopia's current number one trading partner), India, and 
Turkey.  The participants told the Deputy Secretary that U.S. 
businesses do not have a strong presence in Ethiopia, but that most 
businesses would like to tap into the U.S. markets.  Deputy 
Secretary Lew said that the Obama administration looks forward to 
working on these private sector issues going forward. 
 
¶5. (U) Deputy Secretary Lew participated in events demonstrating 
USAID-Ethiopia's work in food security and economic growth. 
 
--  USAID-Ethiopia is part of a multi-donor $400 million a year 
 
Productive Safety Net Program (PSNP) that provides predictable 
cash/food aid transfers to over seven million of the most vulnerable 
people in Ethiopia in exchange for building community infrastructure 
projects such as bridges, dams, schools, and clinics.  Minister of 
State for Disaster Preparedness and Food Security Mitiku Kassa; 
Heads of the World Bank, Donor Coordination Group, and UNICEF; and 
NGOs Save the Children UK and US explained how this strategy has 
shifted large populations who previously received emergency food aid 
into a program oriented towards achieving food security.  USAID 
officials said this food aid/food security program is probably the 
most innovative in the world and is an example of USAID's strategy 
of coordinating its assistance -- in this case with the GoE, eight 
donors, and among USAID sectors since the Office of Foreign Disaster 
Assistance, Food for Peace, and the Economic Growth office are all 
contributing complementary funding.  Deputy Secretary Lew said the 
new Climate Change Fund is aimed at building capacity to deal with 
recurrent climate change, clearly an issue in Ethiopia. 
 
-- Deputy Secretary Lew was joined by Minister of State for Industry 
and Trade Tadesse Haile at a trade fair showcasing USAID-funded 
projects aimed at transitioning from food security to economic 
growth.  These included activities such as livestock development, 
agribusiness - coffee, oilseeds, leather, horticulture - AGOA 
promotion, WTO accession, and land tenure. 
 
-- Deputy Secretary Lew visited the one-year old Ethiopian Commodity 
Exchange (ECX), one of the few in Africa, to see the live trading 
floor and receive a briefing from CEO Dr. Eleni Gabre-Mahdin.  The 
project grew out of research supported by USAID showing that 
Ethiopia's poorly functioning markets were a huge bottleneck to 
agricultural trade and exports.  USAID has supported the ECX 
warehouse receipt system and management salaries with USD 2.6 
million.  Dr. Gabre-Mahdin stated that the ECX is transforming 
Ethiopia's agriculture sector as 70 percent of its export earnings 
now pass through the ECX.  In response to a question by Deputy 
Secretary Lew, she said the ECX will be considering how to expand 
its services to include livestock trade. 
 
¶6. (U) A visit to the 50-year old Gandhi Hospital, one of the major 
referral hospitals in Ethiopia, was aimed to show Deputy Secretary 
Lew the work CDC is doing in the HIV/AIDS counseling and testing 
center on and prevention of mother to child transmission.  The 
HIV/AIDS facility has a relatively low loss to follow-up compared to 
the national average.  USAID uses the hospital as a training center 
for health specialists around the country.  A roundtable discussion 
at the hospital focused on the importance of family planning, which 
has been a focus of USAID funding over the last 20 years.  Training 
is implemented through an integrated health platform, including 
malaria, tuberculosis, mother child health, with a focus on 
long-term family planning as an essential component of Ethiopia's 
quest of food security and achieving MDG goals.  In response to a 
question by Deputy Secretary Lew on health sector coordination 
participants pointed to strong Ministry of Health and Donor 
Assistance Working Groups. 
 
¶7. (U) Deputy Secretary Lew participated in a roundtable discussion 
with USAID Democracy and Governance (D/G) partners in order to learn 
first-hand about the impact of the recent NGO law restricting civil 
society operations (particularly for those working in the D/G 
sector) on activity implementation at the field level.  USAID 
partners said the impact was still unclear but they were developing 
strategies for continuing activities such as re-labeling their 
programs and eliminating democracy, conflict and human rights 
language and have had success in working with forward-looking 
Ministers and cementing these relationships.  However, registration 
under a restrictive NGO climate has presented obstacles.  Women's 
Campaign International has not been able to register; American Bar 
Association's registration lingered for ten months until they 
received an informal nod by the GoE to proceed with agreed upon 
activities.  Deputy Secretary Lew probed the nuances in the 
Ethiopian political landscape, and cautioned against  using our own 
democracy model in the Ethiopian context. 
 
¶8. (U) A press conference capped the Deputy Secretary's visit. 
Journalists mainly asked questions on Somalia, Eritrea and the 
future of U.S.-Ethiopian relations and foreign assistance to 
Ethiopia under the Obama administration.  On the latter, the Deputy 
Secretary said that the deep relationship shared by the two 
countries would continue and that, looking forward, he hoped the 
 
cornerstone would be a broad agenda to improve lives of Ethiopians 
sustainably.  A transcript of the press conference will be provided 
separately. 
 
¶9. (U) Conclusion: Deputy Secretary Lew's visit made clear that the 
Administration plans to reform current foreign assistance mechanisms 
and funding to make them as effective and sustainable as possible. 
The Deputy Secretary was interested in coordinated mechanisms and 
direct local funding possibilities to encourage Ethiopian ownership 
of its development agenda.  He emphasized that any incremental 
increases in funding for agriculture and health programs would 
likely directed to areas that would enable U.S.-provided assistance 
to become more sustainable. 
 
YAMAMOTO