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2005-12-06 12:28:00
Embassy Djibouti
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						UNCLAS SECTION 01 OF 03 DJIBOUTI 001202 



E.O. 12958: N/A


1. Summary: On October 22, 2005, bus and
taxi unions called for a general strike
following a rise in fuel costs. The strike
paralyzed the country and greatly affected
public transportation users during the
Ramadan. The government initially responded
with tough measures, which caused students
and parents to join the strikers. As the
situation worsened, the government invited
union members to the negotiation table. The
talks resulted in the resumption of public
transportation and concrete advantages for
buses and taxis drivers. End Summary.

2. On October 22nd, a general strike by bus
and taxi drivers disrupted the public
transportation of Djibouti. It was a 100
percent general strike, the first of its
kind in Djibouti because buses and taxis
have normally held separate strikes in the
past. In addition, buses going to the
districts and trucks bringing livestock to
the capital stopped their services. The
population was severely affected because
they had to walk long distances while
fasting for the holy month of Ramadan. Some
resorted to staying home, causing empty
schools, markets and work places, giving
Djibouti City the appearance of a ghost
town. Police and army trucks were mobilized
to carry as many hikers as possible,
especially school kids. People living in
Balbala, located on the outskirts of
Djibouti City, had to walk greater

3. (U) The call for the strike followed a
meeting between public transportation unions
and the government, which came to a dead
end. In this meeting, union members
indicated that the rise in fuel costs was
the last straw after a series of other price
increases in food staples and electricity.
As the strike completely paralyzed the
country, the government quickly organized
another meeting with union members. As a
result, union leaders agreed that services
should resume while the government was
reviewing union requests. However, the
drivers responded they did not trust the
government would promote their interests if
they stopped the strike.

4. (U) The government made a public
announcement asking the drivers to
immediately stop the strike to avoid serious
sanctions. The buses and taxis drivers
unanimously refused to obey the government
injunctions. The government responded by
jailing some drivers and confiscating some
vehicles. High school and college students
went to the streets in solidarity with the
strikers and burned tires, aggravating the
situation. Some parents joined their kids
and also demonstrated to show their
discontent with the high cost of living.
The police responded with tear gas and real
bullets in one instance (See reftel).

5. (U) The government quickly put together a
crisis unit formed by members of the
Ministries of Transportation, Interior and
Finance in order to bring the union back to
the table and engage in negotiations. The
meeting was televised and widely covered in
the local media. The union leaders
complained about the high cost of fuel,
insurance and other related charges. They
complained that annual fees and taxes
prevented them from earning a decent income,
including annual insurance cost of DF
258,000 (US$ 1,458), licensing fee of DF
56,000 (US$ 316), and road tax of DF 25,000
(US$ 141). In spite of the government's
recent reduction in taxes, the situation is
exacerbated when daily costs are added, such
as fuel running between DF 8,500 (US$ 48)
and DF 14,500 (US$ 82) and the frequent need
for expensive parts for repairs caused by
poor conditions of the roads. They added
that their vehicles needed new tires every
three months also because of the bad roads.

6. (U) Government representatives argued
that the cost of fuel is determined by the
international market but that they were
doing their best to keep the price of fuel
down. Three kinds of taxes are levied by
the government: the Internal Consumption Tax
(known as TIC), surtax and special fees. A
finance law related to the state budget
fixes the tax and surtax so the only part
that can be adjusted is the special fees.
For instance, in July 2005 a liter of diesel
oil cost around 137 DF ($0.77) at gas
stations instead of 145 DF ($0.82) if the
pricing structure was applied, which means
that special fees were reduced.
Consequently, the government was able to
decrease 8 DF ($0.05) per liter by adjusting
the special fees part of the pricing
structure. The same efforts were carried
out by the government in August, September
and October during which the cost of the
liter of diesel oil was maintained at 137 DF
($0.77) during August (instead of 148 DF
($0.84)) and at 137 DF ($0.77) in September
(instead of 149 DF ($0.84)) and at 143DF
($0.81) in October (instead of 155 DF
($0.88)). As a result of the adjustments,
the Ministry of Finance claimed it suffered
a loss of income equal to DF 535 Million
(US$ 3.02 Million) between January and
October 2005.

7. (U) The government appeared eager to
solve the crisis, which impacted the economy
and the social life of the country. After
long negotiations, both parties agreed to
meet again on November 16, after Ramadan.
Bus and taxi drivers resumed temporarily
their services after three days of striking.
This strike clearly showed that public
transportation constitutes an essential link
in the economic and social life of the
country. The population was relieved
because they were preparing for the holiday
festivities, which required reliable public

8. Cost of fuel at the pump is determined by
several factors. State taxes, storage fees,
distribution charges, oil company margins,
and profits of resellers are added to the
initial price of fuel when it arrives at the
port. The cost of a liter of regular fuel
increased from DF 163 (US$ 0.92) in January
2003 to DF 231 (US$ 1.31) in October 2005, a
hike of more than 41 percent. The increase
was more pronounced for diesel fuel, which
jumped from DF 94 (US$ 0.53) in January 2003
to DF 143 (US$ 0.81) in October 2005, more
than a 52 percent rise.

9. The government-owned newspaper "La
Nation" said union members took the country
and its population as hostages. It added
that the drivers did not act as negotiators
but gave orders to government
representatives during the talks. On
November 3, President Guelleh, in his speech
of Eid El-Fitr, said that the hike in oil
prices was an international issue and that
the population should be patient. He added
that he called for oil producing countries
to show some generosity towards poor
countries. He finished by saying that the
law will punish those who try to harm the
security or the stability of the country.

10. The opposition paper "Le Renouveau"
reported the death of a high school student
on October 24, killed by the police during
the demonstration started by the population
in Belbela. The paper also reported the
arrest of more than twenty drivers by the
police. In addition, the paper accused
President Guelleh of "fleeing" to Saudi
Arabia when the population needed him the
most and giving instead strict instructions
to restore order. (Note: Guelleh went to
Saudi Arabia for Imra, a minor pilgrimage
during Ramadan. End Note.) The opposition
paper deplored that President Guelleh
congratulated his police forces and did not
express regret or excuse for the
"assassination" of the student. Finally,
the Djiboutian League of Human Rights
condemned the killing of the young man and
requested the government to investigate and
bring the perpetrator to justice.

11. Talks resumed November 16 between the
government and transportation unions at the
office of the Ministry of Interior. The
Ministers of Transportation, Interior and
Finance met with union representatives.
The government favorably answered the two
main requests of the unions, namely a
decrease in fuel cost and insurance. The
government promised to decrease the cost of
the fuel and insurance. With the approval of
insurance companies, the rate of insurance
coverage was decreased by 11.72 percent for
public carriers, effective January 2006. On
November 22, 2005, the cost of diesel fuel,
mainly used by buses was decreased to DF 137
($0.77) per liter but the regular fuel
stayed at the same price of DF 231 ($1.30).
Other advantages included promises of
participation from union members to the
administration board of insurances and
promises of integration of union members
into the committee in charge of the creation
of the project to reorganize the public
transportation sector.