Viewing cable 09LONDON694
Title: AFRICAN LEADERS CONSULTED IN RUN-UP TO APRIL

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09LONDON6942009-03-19 14:13:00 2011-08-30 01:44:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy London
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RUEHFR/AMEMBASSY PARIS PRIORITY 3426
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RUEHTC/AMEMBASSY THE HAGUE PRIORITY 1455
RUEHKO/AMEMBASSY TOKYO PRIORITY 1246
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1403
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UNCLAS SECTION 01 OF 08 LONDON 000694 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/EPS 
 
E.O. 12958: N/A 
TAGS: PREL ECON EAID XA UK
SUBJECT: AFRICAN LEADERS CONSULTED IN RUN-UP TO APRIL 
LONDON ECONOMIC SUMMIT 
 
¶1. (SBU) Summary. Prime Minister Gordon Brown hosted African 
leaders (listed in para 17) in London at a consultative 
pre-London Economic Summit meeting on March 16, where African 
leaders delivered pre-agreed positions and a statement on 
proposals for the G20 to mitigate the worst effects of the 
global economic crisis in Africa.  HMG officials said 
discussions focused on a UK-proposed framework of five 
themes, which Brown highlighted in his remarks (para 18). 
These were Financing for African Countries; Social Safety 
Nets for the Poorest; Governance Reform; Trade and Trade 
Finance; and Tax Havens. 
 
¶2. (SBU) Summary continued. While the African leaders' 
finalized statement has not yet been released, their main 
points, according to HMG contacts, included the following: 
 
- Impact of the global recession is unknown and will be 
highly individualized. 
 
- Aid disbursements should be accelerated. 
 
- The IMF Board should seriously consider selling gold 
reserves to raise additional funds and to increase the 
allocation of Special Drawing Rights (SDR). 
 
- As African countries are squeezed from the capital markets, 
additional capital from the African Development Bank is 
increasingly important. 
 
- Africa needs more market access; protectionism is not an 
appropriate response.  Trade finance needs special attention. 
 
 
- Reform of the IFIs is important, and Africans would like 
additional votes and more voice. End summary. 
 
UK Objectives 
------------- 
 
¶3. (SBU) Prime Minister Gordon Brown and senior British 
officials hosted in London March 16 African leaders (see para 
17) to discuss practical proposals, for consideration at the 
Lunch Economic Summit, to mitigate the worst effects of the 
global economic crisis in Africa.  The UK's core objective in 
the day long event was to engage African leaders and Finance 
Ministers and advance its development policy agenda.  HMG 
officials gave us a detailed read-out of these objectives and 
the meeting. 
 
¶4. (SBU) The UK's policy views are based on five themes: 
 
- Financing for African Countries: International Financial 
Institution (IFI) and Multilateral Development Bank (MDB) 
lending needs to reflect changed circumstances and radically 
change conditionalities as a consequence.  Leveraging 
additional resources from donors, the World Bank (WB), 
International Monetary Fund (IMF), and the African 
Development Bank over the next three years will be critical, 
in London's view.  Equally the international community must 
be ready to revisit the way in which resources are allocated 
 
LONDON 00000694  002 OF 008 
 
 
in response to the crisis, quickly deploying slow spending 
funds into fast distribution instruments, being prepared to 
revisit the performance based allocation system and further 
reduce the weight of conditionality, including within an 
enhanced Exogenous Shocks Facility (ESF) and Poverty 
Reduction and Growth Facility (PRGF). G20 countries should 
urge MDBs to make more use of their balance sheets to release 
more finance, relax and/or eliminate IMF lending conditions, 
and urge the World Bank to front-load International 
Development Association (IDA) finance, abolish caps on 
Development Policy Lending including IDA, allow IDA-only 
countries with sustainable debt positions to access IBRD 
funds, reconsider limits on individual country borrowing, 
continue monitoring and assessing Africa's financing needs, 
and work with finance institutions to reduce the costs of 
remittances. 
 
- Social Safety Nets for the Poorest: There is risk that the 
global economic crisis will disproportionately impact the 
poor and vulnerable.  HMG, therefore, pressed Africa leaders 
to affirm the need to strengthen social safety nets, and G20 
countries should provide resources to a new Global Rapid 
Social Response Fund which could be used to protect the 
poorest, ensuring that development gains are not lost. 
 
- Governance Reform: IFI governance reform should strengthen 
political accountability and effectiveness.  Britain wants 
G20 countries to commit to principles, a process and 
timetable for reform, building on commitments made at World 
Bank Annual meetings and the Washington Summit, that 
strengthen accountability of management through merit-based 
selection; accelerate work on voting reform in the World Bank 
Group; and reform the World Bank to give developing countries 
more say in decision-making at all levels.  Such reforms 
should be supported by ratification of the April 2008 IMF 
quota and voice reform and increase access limits under the 
PRGF and ESF. 
 
- Trade and Trade Finance: Increased trade and greater 
integration into the global economy is vital if African 
economies are to grow and thrive.  While global trade is 
predicted to decline this year, G20 countries should commit 
to an ambitious and development-focused conclusion of the 
Doha Trade Round as soon as possible and refrain from raising 
protectionist barriers to trade and investment.  Trade 
finance availability and affordability is central to ensure 
that trade flow continues, and G20 members should support, 
including through contributions, the World Bank's proposal to 
create a Global Trade Liquidity Pool to ease trade finance 
gaps. 
 
- Tax Havens: Governments' ability to protect their tax bases 
is an essential part of economic development, and G20 
countries should take action to tackle tax havens. 
 
---------------------------------------- 
African Leaders Conference Interventions 
---------------------------------------- 
 
Ethiopia 
 
LONDON 00000694  003 OF 008 
 
 
-------- 
 
¶5. (SBU) Ethiopian Prime Minister Meles Zenawi set out three 
core issues that were important for Africa: first, IFI 
reform; second, African voices and votes in IFIs; and, third, 
modifications of the World Bank's Country Policy and 
Institutional Assessment tool to rate countries on 
performance.  On financing issues, Meles said that sources of 
finance need to be easily accessible and disbursement should 
be accelerated.  Additional issuances of SDRs are required 
and should not be tied to IMF program.  Furthermore, the IMF 
Board should seriously consider selling IMF gold reserves to 
raise additional funds.  With respect to the MDBs, Meles said 
more money needs to be leveraged from MDBs, including 
recapitalizing ADB and IBRD resources to make them more 
widely accessible. 
 
South Africa 
------------ 
 
¶6. (SBU) South African Finance Minster Trevor Manuel said 
that the impact of the global recession in Africa is not 
known yet and will be highly individualized.  Manuel said 
initial assessments of the most recent data indicate how 
difficult it is to analyze the impact of the global economic 
crisis on Africa.  Angola is in the worst position: after 15% 
growth last year, its economy is expected to contract 7% this 
year.  The situation has resulted in a huge dip in revenue 
for all countries.  Commodity prices have fallen, current 
accounts are in deficit, remittances have dried up, returns 
from company taxation have fallen, and capital flows have 
been withdrawn.  Countries that had been able to access money 
from capital markets are finding that this has dried up also. 
 Manuel also said that the issue of trade finance needs to be 
given special attention.  As African countries are squeezed 
out of capital markets, additional ADB capital becomes 
increasingly important. Manuel said, "It is essential that 
the IMF has the firepower to support countries that need it." 
 
¶7. (SBU) In discussing the IFIs, Manuel said the IMF's "one 
size fits all" approach should be stopped.   The IMF needs to 
be able to deliver flexibly, allowing countries to use a tool 
box of measures.  Difficulties, according to Manuel, were 
arising around the table at the IMF Executive Board, and 
there needs to be equality of treatment.  Finally, Manuel 
welcomed the WB's proposal that donor countries allocate 0.7% 
of fiscal stimulus packages to the WB's Vulnerability Fund, 
though he noted issues of eligibility and conditionality 
would need to be resolved. 
 
Egypt 
----- 
 
¶8. (SBU) Egyptian Finance Minister Yousef Boutros-Ghali 
highlighted that, although substance is important, the form 
with which assistance is conveyed is more important.  It is 
essential to look at the immediate feasibility of delivering 
assistance and not promise things that will take years to 
deliver.  In countries that have reached their IFI facility 
limits, he argued, limits should be doubled.  Money is not 
 
LONDON 00000694  004 OF 008 
 
 
fungible between budget lines at the IMF and must be 
concessional from the start.  SDR allocations need to be 
ratified by 85% of the voters, making them a largely 
long-term measure.  Boutros-Ghali also said facilities need 
to be easily accessible, for example through IDA. 
 
Botswana 
-------- 
 
¶9. (SBU) Botswana President Ian Kharma highlighted the loss 
of diamond revenues in Botswana.  He argued that it is 
important that international commitments made at Gleneagles 
are honored.  Flexibility needs to be widely extended, and 
interventions need to be rapid.  He noted that even countries 
that have reached MDG-defined Medium Income Country status, 
such as Botswana, are seeing a downgrading of their credit 
rating.  He said migration will increase if countries cannot 
provide for their people. 
 
¶10. (SBU) Botswana Central Bank Governor Linak Mohoholo 
emphasized that Africa wants to be part of the solution and 
should not be at a distance from it.  The C10 underscored the 
need to acknowledge African progress on governance and wanted 
to maintain those governance gains. 
 
Tanzania 
-------- 
 
¶11. (SBU) Tanzanian President Jakaya Kikwete said that 
"Africa is not responsible, but Africa is suffering."  In 
reality, African economies will decline, and more people will 
fall into poverty.  The issue, Kikwete said, is not one of 
resources but of political will on the part of donors. 
Africa needs additional resources and talk of cutting aid 
will only increase the number of people in poverty.  He 
argued that developed countries must keep their development 
promises and actually deliver additional resources in 
innovative ways, including through debt relief.  If Africa 
was allowed to roll backwards, he suggested, there will be 
more Darfurs and Somalias, and more ICC indictments.  "How 
many more people will you indict?" 
 
Liberia 
------- 
 
¶12. (SBU) Liberian President Johnson-Sirleaf said that 
additional assistance is important, but availability is just 
as important.  It may be better to look at existing 
facilities, enhancing those and enabling easier access. 
Private capital is the engine of growth, she argued, and 
investment in all sectors is needed, including agriculture, 
forestry, and mining.  Long-term facilities are required 
within the IFIs to enable companies to continue investing. 
 
Kenya 
----- 
 
¶13. (SBU) Kenyan Prime Minister Raila Odinga said the 
economic crisis is a global problem, requiring a global 
solution.  He said Africa needs more market access and 
 
LONDON 00000694  005 OF 008 
 
 
support on debt servicing, while also noting Africa's resolve 
to fight global warming.  Africa, he said, is suffering from 
extremes of weather, from drought to flooding, and five 
million people are facing starvation in Kenya, which 
undermines our ability to deal with the economic crisis. 
Protectionism, he said, is not an appropriate response 
because Africa needs more market access. 
 
UK Response to African Leaders 
------------------------------ 
 
¶14. (SBU) In response, UK Financial Secretary to the Treasury 
Stephen Timms said he was hearing a good degree of agreement 
on what needed to be done and concurred with the need to 
protect the most vulnerable.  Following the G20 Finance 
Ministers' meeting, Timms noted that while there are still 
many issues to be resolved, there are encouraging signs about 
IMF resource increases. He said the importance of maintaining 
commitments to the MDGs and climate change is clear.  He also 
explained that Switzerland had recently made changes to 
provide more information on tax havens, a historic shift and 
an example of an international willingness to look at these 
issues. 
 
¶15. (SBU) UK Development Junior Minister for Africa Ivan 
Lewis welcomed the "frank and credible voices" from Africa. 
He said the narrative and substance are important and 
practical measures will make a difference; access is clearly 
of crucial importance.  Lewis said the international 
community needs to move quickly and nimbly, differentiating 
growth measures from poverty reduction measures.  UK Foreign 
Office Minister for Africa Mark Malloch-Brown said he took 
from the discussion two main points: the international 
community needs to honor the pledges they have made and that 
both additional resources and access are crucial. 
 
¶16. (SBU) PM Brown concluded the discussion by saying he want 
to look at ways to raise hundreds of billions in extra 
resources.  Bringing back confidence, ending irresponsible 
practices, and bringing shadow banking practices in to the 
real markets are priorities.  He noted that tax havens are 
now saying that they will abide by international rules and 
that the proper regulatory systems need to be re-built. 
Brown emphasized the UK's commitment to ODA targets and said 
he would encourage others to meet their ODA.  He also said 
President Obama had agreed to USD 2 billion in education and 
healthcare funding.   Safety nets are also important, and 
Brown said he wants to have an announcement on the 
vulnerability fund from the G20.  The UK is also considering 
trade finance support options to provide tens of billions in 
credits.  HMG is also looking at SDRs, gold sales, and 
sovereign wealth funds.  This will all mean a substantial 
package of measures for the short, medium and long term. 
Access to resources, he noted, is as important as additional 
money.  He concluded by saying that conditionalities of the 
past are not the right way of looking at this and noted the 
need for strong African voices. 
 
¶17. (U) Meeting Participants included the following: 
 
 
LONDON 00000694  006 OF 008 
 
 
UK Prime Minister Gordon Brown 
UK Development Secretary Douglas Alexander 
UK Foreign Office Minister for Africa Mark Malloch-Brown 
UK Development Junior Minister for Africa Ivan Lewis 
UK Financial Secretary to the Treasury Stephen Timms 
Tanzanian President Jakaya Kikwete 
Liberian President Ellen Johnson-Sirleaf 
Botswana President Seretse Ian Khama 
Ethiopian Prime Minister Meles Zenawi 
Kenyan Prime Minister Raila Odinga 
South African Finance Minister Trevor Manuel 
Nigerian Finance Minister Mansur Muhtar 
Egyptian Finance Minister Youssef Boutros-Ghali 
Rwandan Finance Minister James Musoni 
Tanzanian Finance Minister Mustafa Mkulo 
Botswana Finance Minister Baledzi Gaolathe 
Cameroonian Finance Minister Lazare Essimi Menye 
Cape Verde Finance Minister Cristina Duarte 
Mozambican Central Bank Governor Ernesto Gove 
Botswana Central Bank Governor Linah Mohohlo 
Algerian Central Bank Governor Mohamed Laksaci 
Governor of the Bank of Central African States (BEAC) 
Philibert Andzembe 
African Union Commission Chairperson Jean Ping 
UN Under-Secretary-General and Executive Secretary of the 
Economic 
     Commission for Africa Abdoulie Janneh 
President African Development Bank Donald Kaberuka 
Africa Progress Panel Michael Keating 
AU Commissioner for the Economy Maxwell Mkwezalamba 
 
Prime Minister Gordon Brown's Remarks 
------------------------------------- 
 
¶18. (U) Begin text: 
 
Can I first of all welcome you all to London.  This is one of 
the most important meetings we will have. The world economy 
is in a recession that is affecting every continent and 
affecting, as you know, every country, and it is our duty to 
do everything that we can, first of all, to relieve the 
pressure that people are facing as a result of the downturn, 
and Africa knows more about these problems than any continent 
in the world; and secondly, to prepare ourselves to get out 
of the downturn by taking the right decisions for the future. 
 
Now that is why I am so pleased that President Kikwete, 
President Khama, President Johnson-Sirleaf, Prime Minister 
Odinga and Prime Minister Meles Zenawi are all here with us 
today and I am very pleased that Trevor (Manuel), as Head of 
the Group of the Finance Ministers that has been involved in 
making proposals to us, is also here. 
 
And I want us to come out of this meeting today with not only 
a determination that every continent, and that means Africa, 
has its fair share of support over the next few months, but 
equally every continent feels that it can play a part in 
drawing up the plan for recovery. 
 
There will be of course representatives at the G20.  I know 
 
LONDON 00000694  007 OF 008 
 
 
that your preference is also for reform of the international 
system and I agree with you that big changes need to be made 
in the representation and the quotas and the allocations for 
individual countries and individual continents, and I believe 
that that wish will come out of the G20 meeting. 
 
Now in dealing with this global crisis, the first thing that 
we have got to do is to make sure that where we can we 
protect people against the impact of this crisis. And Douglas 
Alexander has announced that we will make our contribution to 
a World Bank Social Protection Fund, and we are calling on 
all countries to make such a contribution. There is a need 
for a safety net against the vulnerabilities that people 
face. We know that 100 million more people are being forced 
into poverty, we know that half a million children a year 
could die as a result of the absence of healthcare because of 
the deterioration of the finances of families. So that is the 
first thing - we have got to protect people, and provide real 
help now for people in difficulty. 
 
The second thing is that we have got to make sure that every 
continent has the ability to protect itself against the 
banking failures that have happened.  A situation that 
started in America and spread to the rest of the world is now 
affecting the poorest countries most, and we want the 
different international institutions to be in a position to 
support whatever restructuring of the financial system is 
necessary, and to support the funds flowing again to 
businesses to invest. 
 
And that leads on to the third point - and that is trade.  We 
know that there is an interruption in trade taking place. We 
know that this will be the first year in 30 years that trade 
has actually fallen, and we know that the impact of that is 
mostly on the poorest countries. So we have to find a way in 
which we can stop protectionism, encourage people to sign up 
to Doha - which has of course the effect of releasing about 
four billion of extra resources for infrastructure and other 
support for development - and monitor what is happening. If 
other countries are adopting protectionist policies we will 
know about it and the world is in a position to take action. 
But perhaps most of all we have to make available trade 
credits to enable trade to flow round the world and enable 
Europe to trade with each other and others to trade with you. 
 And this is one of the main aspects of policies that we need 
to discuss at the G20 and your views on this would be most 
welcome. 
 
And then to the international institutions themselves. I have 
said that they need to reform in terms of their 
representation. I think that they also need to be in a 
position to provide the resources with less conditionality 
than we have had in the past. I want the International 
Monetary Fund to have available a crisis facility, but it 
will need to be properly resourced. I want the Monetary Fund 
also to be able to set up a preventative facility to prevent 
the damage that could be done if banks fail and if countries 
are put in a difficult position because of that. We want the 
World Bank to be in a position to deliver more resources for 
infrastructure, not as a promise, but in detail this year, as 
 
LONDON 00000694  008 OF 008 
 
 
a result of advancing their programmes, and I have talked to 
President Zoellick of the World Bank about what he can do in 
this respect. We want the World Bank to be in a position to 
sponsor - with other countries, export credit agencies and 
the private sector - billions of pounds of trade credits that 
would enable the 
flow of trade around the world. 
 
So for the outcome of this G20 meeting we want there to be 
immediate action, the medium term reforms that are necessary 
for our financial system.  And we want, finally, the big 
reforms to take place in the International Monetary Fund and 
the World Bank that were set up in the 1940s that do not meet 
all the needs that we have in 2009. And when we set up a 
preventative facility to enable people to draw on it, I want 
it to be without the conditionality that normally attaches to 
International Monetary Fund programmes. 
 
I think you can look on this as one of the problems that this 
globalising world has got to deal with. We have problems of 
climate change, we have problems of great inequalities 
between nations. We have problems of security arising from 
the mobility of people and obviously the insecurity that 
arises when groups who are violent try to take part.  We have 
also the problem of financial instability. 
 
If we can solve these four big problems of globalisation, 
then we are able to say that the global economy could start 
to work in the interests of all those who depend upon it, and 
we are on the way to building a global society where people 
can work together for the future. 
 
So the challenge is big. It is not simply about getting out 
of this financial crisis; it is about building a global 
economy that is a force for justice on a global scale. I 
believe that we would be true to the Millennium Development 
Goals only if we see that solving the present financial 
crisis is part of building a world that is more equal and 
more fair and not using the crisis to delay that, but 
actually seeing the crisis as a means by which we have to 
move quickly, more quickly indeed, to bring that about. 
 
So I look forward to our discussions and thank you all for 
being here today. 
 
End text. 
 
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