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Cablegate: Scenesetter for Codel Payne Visit to Dar Es Salaam


DE RUEHDR #0771/01 3160355
P 120355Z NOV 09




E.O. 12958: N/A

1. Your visit to Dar es Salaam comes at a time when our bilateral
relationship with Tanzania has never been stronger, in part because
of our expansive assistance efforts in multiple sectors. Tanzania's
political stability, sound macroeconomic management and enormous
development needs have made it a favored recipient of donor funds,
although the recent slow pace of reform and of efforts to fight
corruption are increasingly of concern to donors. Roughly one third
of the government's budget is financed by direct budget support.
The U.S. has its largest Millennium Challenge compact with Tanzania,
significant PEPFAR and PMI programs, and a range of other foreign
assistance activities.

Political Background

2. Tanzania's long record of peace and stability make it an example
for the region. President Kikwete's landslide election in 2005
marked the country's third peaceful presidential transition; he is
expected to stand again and is heavily favored for the elections due
in October 2010. Multi-party democracy, reintroduced in the early
1990s, has not shaken the dominance of the Chama Cha Mapinduzi
(CCM), the ruling party since independence. However, the long
dormant parliament is increasingly exercising its oversight function
on an executive branch accustomed to governing unchecked. While
elections on the mainland have generally been free and fair, serious
irregularities and violence have marred elections in the
semi-autonomous islands of Zanzibar, where support is evenly divided
between CCM and the main opposition party. Voter registration for
2010 has already been disrupted by boycotts and clashes between
opposition supporters and security forces.

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Regional Leadership

3. Under the leadership of President Kikwete, a former Foreign
Minister, Tanzania has played an increasingly prominent role in
regional issues. Kikwete finished a one-year term as Chairman of
the African Union (AU) in January 2009. In that role, he spoke out
against military coups in Mauritania and Guinea and the
unconstitutional change in power in Madagascar. Within the Southern
Africa Development Community (SADC), Tanzania has played a
relatively quiet but positive role with respect to Zimbabwe.

East African Community

4. The 2005 establishment of a customs union in the East African
Community (EAC) has increased Tanzania's regional trade, especially
with Kenya. However, Tanzania's concerns about economic
competition, particularly from Kenya, and the designs of its
neighbors on Tanzania's abundant land, have led it to resist more
rapid and more comprehensive integration within the East African
Community. Tanzania has balked at provisions that would permit
other EAC citizens to buy land, establish residence, or enter
without a passport. The EAC leaders are scheduled to conclude an
agreement on a common market protocol at a summit in Arusha in late


5. Tanzania has long hosted refugees from the region's conflict
areas. The number has declined from more than a million in the late
1990s to about 100,000 currently (the U.S. has provided significant
support for UN operations in the refugee camps and is one of the
main resettlement destinations), mainly from Burundi and the
Democratic Republic of Congo. Tanzania has offered naturalization
to more than 100,000 Burundi who came as refugees in 1972, an
unprecedented act. Tanzania is also host to the International
Criminal Tribunal for Rwanda, which is set to end in 2010.

Economic Background

6. Tanzania began an incomplete transition from socialism towards a
free-market system with macroeconomic reforms in the mid-1980s,
which have provided a basis for sustained moderately high economic
growth. However, even with growth averaging 7 percent in this
decade, the percentage of people living in poverty has declined only
slightly, to one-third of the population, while continued rapid
population growth has increased the absolute numbers of the poor by
more than a million since 2001 and threatens to overwhelm an already
fragile social service system. Roughly 80 percent of the population
is engaged in mostly small-scale agriculture, while per capita GDP
is about USD 415. Although the global financial crisis has
significantly affected the tourism industry, one of Tanzania's top
foreign-exchange earners, economic growth of 5 percent is projected
for 2009. High food prices since a spike in 2008 have contributed
to a rise in inflation to over ten percent, a substantial increase
from more moderate inflation earlier in the decade.

Business and Investment Climate

7. Two years after the World Bank Doing Business Index called
Tanzania a "top reformer," the pace of reform has stalled. In
addition to bureaucratic obstacles, investors face poor
infrastructure, a population with a limited skills base, and
widespread corruption. Strained capacity at the port of Dar es
Salaam delays cargo twice as long as at the competing port of
Mombasa. Power generation, heavily reliant on hydropower, has run
far behind rising demand, leading to frequent blackouts. The
Kikwete government's efforts to fight corruption have been fitful.
Late 2008 saw the first major court cases on grand corruption, with
the arrests of individuals whose companies allegedly siphoned funds
from the Bank of Tanzania, along with several Bank employees, and
the separate arrests of two long-serving former ministers on
corruption-related changes. Since then, the cases have progressed
slowly and several other well-publicized scandals have yet to result
in prosecutions.

U.S. - Tanzanian Bilateral Relationship

8. Since the election of President Kikwete in December 2005,
U.S.-Tanzanian bilateral relations have significantly deepened.
President Kikwete's pro-American stance, coupled with an increasing
level of U.S. assistance, has been the catalyst for this change,
enhancing cooperation in sectors from health and education to
counterterrorism and military affairs. President Kikwete has
visited the U.S. several times since taking office, including an
official visit in August 2008 and a meeting with President Obama in
May 2009 (the first African Head of State received in the White
House by President Obama). The public signing of the MCC compact
during President Bush's February 2008 visit to Tanzania, and the
favorable public reaction to the visit, had earlier deepened the

USG Assistance

9. The U.S. is one of the top donors in Tanzania, with total FY08
bilateral assistance of nearly USD 400 million. Taking into account
the U.S. share of contributions from multilateral donors such as the
World Bank and African Development Bank, U.S. assistance totaled USD
662 million in 2008. This does not include major private U.S.
benefactors such as the Gates Foundation. Other major bilateral
donors include the U.K., Sweden, Netherlands, Denmark, Norway, and
the European Commission; for several of the other donors, Tanzania
is among the top recipients of assistance.

Health Challenges

10. HIV/AIDS: Tanzania faces a mature generalized HIV epidemic, with
a prevalence rate of approximately 5.8 percent and 1.4 million
people living with HIV/AIDS. An estimated 440,000 individuals are
clinically eligible for antiretroviral treatment; however, available
services can support less than half of those in need. In FY 2008,
PEPFAR provided Tanzania with over USD 313 million to support
treatment, care, and prevention programs. In FY 2009, the PEPFAR
planning budget is USD 308 million, and will have access to an
additional USD50 million under an approved Partnership Framework.
The PEPFAR program has exceeded its original PEPFAR targets of
providing anti-retroviral treatment for 150,000 individuals and care
for 750,000 individuals, including orphans and vulnerable children.
Although the U.S. has fostered positive relationships with the
Tanzanian government in the health sector, significant challenges
remain, including: the need for stronger leadership in line
ministries; poor health infrastructure; a shortage of health care
workers; a weak government procurement system; and allegations of
corruption in the public and private sectors. We recently entered
into very productive negotiations with the GOT on a PEPFAR
Partnership Framework Agreement, which would deepen our relationship
over the coming five years. We are also working to increase our
coordination with - and the effectiveness of - Global Fund grants to
Tanzania for HIV/AIDS, HIV/TB and malaria.

11. Malaria: Malaria is the number one killer of children in
Tanzania and continues to be a major cause of maternal mortality.
As a focus country under the President's Malaria Initiative (PMI),
Tanzania received USD 36 million in FY 2008 to support the delivery
of long-lasting, insecticide treated bed-nets (LLINs), the care and
treatment of malaria, the malaria in pregnancy program, and indoor
residual insecticide spraying (IRS). The 2007-2008 Malaria
Indicator Survey (MIS) shows malaria prevalence at less than 1
percent on the islands, advancing Zanzibar to a pre-elimination
phase in malaria control. While support to the Zanzibar Malaria
Control Program continues focusing on capacity building and systems
strengthening for sustainability, PMI interventions in mainland
Tanzania are rapidly scaling up through IRS and partnership with GOT
on a multi-donor campaign to distribute LLINs to children under five
and pregnant women with the goal of achieving universal bednet
coverage in the near term.

12. Maternal and Child Health and Family Planning: USG assistance
through USAID has played a role in reducing infant mortality by 32
percent since 1999, but the rate is still unacceptably high (112 per
1000 lives births; 2004 DHS). Maternal mortality and fertility
rates remain unacceptably high (578 per 100,000 and 5.7 per woman
respectively; 2004 DHS) and have not changed appreciably for the
past 15 years. USAID will continue to use Child Survival and Health
funds (USD 19 million in FY08) to reduce infant mortality by 25
percent over the next five years by controlling malaria, providing
six to eight million children with life-saving nutritional
supplements, providing training and improving facilities for
maternal health, and scaling up family planning services for better
reproductive health. USG programs work in partnership with the
Government of Tanzania and NGOs to upgrade health care systems,
norms and standards at the national and local levels.


13. Like other countries undergoing a rapid expansion of their
education system, Tanzania is faced with challenges of capacity and
education quality. Schools lack sufficient teaching and learning
materials at all levels. Classrooms are overcrowded despite double
or triple shifts. There is an acute shortage of teachers and the
majority of teachers lack adequate qualifications, particularly in
English, science and mathematics. USAID and GOT have recently
approved a new Education Objective with USD 11 million in FY09 funds
focused on: improved quality in lower primary education (reading,
math and science); teacher training; learning materials such as
provision of textbooks; and improved educational quality through
capacity building for educational management systems.

Millennium Challenge Corporation

14. In September 2008, the MCC Compact signed by Presidents Kikwete
and Bush entered into full force and effect. It is the largest
Compact signed to date (USD 698.136 million) and is targeted to
address significant weaknesses in Tanzania's long-neglected
transport (roads and an airport), energy, and water infrastructure.
A significant amount of required preparatory work (environmental
studies, finalization of technical designs, and planning for
resettlement and compensation) has been completed. Construction
supervision contracts for all main roads have been competed and
awarded, and the first construction works contract should be awarded
in the next few weeks. Several other contracts for energy
activities are currently being tendered. On the strategic political
front, our message continues to be that a Compact is an agreement of
reciprocal responsibilities; to sustain it over five years, Tanzania
must pay heed to its corruption index and be vigilant at all levels
to ensure transparency and accountability in governance. A planned
hydropower plant in Kigoma was recently stalled due to the discovery
of three newly identified endemic species (two fish and a snail)
whose habitat would be destroyed or critically altered by the plant
as designed. However we are working closely with GOT to come up
with a substitute activity that could be completed by MCC's
September 2013 deadline and help bring power to Kigoma.

Food Security

15. While Tanzania performs relatively better than its neighbors in
food self-sufficiency, malnutrition is rampant among children under
five. USAID's proposed food security program is designed to
increase food production and availability (staples), and strengthen
secondary value chains (horticulture and livestock), in order to
improve household income diversification and nutrition, particularly
for women and small holder farmers. The plan is aligned with
Tanzania's Agricultural Sector Development Plan (through 2015) and
the 2009 "Agriculture First" initiative. The USD 37.7 million
Financial Crisis Initiative (FCI) for Tanzania announced this month
is targeted at enhancing food security in the short-term through
school feeding and employment programs in areas most affected by the
global economic slowdown. FCI funds will also contribute to
improved access to credit for agri-businesses and strengthening of
economic forecasting and budget processes at the central level to
cushion the effects of future economic shocks.

Democratic Governance

16. With USD 4.2 million in FY09 funding, USAID is supporting
ongoing programs to build civil society capacity and accountability
and transparency in local government spending through Public
Expenditure Tracking at the community level. Governance funds will
also be used for election monitoring and civic education in the
run-up to the October 2010 elections.

Military-to-Military Relations

17. Under the Kikwete administration, the GOT has begun
participating in international peacekeeping operations. Most
significantly, Tanzania is in the process of deploying a battalion
to Darfur as part of the UN peacekeeping mission. The U.S. provided
training to that battalion and plans to train others through the
African Contingency Training and Assistance (ACOTA) program.
Evidence of deepening military-to-military ties between the USG and
GOT include the establishment of a Civil Affairs Team, which is
carrying out humanitarian projects and helping build civil military
operations capacity within the Tanzania Peoples Defense Forces
(TPDF), increasingly routine U.S. naval ship visits (the one in 2007
was the first since Tanzania's independence), and an expanding DOD
PEPFAR program.


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