1. (U) A review of items of interest in
Djibouti for the month of December follows.

DJIBOUTI-SOMALIA RELATIONS


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2. (SBU) Ministry of Foreign Affairs Secretary for
Bilateral Relations Miriam Goumaneh updated visiting AF/E
Deputy Director Phil Carter and Political Officer Erinn
Reed on Djibouti-Somalia relations, as well as the
Djiboutian Foreign Ministry perspective on relations with
the U.S. on December 9. Goumaneh described recent
actions by the Djiboutian government -- such as
withdrawing from then almost immediately returning to
Somali peace talks in Kenya -- as consistent with the
long-term goal of establishing a peaceful Somalia. Carter
agreed that Djibouti had played an important role and was
well placed to continue being a positive influence on the
process. Goumaneh stressed that Somalis needed to reach
their own agreement and that it could not be imposed from
the outside, but she believes Djibouti can act as a good-
faith facilitator among the many factions.



3. (SBU) Carter assured Goumaneh that the U.S. shared the
same goals for Somalia but questioned the feasibility of
a process without TNG participation. He added that if
the present peace conference failed, the U.S. would have
to rethink the policy on engagement with Somaliland. In
any case, the U.S. would continue to follow the lead of
the African Union policy in recognizing a secession if
and when all sides directly concerned agreed to separate
amicably.

IMF TEAM VISIT


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4. (SBU) An International Monetary Fund team headed by
Ugo Fasano, Deputy Division Chief, ended its visit with a
donors' meeting on December 13, 2003. POLOFF Erinn Reed
and Econ Assistant Abdi Mahmoud attended the meeting
which focused on the implementation of a Staff-Monitored
Program (SMP) following the failure to fully implement
economic reforms that accompanied the three-year poverty
reduction and growth facility (PRGF) which expired in
January 2003. The team reviewed the Djiboutian 2003 and
2004 budget and economic model and also focused on
international competitiveness.



5. (SBU) During an earlier meeting with CDA Smith on
December 10, 2003, the team inquired about the monies
given to the Djiboutian government by the U.S. They found
it hard to reconcile amounts in the 2003 and 2004
Djiboutian budgets with the amounts reported by the USG
and other donors. The group believes Djibouti has a ways
to go before it has a strong enough track record to merit
another formal IMF program. If they choose to, the
Djiboutians can use the SMP as an opportunity to prove to
the IMF they are sufficiently dedicated to policy reform
to receive a new agreement. The permanent representative
from the IMF in Djibouti and several follow-on Article IV
consultations will show whether the political will is
really there.



6. (SBU) The IMF and other donors are critical of
increased U.S. and French payments for military services.
They believe these increases in funds available to the
government of Djibouti have relieved the pressure to
reduce government expenditures, especially the need to
reduce public employees. During the two formal meetings
as well as during two informal meals, the IMF team had
the opportunity to review (and defend) some of their
stock policy recommendations, particularly currency
devaluation. The critique was that removing the 176.95
Djiboutian Franc to the U.S. dollar peg that has held
since 1947 would not increase productivity. With no
agriculture and no manufactures, Djibouti has only port
and military services as foreign exchange earners.
Neither of these is price sensitive. Some argued that
with Djibouti's totally non-elastic productive center, a
devaluation would only increase poverty and suffering.

DJIBOUTIAN OFFICIALS VISIT IRAN


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7. (U) President Ismail Omar Guelleh and several cabinet
officials made a state visit to the Islamic Republic of
Iran (IRI). Subsequent public announcement stressed
increased cooperation between the two governments,
including a number of agreements in the economic,
industrial and mining sectors. Specific aid to Djibouti
included a loan for building a new office for the
Djiboutian National Assembly and a commercial center.
The Iranian Red Crescent promised to help in Djibouti's
health program and in the education domain. Iran also
promised scholarships to students majoring in computer
science.



8. (U) Political discussions covered the African
continent's conflicts and crises. President Khatami
complimented Guelleh's effort to restore peace and
stability in Somalia while the two parties condemned the
atrocities and violence of the "Zionist government of
Sharon" against the Palestinian people. They also
condemned those who try to distort the image of Islam and
lashed out against all acts of terrorism. On Iraq
issues, the two countries reaffirmed the need to preserve
Iraq's territorial integrity, national unity and called
for withdrawal of "occupiers" to allow the people of Iraq
to govern their own country. The two leaders called for
peaceful application of nuclear technology for all
members of the Non-Proliferation Treaty.

EXXON MOBIL'S CLAIM AGAINST THE DJIBOUTIAN JUDICIARY


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9. (SBU) The three major Western oil companies operating
in Djibouti - ExxonMobil, Shell and Total - are defending
themselves in several lawsuits brought forth by the
Government of Djibouti. ExxonMobil has written to the
Embassy complaining that fines have been tallied against
them based on blatantly altered documents overturning
previous appeals. Evidence to support this charge was
given to the Charge in a meeting with ExxonMobil
representative Alain Adam on December 10, 2003. The
Charge visited the Minister of Justice and was promised
immediate action but since a follow-up visit with the
Minister of the Presidency in charge of Foreign
Investment on December 22, we have heard nothing.



10. (SBU) As soon as we receive a reaction on this
issue, we will incorporate it in our National Trade
Estimate reporting cable. Depending on the response,
this incident might severely affect Djibouti's reputation
with the international business community. We expect the
Government will respond within the next several days, but
we are not heartened by Minister of the Presidency
Osman's plea we "not punish the entire country for the
actions of a few individuals."

JOINT CHIEFS/ROBIN WILLIAMS' VISIT TO CAMP LEMONIER ON
RTD


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11. (SBU) Embassy Djibouti's PAO Tiffany Bartish provided
footage, photos and a press release to Radio-TV Djibouti
(RTD) of the Robin Williams USO Christmas visit to Camp
Lemonier. RTD aired a full three minutes of footage that
included the American Flag and a presentation to Williams
of a man-skirt and a cow skull (a symbol of the Horn of
Africa). Response has been positive from the Djiboutian
public who might not have enjoyed some of William's
comments about the locale -- "Not the end of the earth,
but you can see it from here!" PAO Bartish ensured
neither these nor Mr. Williams' bluer comments were on
the tape.

OBO NEW EMBASSY COMPOUND SITE SELECTION TEAM FINDS THREE
POSSIBILITIES


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12. (U) Post hosted an OBO site selection committee
headed by Thomas Grubb December 14 through 18. Three
possible sites were found. All are within a kilometer of
each other about half way between the present site in
downtown Djibouti and the airport and Camp Lemonier.

FOOD AID CUT TO DJIBOUTI-BASED REFUGEES TO FORCE REFORMS


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13. (SBU) USAID's REDSO office out of Nairobi has
temporarily cut off U.S. food assistance for refugees to
force the Djiboutian refugee offices to reform their
operations, stop diversion of food assistance to security
forces and kick start the almost moribund program of
repatriation of Somalis from Somaliland. Following up on
03 Nairobi 5355, we believe that the cancellation of
shipments for December and January will result in a re-
organization of the Djiboutian refugee office ONARS.



14. (SBU) This coordinated tough love for the Djiboutian
government seems to be working. First put in place in
September when the U.S. and UN provided a common front on
not supporting a new refugee camp made of formerly
clandestine workers, the new step initiated by World Food
Program officer Robert Gillenwater has already helped
focus GoDj attention at the highest levels on the need to
reform the refugee program. Gillenwater and UNHCR
representative Collins Asare expect a new proposal from
the Djiboutians in mid-January which will allow USAID to
resume shipments. These would arrive in March or April
and not effect actual food distribution to the refugees.

SMITH