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Cablegate: Jamaica: Pm Attempts to Recapture Political Momentum, Goj

VZCZCXYZ0000
OO RUEHWEB

DE RUEHKG #0709/01 2741752
ZNY CCCCC ZZH
O 011752Z OCT 09
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0091
INFO EC CARICOM COLLECTIVE IMMEDIATE
RUEHLO/AMEMBASSY LONDON IMMEDIATE 0027
RUEHOT/AMEMBASSY OTTAWA IMMEDIATE 0026

C O N F I D E N T I A L KINGSTON 000709

SENSITIVE
SIPDIS
STATE FOR WHA/CAR (JMACK-WILSON) (RALVARADO)(VDEPIRRO)(WSMITH)
WHA/EPSC (MROONEY) (FCORNEILLE)
EEB/IFD/OMA
WHA/PPC (JGONZALEZ)
INR/RES (RWARNER)
INR/I (SMCCORMICK)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
EXPORT IMPORT BANK FOR ANNETTE MARESH
USTR FOR KENT SHIGETOMI
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

© Scoop Media

 
 
 
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