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Cablegate: Dot Deputy Secretary Visit to South Africa, April 12-16,

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RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHSA #0937/01 1261212
ZNR UUUUU ZZH
R 051212Z MAY 08
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 4330
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE

UNCLAS SECTION 01 OF 04 PRETORIA 000937

SIPDIS

SENSITIVE BUT UNCLASSIFIED
SIPDIS

E.O. 12958: N/A
TAGS: ETRD EAID EAIR ELTN EWWT EIND EINV SF LI KE
SUBJECT: DOT DEPUTY SECRETARY VISIT TO SOUTH AFRICA, APRIL 12-16,
2008

REF: CAPE TOWN 72

1. (U) Summary. Deputy Secretary of Transportation Admiral Thomas
Barrett led the U.S. delegation to the first African Growth and
Opportunity Act (AGOA) Transport and Trade Forum in South Africa
April 12-16. The delegation met with a wide range of transport
sector officials and industry representatives from throughout Africa
and discussed many of the pressing transport issues facing the
continent. Congressman Donald Payne (D-NJ) met with the delegation
on April 13 and discussed the role of transportation as an engine
for economic growth in Africa. The delegation held bilateral
meetings with South Africa, Liberia, and Kenya to discuss transport
challenges and offer U.S. assistance. The AGOA Forum proceedings
will be reported in greater details in septel. The U.S. mission
thanks the Department of Transport for sponsoring a timely forum to
promote African transport infrastructure investment and U.S. trade
with the continent. End Summary.

2. (U) Deputy Secretary of Transportation Admiral Thomas Barrett led
the U.S. delegation to the first African Growth and Opportunity Act
Transport and Trade Forum in Cape Town, South Africa April 12-16.
The Department of Transportation (DOT) led the delegation, which
included senior officials from the Millennium Challenge Corporation
(MCC), the U.S. Trade and Development Agency (USTDA), and the Office
of the U.S. Trade Representative (USTR). The delegation brought
together technical transport sector specialists and MCC, USTDA, and
USTR representatives, who could address the issue of transport
finance. U.S. DOT delegates included experts from all
transportation modes (aviation, land, maritime, and rail). The
delegation met with a wide range of transport sector officials and
industry representatives (i.e., Boeing, FEDEX, Maersk and GE) from
throughout Africa and discussed many of the pressing transport
issues facing the continent. The delegation visited the Port of
Cape Town and Villafont Winery (a US-SA joint venture) as a part of
a supply-chain logistics familiarization tour.

3. (U) USTDA Director Larry W. Walther officially launched the
African Trade Lanes Partnership during a press conference at the
Forum. The Partnership will support a coordinated intermodal
transportation infrastructure program in order for Africa to take
advantage of AGOA benefits. The initiative is designed to promote
regional cooperation and connectivity in all modes of
transportation, including aviation, land, maritime, and rail. During
the two-year initiative, USTDA will provide $4 million for
transportation infrastructure planning across sub-Saharan Africa,
including technical assistance, investment analysis, business
workshops, training, project definition, and other critical
capacity-building activities.

------------------------
Congressman Donald Payne
------------------------

4. (SBU) Congressman Donald Payne (D-NJ) met with the delegation on
April 13 and discussed the role of transportation as an engine for
economic growth in Africa. Congressman Payne was in Cape Town to
attend the 118th Assembly of the Inter-Parliamentary Union (reftel).
Barrett stated that the delegation was approaching transport and
trade in a holistic manner. Barrett sought advice on working on
African transportation issues. Congressman Payne cited border
control issues (e.g., customs and long border delays), bureaucratic
red-tape, and corruption as areas for concern. Deputy Secretary
Qred-tape, and corruption as areas for concern. Deputy Secretary
Barrett agreed and noted that a little more regionalism would help
the transport sector in Africa. Congressman Payne called for more
regional and less country-specific assistance through the MCC.
Deputy Secretary Barrett stated that discussions about recent MCC
transport programs in Kenya and Tanzania highlighted the need for
more regional assistance and hoped to "get more dialogue" on
promoting regional programs during the forum and in follow-up
discussions in D.C.

--------------------------------------------- --
SA Bilateral - Assistance Offered for World Cup Preparations
--------------------------------------------- --

5. (U) A South African Department of Transport delegation led by
Director General Mpumi Mpofu met with the U.S. delegation on April
14. Deputy Secretary Barrett was positive about the opportunities
for bilateral cooperation, which could be used as a model for the
rest of Africa. He stated that "South Africa was the right place on
the continent to host the first AGOA Forum on Transport and Trade
because of the leadership role South Africa played on the
continent". Director General Mpofu agreed, but added that South
Africa's leadership role on the continent and in the African Union
sometimes constrained its ability to act unilaterally. Barrett also
emphasized that improving regional transport infrastructure would be
beneficial to trade development. Deputy Secretary Barrett
congratulated South Africa for its winning bid to host the FIFA 2010
World Cup.

PRETORIA 00000937 002 OF 004

6. (U) Deputy Secretary Barrett offered technical assistance with
transportation planning, outreach, and development for the World Cup
and beyond. He noted that the U.S. DOT was already providing road
safety assistance for World Cup preparations and inquired how the
U.S. could provide further assistance. Barrett said the U.S. had
comparative advantages in intelligent transport technology programs,
which South Africa could benefit from. For example, the U.S. DOT's
21st Century Solutions program utilizes technology to improve
efficiencies of existing infrastructure and infrastructure
investment.

7. (U) Mpofu stated that at this point all of the infrastructure
plans for 2010 preparations were already in place and now the focus
was on implementation. She requested assistance to operationalize
these transport infrastructure plans. She said that the SAG viewed
the 2010 World Cup as a catalyst to implement long-term, sustainable
transport systems.

--------------------------------------------- ---------
Implementation - Leveraging Private Finance and Skills Development
--------------------------------------------- ---------

8. (U) Mpofu said that SA DOT needs assistance with operational
plans and implementing ticketing systems. The SAG has placed great
faith in the transport sector and has dramatically increased
investments in the transport sector from R6 billion ($779 million)
to R20-24 billion ($2.6-3.1 million) per year. The SAG has also
launched a R300 billion ($39 billion) overall infrastructure
development program. It is receiving technical assistance on
traffic management from the U.S. Intelligent Transport Systems (ITS)
program. SA is implementing a highway improvement scheme with
assistance from ITS. This R23 billion ($2.9 billion) program is one
of the SAG's biggest transport investments. New highway
construction plans that will feature Easy Pass systems are in place
for completion in 2011.

9. (U) Mpofu stated that leveraging private sector finance is
another major area where SA could use technical assistance. Mpofu
described World Cup preparations as the first phase of a larger
ten-year transport development program. The SAG needs to better
understand investment mechanisms and determine which financial
instruments to use to best leverage private sector financing.
Deputy Secretary Barrett responded that the U.S. faces the same
challenges. The U.S. DOT is willing to follow-up and assist with
increasing private sector finance. One of the goals of the U.S. DOT
21st Century Solutions program is to increase public private
partnerships, which address transport technology and finance. The
U.S. can share best practices regarding public private partnerships.
Mpofu thanked Barrett and reiterated that this was a key strategic
issue. SA already has public private partnerships in different
sectors, but more are needed in the transport sector.

10. (U) According to Mpofu, FIFA chose the nine host cities well in
terms of existing transport infrastructure, but the principle
challenge has been stadium construction. According to the SA DOT
delegation, the 2010 transport projects are "feeling the bite of
skills shortage" since stadium construction is absorbing skilled
professionals. Engineers and other skilled specialists are in
demand, but in short supply. SA DOT delegates asked for U.S.
assistance in the form of skills transfer and other training
programs. They requested a program similar to an existing USAID
Qprograms. They requested a program similar to an existing USAID
training program in Kenya. Deputy Secretary Barrett responded
favorably to the request. He also encouraged the development of
community colleges, technical institutes, and career development
programs linked to businesses as means of addressing skills
shortage.

------------------------------------
Collaboration on Intermodal Linkages
------------------------------------

11. (U) Deputy Secretary Barrett also raised the importance of
intermodal linkages during the discussion. He informed Mpofu that
the delegation would be touring the Port of Cape Town to learn about
its expansion program. Mpofu said that the U.S. was a world leader
in driving efficiency and SA DOT would like to engage with the U.S.
on intermodal transport linkage issues. SA has started creating
regulatory bodies and intermodal plans and she proposed looking at
freight, rail, and maritime transport to explore collaboration.


12. (U) Mpofu stated that great opportunities for collaboration
existed in the maritime sector. The current problem with the SA
maritime sector is its fragmented structure. Transnet, the
government-owned company which operates the ports, is under the
authority of the Department of Public Enterprises and operates in a
monopoly environment. According to Mpofu, Transnet focuses on
freight transport and logistics at the expense of maritime transport

PRETORIA 00000937 003 OF 004


development. She said that SA needs significant assistance with
port operations. Deputy Secretary Barrett cited public private
partnerships as a means for improving port operations efficiency.
He also warned Mpofu not to lose total jobs due to increased port
mechanization; but to also think about investing in areas that would
spur further investment, development, and job growth. He explained
that a container facility in Port Smith, Virginia, was able to
increase efficiency and double stack containers by raising the
height of its tunnels.


13. (U) Mpofu said SA also has an ambitious program to rehabilitate
its rail infrastructure. She added that SA could learn from U.S.
experiences in operational efficiencies, refurbishing, and the
establishment of finance mechanisms for rail infrastructure. For
the World Cup, SA is creating a high-speed rail system (Gautrain) in
the Gauteng province linking Johannesburg and Pretoria. Post 2010,
SAG would like to implement similar systems in other urban areas
such as Durban. SA would also like to implement a bus rapid transit
system. SAG and the host cities are also procuring 1,200 new buses
for the 2010 games.

--------------------------------------------- ------
Open Skies - SA Frustrated by African Union Process
--------------------------------------------- ------

14. (SBU) Deputy Secretary Barrett said that the U.S. has been
unsuccessful in increasing aviation linkages through an Open Skies
agreement with SA. He reiterated that the World Cup could be a real
catalyst for tourism growth if the number of direct flights to the
U.S. were increased. He added that an Open Skies agreement would
signal that SA was open for business. Mpofu responded by stating
that bilateral Open Skies negotiations should be viewed in the
context of aviation liberalization negotiations within the African
Union. She said that SA is looking at the recent U.S. Open Skies
agreement with the European Union with interest. SA is trying to
get to an Open Skies agreement through the African Union, but is
frustrated by the slow progress of the Yamoussoukro agreement.
(Note: The Yamoussoukro Declaration outlines the process for
aviation liberalization within the African Union and has precedence
over any bilateral or multilateral agreements of member-states).

15. (SBU) Mpofu expressed the belief that like-minded countries such
as Egypt, Ethiopia, Kenya, and South Africa are ready for Open
Skies. She predicted that if the Yamoussoukro agreement does not
move forward in the next year, then more countries will lose
patience and proceed with aviation liberalization on a unilateral
basis. As far as SA is concerned a decision needs to be made in the
next year. "If the African Union process is not successful in
twelve months, SA will have to rethink its strategy and go solo."
In the interim, she suggested renegotiating airlift agreements to
make them more liberal. Mpofu noted that increasing airlift would
improve trade links with the U.S.

----------------------
Safe Skies - FAA Visit
----------------------

16. (SBU) Deputy Secretary Barrett stated that SA had come very
close to losing its Category One rating under the Federal Aviation
Administration's (FAA) International Aviation Safety Assessment
program in December 2007. He emphasized that SA will not get a
"second swing" this time when the FAA team returns. He inquired how
the U.S. DOT could assist in resolving safety issues and added that
Qthe U.S. DOT could assist in resolving safety issues and added that
the U.S. wants SA to be prepared for the June visit. Mpofu was
confident about the return visit. She noted that significant
progress has been made in improving human resource capacity since
December. Mpofu stated that legislative reform was also another
major challenge that she expected to be resolved shortly. She
expected draft legislation to be ready when the FAA team returns in
June.

-----------------
Liberia Bilateral
-----------------

17. (U) The delegation met with officials from the Liberian Ministry
of Transport to follow-up on President Bush's successful Africa
visit. Liberian officials explained that 14 years of conflict had
destroyed Liberia's transport systems. Liberia is working to
develop transport systems and has attracted Chinese investments.
Deputy Secretary Barrett underscored the importance of examining
ways to improve the efficiency of existing infrastructure since it
would take a few years to built additional infrastructure. He also
stated that starting from scratch was not a bad thing since Liberia
would not be constrained by existing infrastructure. Barrett
outlined technical assistance programs offered by the USG and
encouraged the Liberian delegation to speak with U.S. transport
experts at the forum. He reiterated that the goal of the forum was

PRETORIA 00000937 004 OF 004


to assist Liberia (and other AGOA recipients) according to their
needs. USTDA Director Larry Walther offered to fund a USTDA
definitional mission to Liberia to identify and define opportunities
for USTDA funding in the transportation sector.

---------------
Kenya Bilateral
---------------

18. (U) The delegation next met with delegates from the Kenyan
Ministry of Transport. The Kenyan delegation spoke about a study
released by the University of Nairobi, which examined U.S.-Africa
trade volumes. The study showed that Africa's share of U.S. trade
is still small, but Africa trade with Asia is increasing. Kenyan
officials also stated that the number of Asian tourists was growing
faster than the number of U.S. tourists. The Kenyan delegation
cited the lack of direct transport links as a cause for the low
levels of trade with the U.S. The Kenya Civil Aviation Authority is
trying to achieve FAA International Aviation Safety Assessment
program Category One status so that Kenya Airways would be able to
initiate direct or code-share service to the U.S. The U.S.
delegation agreed that direct service would increase trade and said
that implementation of safety standards would be a key issue in
obtaining the Category One status. U.S. officials also noted that
Delta Airlines has shown interest in starting direct service to
Kenya, but has experienced delays with Kenya's application process.


19. (U) Kenyan delegates stated that rail systems currently carried
only ten percent of products from Kenyan ports. They hoped to
improve the efficiency and reliability of rail service. Kenyan
delegates noted that big changes had recently occurred in the Kenyan
and Ugandan rail sector. A South African company has won a large
concession, which should improve rail capacity. Kenya is also
trying to create a second port 25 kilometers from the Mombasa port.
According to Kenyan delegates, this would shorten the distance
between the Indian Ocean and the Sudan basin. Kuwaiti investors
have shown interest in owning and operating this second port on a
transfer basis. The Kenyan delegates would like to see more U.S.
companies bid on Kenyan tenders. So far, Chinese and European Union
companies have been bidding and winning the tenders. USTDA
officials encouraged the Kenyan DOT to work with the U.S. Embassy
and Foreign Commercial Service in Nairobi to attract U.S. investors.
USTDA could also provide funding for orientation visits to the U.S.
to build relationships.

20. (SBU) Comment. The U.S. mission thanks the Department of
Transportation for sponsoring a timely forum to promote African
transport infrastructure investment and U.S. trade with the
continent. SA DOT officials have expressed gratitude for the
networking opportunity presented by the forum and the bilateral
dinner hosted by the Ambassador. SA DOT officials have already
scheduled follow-up meetings with U.S. DOT experts to discuss
technology transfer and skills development. SA DOT officials have
also approached the U.S. mission with requests for orientation
visits to the U.S. and to learn more about U.S. DOT best practices
with respect to public affairs. End Comment.

21. This cable was cleared and approved by the U.S. DOT delegation
led by Deputy Secretary Barrett.


END TEXT

BALL

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