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DE RUEHKG #0709/01 2741752
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O 011752Z OCT 09
FM AMEMBASSY KINGSTON
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C O N F I D E N T I A L KINGSTON 000709 
 
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AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA 
 
E.O. 12958: DECL: 2019/10/01 
TAGS: PGOV PINR PREL ASEC SOCI ECON EFIN IMF IBRD ENRG EINV
ETRD, ELAB, KCOR, KCRM, JM, XL 
SUBJECT: JAMAICA: PM ATTEMPTS TO RECAPTURE POLITICAL MOMENTUM, GOJ 
RECEIVES MIXED MARKS AFTER TWO YEARS IN OFFICE 
 
REF: REF: A. KINGSTON 712; B. 07 KINGSTON 1336; C: KINGSTON 634 
¶D. 08 KINGSTON 884; E. KINGSTON 490; F. KINGSTON 601; G. KINGSTON 581 
¶H. KINGSTON 471; I. KINGSTON 697 
 
CLASSIFIED BY: Isiah Parnell, CDA; REASON: 1.4(B), (D) 
 
Summary: 
 
 
 
¶1. (SBU) In a much-anticipated pre-dawn address to Parliament, 
Prime Minister (PM) Bruce Golding called for a "paradigm shift" in 
the Government of Jamaica (GOJ)'s civil service and government 
finances.  Confronting a moribund economy, unsustainable budget 
deficits, and a resurgent opposition People's National Party (PNP), 
the PM attempted to recapture political momentum for his Jamaica 
Labour Party (JLP)-led government by calling for reductions in 
public sector employment and the size of the Cabinet as well as tax 
reform in an effort to reduce the GOJ's burgeoning budget deficit. 
However, the PNP was quick to denounce the speech for having "very 
little action content." 
 
 
 
¶2. (SBU) Two years after leading his JLP to victory over the PNP, 
the PM confronts a daunting political landscape.  Faced with an 
economy mired in recession, one of the highest per capita crime 
rates in the world, a crushing balance of payments burden, 
potential labor unrest, and a politically-vexing extradition case, 
Golding nevertheless enjoys respectable levels of support among the 
Jamaican electorate - and is in fact more popular than his party - 
as demonstrated by recent public opinion polls.  However, the PNP 
has recently shown signs of resolving its internal divisions 
(Reftel A) and recent public opinion polls show the PNP with a six 
point advantage over the JLP.  End Summary. 
 
 
 
"Reflective Soliloquy" or "Paradigm Shift"? 
 
--------------------------------------------- ---------- 
 
 
 
¶3. (C) In a much-heralded parliamentary address that was delayed 
until after midnight on September 30 by a marathon Standing Finance 
Committee session considering the GOJ's revised supplementary 
budget figures, Golding called for major civil service 
modernization which could result in job cuts, a reduction in the 
size of the Cabinet, reining in the GOJ's spiraling budget 
deficits, and other reforms in an effort to realize greater 
administrative efficiencies.  However, by prolonging the committee 
questioning, the PNP succeeded in minimizing the speech's 
effectiveness by pushing it from prime time until the early morning 
hours (NOTE: The PM's speech was later replayed on television and 
radio the evening of September 30.  End Note).  Furthermore, 
although the PM's office had promoted the address to the media and 
the diplomatic community as a game-changing event, its provisions 
generally failed to live up to the hype.  Although Minister of 
Parliament (MP) and Minister without Portfolio Daryl Vaz described 
the PM's speech to Emboff as "honest and strident, but not the 
bearer of good news," Peter Bunting, JLP MP and PNP General 
Secretary, likened the address to a well-delivered "reflective 
soliloquy" but with "very little action content."  "The hype had 
promised more," Bunting told Emboff. 
 
 
 
¶4. (SBU) Employing rhetoric made popular by his party in the run up 
to the 2007 general elections, Golding asserted that after almost 
three decades of political and economic transformation, the process 
was far from complete.  The PM asserted that "the operations of 
government and its stifling effect on the economy must be 
reconfigured so that the entrepreneurial spirit which is so 
instinctive to the Jamaican character can be unleashed, so that as 
we have demonstrated in our music and on the international 
athletics track, we can be the best in the world and on top of the 
world. For too long, we have been playing catch up, trying to meet 
illusive targets, trying to get through one fiscal year hoping that 
better will come next year, only to find that next year brings more 
despair." 
 
¶5. (SBU) In explaining the gravity of the challenges facing the 
country, Golding said that difficult choices had often been 
postponed, waiting for a more appropriate time.  "Timing, they say, 
is everything," the PM noted.  "But the time can never be more 
appropriate than when it is necessary and when that necessity is so 
significant that it becomes an imperative.  So often, we have 
flinched because doing what is right and what is necessary may be 
unpopular and the next elections are never far away.  But the hopes 
of our children and the future of our country will be defined and 
determined not by how many elections we win but by what when we 
have won (sic)," Golding continued. 
 
 
 
"Changing Course" 
 
------------------------ 
 
 
 
¶6. (SBU) In laying the foundation for his case, Golding argued that 
the supplementary budget revisions were necessary due to the 
continuing effects of the global recession, public sector wage 
adjustments promised to teachers and nurses, and increased interest 
payments on the public debt.  Since the global recession began, the 
PM noted that Jamaica's export earnings had fallen by half 
(primarily due to declines in the bauxite/alumina sector), 30,000 
Jamaicans had lost their jobs, and remittances had declined by 15 
percent.  As a result, the GOJ's budget deficit for fiscal year 
2009 had increased to over USD 180 million, almost nine percent of 
the total budget.  Nevertheless, despite the effects of the global 
recession, Golding asserted that Jamaica's persistent fiscal 
problems were systemic, "the symptom of deeper, more fundamental 
problems that have long bedeviled us."  These problems include 
chronic indebtedness, financed by both international and private 
sector borrowing that absorbs almost 60 percent of the budget in 
debt-servicing costs, keeps interest rates high, and crowds out 
private investment, as well as a government that is bloated, 
inefficient and too expensive to maintain.  "We cannot go on like 
this," the PM declared, while calling for "a process of structural 
adjustment...to allow the energizing stimulus of market forces to 
transform the economy." 
 
 
 
¶7. (SBU)  Golding lamented that Jamaica's current government 
apparatus was designed to support wages and debt servicing as 
opposed to delivering services to the Jamaican people.  "The 
Jamaican people are being shafted.  They pay taxes but they are 
never able to see a commensurate return in the delivery of 
government services, e.g. roads, water supplies, good quality 
education, and health services," Golding posited.  The PM noted 
that the GOJ's public sector was based on "a structure and culture 
inherited from a colonial era," was "antiquated, inefficient, and 
largely irrelevant," and should be replaced with "a flatter 
structure, devolution of authority with responsibility and 
authority conjoined.  However, although Golding promised to 
establish a unit within his office to drive this reform process, 
the PM provided few specifics as to how he would address these 
issues.  Nevertheless, Golding insisted that the public sector's 
"wage bill burden cannot be sustained" and that "some departments 
and agencies will have to be eliminated...[or] merged." 
 
 
 
¶8. (SBU) Similarly, the PM noted that the public sector wage bill, 
which he said has increased by 50 percent over the past two years, 
was unsustainable and in need of "restructuring...to be more 
efficient and cost-effective."  Again, however, Golding offered few 
specifics as to how many of the GOJ's 117,000 civil service jobs 
and 16 Cabinet positions would be affected, nor which "departments 
and agencies will have to be eliminated."  Golding did indicate 
that GOJ entities that provide or regulate commercial services - 
such as the Registrar General's Department, the Passport, 
Immigration and Citizenship Authority, or the Firearm Licensing 
Authority - should become self-sufficient and fully fund their 
operations from fees and user charges.  The PM also described the 
GOJ's much-evaded and poorly-enforced tax system as "inequitable 
and unjust," and called for a "full program of tax reform" to 
enhance revenues and distribute the nation's tax burden more 
fairly. 
 
 
 
Two Years In, Mixed Marks For JLP 
 
-------------------------------------------- 
 
 
 
¶9. (SBU) Golding's attempt at recapturing the political initiative 
comes just after the second anniversary of the JLP's narrow 2007 
general election victory that ended 18 years of continuous PNP rule 
(Reftel B).  In a series of media retrospectives on the JLP's 
record, the record was mixed and Golding himself intimated that he 
his government had failed to live up to expectations. 
Nevertheless, public opinion polls indicate that Jamaicans remain 
moderately supportive of the JLP's record in office - Golding's job 
approval rating in August was 47 percent, virtually identical to 
the 48 percent approval he enjoyed a year earlier - suggesting that 
the public remains willing to give Golding and the GOJ the benefit 
of the doubt given the difficult economic climate in which Jamaica 
finds itself (Reftel C). 
 
 
 
¶10. (SBU) In media interviews commemorating the second anniversary 
of the 2007 general election, Golding admitted that his government 
had lost valuable time in 2007 and 2008 in failing to address the 
nation's spiraling crime rate and to appreciate the effects of the 
global economic crisis on Jamaica, focusing instead on a series of 
high profile government corruption cases.  As global commodity 
prices skyrocketed in late 2007 and into 2008, foreign exchange 
markets lost stability and Jamaica's inflation rate soared to over 
20 percent.  When the global financial crisis hit the world's 
financial markets in 2008, revenues from remittances and the 
bauxite industry - the major sources, along with tourism, of 
Jamaica's foreign earnings - plummeted.  To compensate, the Bank of 
Jamaica increased interest rates, implemented a number of 
controversial monetary policies, and succeeded in reducing and 
stabilizing the inflation rate by early 2009. 
 
 
 
¶11. (SBU) The PM also has suggested that he might have squandered 
the vast political capital he enjoyed following the 2007 elections, 
and that "we might have invested it more in some tougher decisions 
at that time."  Golding attributed his GOJ's failure to take "the 
fiscal challenges by the scruff of the neck more vigorously" to his 
Cabinet's inexperience after the JLP's 18 years in opposition. 
 
 
 
 
Responding to media criticism of the slow pace of GOJ proposals 
currently before Parliament, the PM "concede[d] that we have been 
less assertive than we should have been," but promised "[y]ou are 
going to see a much more active legislation session up to 
Christmas, and then up to the end of the fiscal year." 
 
 
 
¶12. (C) Delano Seiveright, a JLP party insider who works in the 
PM's office, told Emboffs that the general feeling within the JLP 
was that Golding had wasted valuable time pursuing elusive 
political consensus with an opposition party unwilling to accept 
its fate.  As a result, Seiveright explained, Golding had alienated 
a number of JLP supporters who, after years of toiling for the 
party, had expected to assume some of the posts held by known PNP 
operatives.  Seiveright told Emboffs that some of those who had 
supported Golding's return to the helm of the party (NOTE: Golding 
left the JLP during the 1990s to lead the minor party National 
Democratic Movement, but returned to the JLP in the early 2000s. 
End Note) were becoming impatient with his leadership, which they 
felt was beginning to drive segments of the re-energized middle 
class back into apathy. 
 
 
 
¶13. (SBU) Luckily for the JLP, the divided and demoralized 
post-election PNP, riven by leadership divisions (Reftel D) and 
pursuing an ill-advised strategy of attempting to regain a 
parliamentary majority by challenging the eligibility of JLP 
Members of Parliament (MPs) on dual citizenship grounds (Reftel E), 
appeared incapable of presenting itself as a credible alternative. 
 
 
 
¶14. (SBU) By the spring and summer of 2009, however, the GOJ's 
perilous economic circumstances could no longer be ignored. 
Although Parliament adopted an austere budget, including a public 
sector wage freeze and a controversial gasoline tax, by September 
Golding and Finance Minister Audley Shaw were forced to admit that 
the budget had been based on overly rosy revenue projections.  In 
August, following a series of high profile personnel changes in the 
Ministry of Finance (Reftel F), Golding instructed his cabinet to 
propose additional budget cuts of 20 percent, more than USD 190 
million, from their ministries, but the following month presented a 
supplementary budget that in fact called for increasing spending by 
USD 75 million, to be financed by increased borrowing and revenue 
enhancements (Septel). 
 
 
 
¶15. (SBU) Meanwhile, the GOJ has been engaged for several months in 
controversial negotiations with the International Monetary Fund 
(IMF) to resume a borrowing relationship in order to bolster the 
GOJ's balance of payments (Reftel G) while efforts at divesting the 
revenue-draining Air Jamaica appear to be going nowhere (Reftel H). 
Similarly, the Golding government has gone through three Ministers 
of National Security but has yet to adequately address Jamaica's 
soaring crime rate, a problem exacerbated by the economic crisis, 
while youth unemployment remains above 20 percent. Finally, the 
GOJ's intransigence in the face of a high profile U.S. extradition 
request (Reftel I) has called into question the JLP's anti-crime 
bona fides. 
 
 
 
Conclusion and Analysis 
 
------------------------------- 
 
 
 
¶16. (SBU) On leaving office in 1997, former U.S. Ambassador Gary 
Cooper noted that Jamaica's problems stem from the fact that 
Jamaicans "applaud announcements and not achievements," and the 
PM's speech is consistent with this assessment.  Although public 
opinion polls demonstrate broad support for such JLP policies as 
the abolition of school fees and user fees for health care 
services, by the PM's own admission little progress has been made 
in addressing the major issues facing Jamaica: balance of payments, 
economic competitiveness, the size of the public sector, labor 
unrest, official corruption, and the maintenance of law and order. 
However, as Jamaica's economic crisis deepens, another election 
cycle nears, and the PNP shows renewed signs of life, time may be 
running out for the policies of Golding and the JLP to begin 
showing results. 
 
 
 
¶17. (SBU) Despite the GOJ's failure to deliver on many of its 2007 
general election promises, Golding remains personally popular, more 
so than his party and his government, even as most Jamaicans tell 
public opinion pollsters that they are worse off than they were two 
years ago and that the nation is heading in the wrong direction. 
However, two years into his administration and by his own 
admission, Golding has not proven himself the transformative leader 
he promised to be during the 2007 campaign and the Jamaican 
electorate continues to withhold judgment on the PM and the JLP. 
And with another election cycle due in less than three years, the 
window of opportunity for making any politically difficult 
decisions may be closing.  End Conclusion and Analysis. 
Parnell