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Cablegate: Senegal Achieves Milestone in Renewed Effort to Achieve An

VZCZCXRO3869
PP RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHDK #1282/01 3101740
ZNR UUUUU ZZH
P 051740Z NOV 08
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 1391
INFO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/USDOC WASHDC
RUEHLMC/MCC WASHDC
RUEHZO/AFRICAN UNION COLLECTIVE

UNCLAS SECTION 01 OF 02 DAKAR 001282

SENSITIVE
SIPDIS

STATE FOR EBB/IFD/ODF, A/EPS AND AF/W
TREASURY FOR RHALL AND DPETERS

E.O. 12958: N/A
TAGS: EAID KMCA ECON EFIN EINV ETRD SG
SUBJECT: SENEGAL ACHIEVES MILESTONE IN RENEWED EFFORT TO ACHIEVE AN
MCC COMPACT

REF: DAKAR 183

DAKAR 00001282 001.2 OF 002


1. (SBU) SUMMARY: By presenting comprehensive concept papers in a
timely manner for important projects, including roads, irrigation,
and judicial reform, Senegal has achieved an important milestone in
its effort to sign an MCC Compact. MCC Vice President John Hewko
told the MCA-Senegal Steering Committee, Chaired by the Prime
Minister, and separately President Wade, that the MCC is ready to
support the next steps on six proposed projects. Hewko also
explained that those projects, with an estimated price tag of
approximately USD 650 million, would have to be pared down to fit a
more realistic budget of approximately USD 400 - 425 million, unless
additional resources unexpectedly become available. He added that a
Compact signing by September 2009 is attainable, but the government
should not consider adding new projects. Both the Prime Minister
and President Wade acknowledged these realities and pledged their
government's support. END SUMMARY.

MCA-SENEGAL PRODUCES HIGH QUALITY CONCEPT PAPERS
--------------------------------------------- ---
2. (U) In July and August, Senegal's "Mission de Formulation et de
Gestion du MCA Senegal (MFG-MCA)" finalized the concept papers that
will form the basis of an eventual MCC Compact. These papers
outline ten possible projects for road construction and
rehabilitation, improvements in water and irrigation infrastructure,
judicial reform measures that include the construction of new
"Maisons du Justice" (Houses of Justice) for enhanced, decentralized
civil law arbitration and dispute resolution, and contributing to
investment fund to promote public-private partnerships for rural
energy production.

3. (U) These concept papers, developed by Senegalese experts at
MFG-MCA, in consultation with MCC staff, provide thorough and
detailed economic rationales and initial technical requirements for
the projects. MCC staff has described the papers as "world class."
In total, the projects outlined in the concept papers have an
estimated price tag of more than USD 1 billion.

MCC VICE PRESIDENT SCALES-BACK AND OUTLINES NEXT STEPS
--------------------------------------------- ---------
4. (U) MCC Vice President for Compact Development, John Hewko,
visited Dakar October 27-28 for meetings with senior GOS officials
to discuss the concept papers, the MCC's assessment of what projects
can be considered, and to explain the next steps for reaching a
Compact signing point in 2009.

5. (SBU) In an October 28 meeting with the GOS's MCA Steering
Committee, which is chaired by Prime Minister Soumare and includes
senior government officials (nine ministers, plus Senegal's
Ambassador to the U.S. were present) and observers from civil
society, Hewko explained that the MCC would not consider the energy
projects, and had decided to specifically focus on two roads
projects, three irrigation projects, and the judicial reform
proposal. All of these projects would benefit Senegal's rural
development and assist with economic decentralization. He noted
that the estimated cost of these six projects was approximately USD
650 million, and that it was unlikely that the MCC budget for
Senegal would match that amount. Hewko explained that MFG-MCA, in
close consultation with the MCC, should target a Compact package
with an investment requirement closer to USD 400 million. Hewko
added that the actual budget would not be known for some time, given
the transition to a new administration, and that, in the end it is
possible that Senegal could receive a larger budget -- however
prudence dictates a conservative estimation of the funds available.


6. (SBU) Mr. Hewko outlined for the Steering Committee the next
steps in Compact development:

-- further prioritization of projects is needed given the budget
realities;

-- feasibility studies -- including environmental impact assessments
and development population relocation plans -- and further technical
analysis will be required;

-- MCC will complete a technical review of the final projects;

-- MCC will present an Investment Memo to its Investment Committee
and Board of Directors;

-- MCC's Board of Directors will approve the proposed Compact;

-- Congress reviews the Compact;


DAKAR 00001282 002.2 OF 002


-- a Compact signing event is organized.

7. (SBU) Given that these significant technical and administrative
steps need to be completed, Hewko told the Steering Committee that
if all goes well, a Compact with Senegal could be signed by the end
of the FY '09 fiscal year, which ends on September 30.

8. (U) By mutual agreement, no estimate of the likely budget for
Senegal's possible Compact would be discussed publically. Hewko and
Foreign Minister Gadio, along with MFG-MCA Director Ibrahima Dia,
briefed the Senegalese press on this important milestone and noted
the specific projects still under consideration.

PRESIDENT WADE INDICATES HE'S ON BOARD
--------------------------------------
9. (SBU) Later that day, Hewko, accompanied by Ambassador Bernicat,
other MCC Officials, and Econ Counselor, met with President Wade so
that Hewko could brief Wade on what he had presented to the Steering
Committee. Hewko also underscored that for a Compact to be signed
in 2009, no additional projects could be added for consideration
beyond what has already been assessed in the concept papers.
President Wade asked for clarification on the likely total amount of
the MCC investment and also on how the funds would be distributed.
Hewko reiterated the current estimate of USD 400 million over five
years and explained that disbursements were made not to Senegal's
Treasury, but to a to-be-created Senegalese MCA management
organization, with funds provided as-needed according to the actual
work schedule. President Wade stated that he confirms this
arrangement, with money being distributed on an "execution basis."
Wade expressed his comfort with the information provided by Hewko
and reiterated his government's continuing support in order to
achieve a Compact signing.

COMMENT
-------
10. (SBU) Senegal has put together an outstanding technical and
administrative team at MFG-MCA which has produced excellent concept
papers (in conformity with MCC, USAID, and World Bank standards) in
a timely manner. We will encourage MFG-MCA to continue to develop
all of the final projects, as time and resources permit, including
completing the necessary follow-on studies. This would add to
Senegal's flexibility should more money materialize from the U.S.
side for Senegal's Compact, or should other donors be identified who
could adopt part of these projects under their own assistance
programs.

11. (SBU) Mr. Hewko and his MCC team was very clear and direct with
President Wade, Prime Minister Soumare and the Steering Committee,
and the MFG-MCA team on what still needs to be accomplished before a
compact can be signed. There should be no misunderstanding from the
Senegalese side on how the MCC operates, nor that the current
project proposals need to form the basis of the Compact, with no new
projects or significant changes put forward. At the same time, we
encourage the MCC to verify, in writing, the GOS' own requirements
for signing a compact, including the need, if necessary, for
implementing legislation, public hearings, approval by the National
Assembly or any other measure that could potentially cause a
last-minute conflict. Overall, barring any new high-level
Senegalese political influence on the process, we are guardedly
confident that all the next steps can be fulfilled in order to meet
the September 2009 signing target.

12. (U) The MCC has cleared this cable.

BERNICAT

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