DJIBOUTI NEC SITE ACQUISITION

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 000767

SIPDIS

FOR OBO/REPM/AQD; ALSO FOR AF/EX AND AF/E

E.O. 12958: DECL: 06/02/2014
TAGS: ABLD AMGT PREL PGOV DJ
SUBJECT: DJIBOUTI NEC SITE ACQUISITION

REF: DJIBOUTI 0741 (AND PREVIOUS)

Classified By: AMBASSADOR MARGUERITA D. RAGSDALE
FOR REASON 1.4 (B) AND (D).


1. (U) At the invitation of the Djiboutian Ministry of
Foreign Affairs, Ambassador, Management Officer and General
Services Officer met on June 1 with representatives of MFA,
Mohamed Ali Hassan, Director of Bilateral Relations, and
Secretary General Badri Ali Bogoreh. The purpose of this

SIPDIS
meeting was for MFA to hand over to the Embassy Decree number
2004-0098/PR/MEFPCP dated May 29, 2004, signed by President
Guelleh.


2. (SBU) The Decree grants the USG 40,321 square meters of
land in Djibouti's Haramous district for construction of a
new embassy. MFA representatives also wanted to finalize
payment terms and conditions of the land purchase. Both
parties agreed the land would be acquired at the Embassy's
offer price of $1.8 million. This would exclude the small
plot of land approximately 7,000 sq. meters, adjoining the
proposed site.


3. (U) Ambassador raised the concern that Mohamed Ali Yamani
of Maya Trading Real Estate Development Co. (Maya) could
subsequently interfere in the transaction by claiming land
ownership based on the urban development contract signed by
Maya and the Government of Djibouti dated February 4, 2004,
and a previous Presidential Decree (2004-0026) ratifying the
transaction. The contract provides Maya with a temporary
land grant ("concession provisoire") of 840,000 sq. meters
for which payment is due in five annual installments starting
in 2006. The contract's seventh article obliges Maya to
begin development during the first half of 2004. While it is
the Government of Djibouti's position that Maya holds a
temporary grant only, Yamani may seek clarification with the
Government of Djibouti regarding land title covered in the
urban development contract. The MFA representatives
underscored that the Djiboutian Government remains
titleholder of the proposed NEC site and chooses to sell the
property to the USG.


4. (U) The present Decree is an official decision by
President Guelleh and reflects a commitment taken at Cabinet
level. The decision will be followed up, reportedly this
week, with a diplomatic note. For the Government of
Djibouti, this note and Decree 2004-0098/PR/MEFPCP, should be
interpreted as having full force. For the MFA, any further
dealings related to Yamani's claim would only cloud the
transaction. Ambassador affirmed our preference to work
solely with MFA representatives to close the property deal.
In response to Hassan's inquiry as to when payment could be
made, Ambassador said she believed payment could be processed
within 30 days of the closing and requested that the MFA
specify in its diplomatic note preferred payment method and
terms. The Management Officer stressed the need to move as
soon as possible to finalize this transaction since
construction of the NEC is likely to commence within the next
two years.


5. (U) Later the same day, Ambassador, Management Officer and
General Services Officer met with the Embassy's legal
counsel, Alain Martinet, to understand where the USG stands
legally if it proceeds with purchase from the Government of
Djibouti. Martinet first remarked that the present Decree
does not identify which lot of Maya's temporary grant will be
sold to the USG. He also noted that before Yamani's urban
development contract was signed, OBO/REPM/AQD's visit in
December 2003 marked the Government's promise to sell the
Haramous property to the USG. It is now incumbent upon the
Government to consult with Yamani to clarify the status of
the urban development contract. Martinet advised the USG not
to approach Yamani directly on these issues in order to leave
the matter for resolution between the Government of Djibouti
and Maya.


6. (U) With the assistance of Ibrahim Hamadou, Director of
Land Records and Revenues at the Ministry of Finance,
Martinet will confirm the legal titleholder of the proposed
NEC site. This is recorded, he said, in Djibouti's land
registry ("Livre foncier"). Hamadou could also check the
exact location of the land plot referenced in the present
Decree. Finally, Martinet would verify ownership of the
adjoining lot to the proposed NEC site. To protect the USG's
interests, Martinet advised that the Government of Djibouti
should issue another Decree stating the primacy of the
current Decree over both the previous Decree involving Maya
and the urban development contract. Without an accord
between the Djiboutian Government and Maya, he said, it would
be possible for Yamani to seek damages from Djibouti,
including return of the land plot. Such a dispute would be
resolved by international arbitration and the Paris court
system, according to their contract. However, should the
matter go to court, enforcing the ruling in Djibouti will be
problematic. Martinet could not be specific as to the
consequences for the USG, but indicated it would be
disruptive (legally/public relations?). It is now important
for the USG to finalize the transaction with MFA and obtain a
permanent land grant ("concession definitive"),Martinet
said. He continued that immediately following the
transaction, the Embassy should also install a provisional
perimeter fence around the plot to indicated ownership and to
ensure that others do not build on it.


7. (U) Embassy will pass copy of promised diplomatic note
referenced in para 4 as soon as MFA provides.


8. (C) Comment: While the Government of Djibouti insists its
May 31 Presidential Decree overrides any pre-existing
contract, we are not certain if Yamani, or binding law, will
hold the same view. This will be an especially pertinent
point if Martinet determines that Yamani is legal
titleholder, after an examination of records. If Yamani
challenges and heads to arbitration, it will be a matter
between Yamani and the Government, but could possibly delay
our ratification of purchase and eventual construction. He
may also choose to bring the USG into a legal deliberation.
We do not believe the Government of Djibouti plans to
coordinate with Yamani.


9. (C) Comment continued: The nature of Yamani's contract
also raises issues as the Government of Djibouti and Martinet
told us that the contract sets a June 30 deadline for Yamani
to begin preparation of the Haramous tract or the contract is
null and void. We will need to proceed carefully and should
await the MFA's diplomatic note before deciding next step.
RAGSDALE