NEW WRINKLE IN QUEST FOR DJIBOUTI NEC SITE

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 000741 SIPDIS FOR OBO/REPM/AQD THOMAS GRUBB; ALSO FOR AF/EX AND AF/E E.O. 12958: DECL: 05/25/2014 TAGS: AMGT ABLD PREL PGOV DJ SUBJECT: NEW WRINKLE IN QUEST FOR DJIBOUTI NEC SITE REF: A. STATE 86390 ¶B. DJIBOUTI 531 ¶C. STATE 69365 Classified By: AMBASSADOR MARGUERITA D. RAGSDALE. REASONS 1.4 (B) AND (D). ¶1. (C) Mohammed M. Ali Yamani, owner of Maya Trading and Real Estate Development Company in Jeddah, Saudi Arabia, approached Ambassador and Management Officer May 17 regarding the USG offer to the Government of Djibouti to purchase a parcel of land in the Haramous section of Djibouti ville for a new Embassy compound (NEC) (See reftels). In a meeting at the Embassy, Yamani stated that he is the sole owner of the parcel in question and that the parcel is part of a villa development project he is planning for the area. Yamani refuted our understanding that the Government of Djibouti owned the parcel and produced a contract and a Djibouti presidential decree which, when translated, appeared to corroborate his assertion. Yamani also offered the property (40,321 square meters) that is the subject of our interest, plus an adjoining 7121 square meters we understood was owned by another buyer, all for the amount of "between USD 250 and USD 300" per square meter. (Note: Yamani stated that the 7121 square meter piece is NOT repeat NOT owned by anyone else. His suggested price is significantly higher than the amount we offered the Government of Djibouti for the parcel. End note.) ¶2. (U) Ambassador subsequently sought clarification of Yamani's assertions in separate meetings with Minister of Presidential Affairs Osman Ahmed Moussa, and Minister of Cooperation in the Ministry of Foreign Affairs, Mahmoud Ali Youssef. Moussa, who was signatory to the Yamani contract, stated that the contract does not convey ownership to Yamani and that he would provide further clarification of this in the next couple of days. He did not do so. Youssef, on the other hand, noted that he would be accompanying President Ismail Omar Guelleh the following day to Tunis to attend the Arab League Summit, would raise the matter enroute, and would respond when he returned three days later. Youssef followed through on his pledge and in a brief to Ambassador, declared that Yamani does not own the parcel. He said Yamani has not paid for any part of the site he intends to develop and that the Government of Djibouti would pass a presidential decree the very next day reserving to the USG the 40,321 square meters site. In addition, Youssef stated that President Guelleh told him the U.S. should not negotiate anything with Yamani. ¶3. (U) Ambassador responded that this statement of ownership alone would not appear to clear the matter. Yamani has stated a claim and he may very well challenge the new decree judicially. Youssef reassured that Yamani had no say in the matter, and that if he attempted to challenge the presidential decree, he could well lose all of his development project. Ambassador impressed upon Youssef the importance of the Government of Djibouti clarifying this matter with Yamani, who is based in Jeddah. We hope it will follow through. ¶4. (C) Ambassador also told Youssef that Yamani wanted to sell to the USG a total of 47,442 square meters, which includes a section of the parcel that we understood had been reserved by another buyer. She told Youssef that Yamani indicated the section is available. Youssef responded that the decree could be amended before it is printed in the official gazette on May 26 to reserve the full rectangular parcel (47,442 square meters vice 40,321 square meters) for the USG. Ambassador will seek clarification first if reservation of the full parcel will obligate the USG to buy the full parcel. If it does not, we will ask the Government of Djibouti to reserve the full parcel (per Ragsdale/OBO telcon). (Note: If OBO decides it wishes subsequently to take the full rectangular parcel, there would obviously need to be a slight adjustment upward in its original USD 1.8 million offer to purchase. The advantage of the complete parcel is that it would give the USG full control of the NEC site from all sides. End note.) ¶5. (C) OBO may wish to begin thinking now about what it will do or should do with the existing embassy site. Abdurahman Boreh, a prominent businessman in Djibouti with close ties to President Guelleh, told Ambassador on two separate occasions that the Government of Djibouti will want "to possess" the existing Embassy site once the U.S. vacates. He stated that the Government of Djibouti will not approve closure of two roads -- one at the current site and one at the new site -- should the U.S. wish to retain the current site. While the current site does not meet our security requirements and is small, it is in a prime location, is developed with several sound structures, and will likely have a number of interested buyers -- including other Governments and organizations with representation here. Perhaps a land swap with the Government of Djibouti might be of interest. In any case, this issue may be possible leverage as we enter into negotiations with the owner -- once determined -- of the proposed NEC site. ¶6. (U) Embassy will seek clarification from its attorney, Alain Martinet, on implications of the decree and related issues. RAGSDALE