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Viewing cable 04ABUJA2131, LETTER FROM PRESIDENT OBASANJO TO PRESIDENT BUSH

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Reference ID Created Released Classification Origin
04ABUJA2131 2004-12-23 14:26 2011-08-25 00:00 UNCLASSIFIED Embassy Abuja
This record is a partial extract of the original cable. The full text of the original cable is not available.

231426Z Dec 04
UNCLAS SECTION 01 OF 02 ABUJA 002131 
 
SIPDIS 
 
DEPT FOR AF/W DAN EPSTEIN, AF/EX 
PARIS FOR OECD/PARIS CLUB 
 
E.O. 12958:    N/A 
TAGS: PREL ECON NI EFIN
SUBJECT:  LETTER FROM PRESIDENT OBASANJO TO PRESIDENT BUSH 
RE FOLLOW-UP ON DECEMBER 2, 2004 MEETING AT WHITE HOUSE 
 
 
ΒΆ1.  On December 10, 2004 Ambassador Campbell received a 
letter from the President of Nigeria, Olusegun Obasanjo, 
dated December 9, 2004 to be transmitted to U.S. President 
George W. Bush.  Original is being sent via unclassified 
pouch. 
 
Begin Text: 
 
His Excellency 
Mr. George W. Bush 
President of the Untied States of America 
The White House 
Washington DC USA 
 
Dear President, 
 
FOLLOW-UP ON OUR DECEMBER 2, 2004 MEETING AT THE WHITE 
HOUSE 
 
I would like to congratulate you one more time on your re- 
election victory and to thank you and your team most 
sincerely for the warm welcome accorded us during our 
recent visit with you in Washington.  As agreed, this 
letter serves as a follow-up to our discussion. 
 
First, on the issue of Africa's role in resolving the 
various conflicts on the continent, I want to assure you of 
the resolve of the African Union Heads of State to continue 
to play a leadership role on this front.  As you are aware, 
we are actively working on the crisis in Darfur and Cote 
d'Ivoire whilst trying to stave off the re-emergence of 
conflict between the Democratic Republic of Congo and 
Rwanda.  I have invested my personal time and effort in 
this and committed Nigerian troops and resources to 
resolving these conflicts.  What we need is your continued 
support in terms of logistics and training for our troops 
to enable us strengthen our capacity to meet the merging 
challenges.  Specifically, we would like further logistical 
support for African troops in Darfur.  We would also like 
to work closely with you on pre-emptive measures to stave 
off renewed conflict in Democratic Republic of Congo. 
 
On Cote d'Ivoire, we shall, as you suggested, take up the 
issue of further support with European Union. 
 
With regard to Nigeria, the one main issue where I would 
request your support is that of our quest for Debt Relief. 
You have recently shown remarkable leadership on this front 
as regards Iraq and I would like to congratulate you and 
the Iraqis on your success. 
 
Nigeria, with a per capita income of US$300, has a debt 
burden of US$34 billion, of which about US$29 billion (or 
85%) is owed to the Paris Club of Creditors.  Very little 
is owed to multilateral institutions or to the London Club 
of Commercial Creditors.  A significant part of the debt 
was incurred in the early 1980s under successive military 
dictatorships and civilian administrations and at a time of 
high oil prices, high interest rates, and exuberant lending 
and borrowing on international capital markets.  As oil 
prices fell precipitously in the mid- to late 1980s, 
Nigeria became increasingly unable to service this debt, 
and arrears and penalties accumulated inflating the debt 
stock.  Successive attempts to reschedule the debt on 
regular terms with the Paris Club have not yielded a debt 
service burden that Nigeria can bear, given its revenue 
profile, large population and huge needs.  Arrears and 
penalties have continued to accumulate such that if we were 
to pay our full debt service for the years 2004 to 2009 for 
example, this would require more than US$3 billion per year 
in regular debt service. 
 
Oil accounts for about 75%-80% of fiscal revenue.  In this 
year of high oil prices, we budgeted at US$25 a barrel for 
total earnings of US$22.5 billion.  With the higher oil 
prices, we expect to earn an additional US$5.2 billion for 
a total of US$28 billion in 2004.  From this, we need to re- 
invest $3.2 billion in our oil industry as our share of 
production cost.  With a population of over 130 million 
people and net oil revenues of about $24.5 billion, this 
amounts to a little over 50 cents per capita per day. 
 
In addition, Nigeria has huge infrastructural needs, 
without which we cannot attract the private sector to 
invest, lead economic growth, and progress towards the 
Millennium Development Goals (MDGs).  For example, as we 
mentioned during our meeting, Nigeria with a population of 
over 130 million generates only 4,500MW of electricity 
compared to South Africa's 45,000MW for 45 million people. 
The World Bank estimates that we need an incremental US$1 
billion a year in power alone for the next few years.  The 
same goes for water, roads, and other infrastructure if we 
are to make progress.  Thus, even with this year's high oil 
prices, we would still not be able to meet our investment 
requirements for basic infrastructure. 
 
Nigeria's weight on the continent is widely acknowledged- 
it comprises 10% of Africa's Gross Domestic Product (GDP) 
and 55% of West Africa's.  One in four Africans is 
Nigerian.  Therefore, economic progress on the continent 
would be difficult in the absence of progress in Nigeria. 
Nigeria provides a large market, and is the economic magnet 
for all West African countries. 
 
Finally, Nigeria has among the lowest aid per capita per 
annum of the Least Developed Countries, at less than $2. 
This compares with $21 per capita for the rest of sub- 
Saharan Africa.  In fact, Nigeria is presently experiencing 
net negative transfers to the tune of about US$1.50 per 
capita, sending back to the developed countries in payment 
more than it receives. 
 
For all these reasons, we are asking that Nigeria be 
considered for Debt Relief under Evian terms.  We are not 
asking for more aid, just for Debt Reduction so that we can 
plough such monies obtained into investment in 
infrastructure, health, education, HIV/AIDS and malaria 
prevention, and in general, the MDGs in a transparent and 
results-oriented manner. 
 
My Administration has been implementing a rigorous economic 
reform programme monitored quarterly for the past 15 months 
by the IMF.  We are fighting corruption head on, managing 
our finances transparently, and laying the foundations for 
private sector-led (sic).  We are achieving successes on 
the anti-corruption and macro-economic stabilization front. 
These reforms provide the foundation for monies coming from 
debt reduction to be well used. 
 
We also recognize the importance of maintaining a steady 
flow of our oil resources to the international market.  To 
that end, we are taking positive steps to deal immediately 
with the disturbances in our Niger Delta.  We also 
recognize the importance of maintaining peace and security 
in the Gulf of Guinea. 
 
Mr. President, the United States is one of smaller 
creditors to whom we owe just about US$1 billion.  However, 
your leadership in supporting Nigeria's case for debt 
reduction with the Paris Club will be paramount.  Prime 
Minister Tony Blair and President Jacques Chirac have 
indicated their support.  Only the political will to assist 
us will make it happen.  We pledge to continue our strong 
reforms and request that in recognition of all the 
arguments we have presented above, you lend your personal 
support to our cause. 
 
We would be delighted to work with your officials on the 
specifics of such debt reduction if you so indicate. 
 
With best personal regards. 
 
Yours sincerely, 
    /s/ 
Olusegun Obasanjo 
END TEXT.