PRESIDENT'S CABINET DIRECTOR ON LIVESTOCK EXPORT

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 001217

SIPDIS

STATE FOR AF, AF/E, AF/EPS AND EB
NSC FOR COURVILLE
STATE PASS USAID
NAIROBI FOR REDSO

E.O. 12958: DECL: 12/12/2015
TAGS: PREL PGOV EAID ECON ETRD SCUL ENRG DJ
SUBJECT: PRESIDENT'S CABINET DIRECTOR ON LIVESTOCK EXPORT
TO GULF, GEOTHERMAL ENERGY AND OTHER PROJECTS


Classified By: AMBASSADOR MARGUERITA D. RAGSDALE. REASONS 1.5 (B) AND
(D).


1. (C) LIVESTOCK EXPORT PROJECT: In her meeting December 7
with Ismail Tani, Director of President Guelleh's Cabinet,
Ambassador talked about the commercial possibilities inherent
in the U.S.- sponsored livestock holding and Gulf export
project now underway in Djibouti. She told Tani that she
understood the Djiboutian government wanted to bring in a
private partner to complete this project. She asked for
information on the partner and the steps being planned by
Djibouti to formalize its relationship with him. Tani made
the following points in response:

-- The livestock export project is a top priority for
President Guelleh.

-- Djibouti will miss a "fourth Hajj" opportunity to export
livestock to Gulf countries because USAID's implementing
partner lacked adequate funding to complete the project.

-- As far back as the year 2000, Djibouti considered cutting
a deal with Sheikh al-Amoudy of Ethiopia to facilitate this
project but dropped that option in favor of USAID sponsorship
with AU-IBAR. AU-IBAR having failed, Djibouti decided to seek
its own foreign investors with the financial capacity to
complete the project.

-- A preliminary agreement with a new investor, who owns more
than 50 abattoirs in Saudi Arabia, was made in October, 2005.
The investor intends to invest USD 10 million and complete
the project within seven months. The "partnership" with the
investor would likely be in the form of a joint venture.
(Comment: Tani was reticent about the investor. However,
according to a November 27 presidential decree, the land on
which the livestock facility sits was granted to Mohamed
Kayed Mohamed Said, a businessman Post believes is of Yemeni
origin with ties to both Jordan and Saudi Arabia. Post is
seeking further information on the investor from Sanaa,
Riyadh and Amman. End comment)


2. (C) Tani continued that the investor is "serious" and has
the "financial capacity" to complete the project. The project
would create a regional center supporting services for the
Horn. USAID will be asked to use its remaining funds for the
project on capacity building and training of staff to work in
the livestock facilities. (Comment: Post is in discussion
with REDSO about next steps for this project. End comment)


3. (C) GEOTHERMAL ENERGY PRODUCTION: Ambassador raised with
Tani the interest of the U.S. company, Geothermal Development
Associates (GDA),in geothermal energy production in
Djibouti. She asked for an update on Djibouti's progress in
tapping into geothermal heat as an energy source. Tani made
the following points in response:

--Geothermal energy is a high priority for the Government of
Djibouti, which has spent a considerable sum of money toward
its eventual production. None of the experiments achieved
results because funding for them was misapplied. Foreign
companies contracted to look at geothermal production
"cheated" the country by doing their research without the
benefit of a feasibility study.

--Djibouti is aware of GDA's interest in setting up a
geothermal plant but does not agree with GDA's conditions.
GDA wants the government of Djibouti to fund the plant, which
GDA would then build and operate, an "unacceptable" prospect.
It is preferred that GDA find its own financial wherewithal
to build and operate a plant, for which Djibouti Electricity
Company would then become a customer. GDA is advised to
contact Djibouti's ambassador in Washington for elaboration.


4. (U) DJIBOUTIAN HANDICRAFTS: Tani expressed appreciation
for what he described as the Ambassador's "high visibility"
in various areas of assistance to Djibouti. "Contrary to
some diplomats who are shut away in their offices," Tani
commented, "the U.S. Ambassador is reaching out to
Djiboutians and this is very much appreciated."


5. (U) The Ambassador responded that her embassy wanted to
assist as much as feasible in Djibouti's economic
development. She noted that she had just inaugurated the
previous day a Djiboutian handicrafts exhibition the U.S.
Embassy sponsored at the People's Palace. The exhibition was
designed to draw attention to Djibouti's handicrafts and to
give many of the women's associations a venue in which to
sell their wares. Tani said he had seen the inauguration on
television and expressed his high esteem for this effort. He
added that handicrafts take Djiboutians back to their roots.
The Ambassador encouraged Tani to promote the international
commercialization of his country's handicraft products.


6. (U) SALT PRODUCTION AT LAKE ASSAL: Tani raised the
commercial possibilities of Djiboutian salt. He described it
as of "good quality" and suitable for cosmetics (spa) use,
for industrial salt and for de-icing. Ambassador noted that
President Guelleh had discussed the possibility of using salt
for cosmetic purposes during his meeting with NSC Director
Courville last Spring, but that we were unaware of movement
on this. Tani also was unaware but indicated that a U.S.
company had expressed interest in producing Djibouti's salt
for de-icing and had recently visited Djibouti. (Comment:
Tani could not recall the name of the U.S. company. End
comment) He said a Spanish company has also expressed
interest in salt from the Assal region.


7. (U) COMMENT: Post is tracking very closely with REDSO
Djiboutian government decisions related to the livestock
project. These decisions could have considerable
implications for U.S. development assistance here. We also
continue to advocate for U.S. company GDA, although several
obstacles remain in the company's efforts to win a foothold
for geothermal energy development in Djibouti. Salt
production has great potential, but movement is slow in a
crowded world market. As for the commercial prospects for
Djiboutian handicrafts, we are working through Self-Help
programming to develop within artisans the skills needed to
produce products for a global market. The Palestinian
ambassador here wants to pair a few artisans with Palestinian
weavers and embroiderers to create styles that might appeal
to western customers. Post is willing to explore
possibilities for such an exchange. End comment.
RAGSDALE