1. (C) Embassy Djibouti heartily welcomes your January 2-3,
2006 visit. A meeting with President Ismail Omar Guelleh is
anticipated.



2. (C) Summary: Combating poverty, improving the nation's
health and education infrastructure and promoting economic
development remain top priorities for President Ismail Omar
Guelleh in his second term of office as President, which
began in March 2005. Embassy Djibouti and the Combined Joint
Task Force - Horn of Africa (CJTF-HOA) based at Camp
Lemonier, the only U.S. base in Africa, are working in tandem
to assist in these areas. The Doraleh Port Complex, a joint
venture with Emirates National Oil Company (ENOC), is seen by
Djibouti as a crucial part of its economic development. Its
first phase is nearly complete and includes an oil terminal
which will support oil storage objectives of the U.S. Navy
and Camp Lemonier, under a contract with Defense Energy
Support Center (DESC). Doraleh oil terminal houses five DESC
contracted tanks -- one for Camp Lemonier and four for U.S.
navy refueling needs. However, U.S. naval vessels are not
yet refueling at Doraleh because this port has not yet met
U.S. naval security requirements.



3. (C) Djibouti's attitude toward the United States remains
favorably disposed. The U.S. military is in the process of
negotiating an extension of its lease and access at Camp
Lemonier and President Guelleh has made known his desire to
see the U.S. play a positive role in achieving security and
stability in the Horn of Africa region. He is urging
international community support of the Somali reconciliation
process but is also hosting a Somaliland Interests Office in
Djibouti. Foreign Affairs agencies in Washington are
reexamining core U.S. strategy for engagement in Somalia and
Somaliland, but remain committed at this point to a unified
Somalia. U.S.- Djibouti military and anti-terrorism
cooperation remain strong and Djibouti continues to support
our ongoing efforts at terrorist interdiction in the region.
Djibouti remains less than satisfied, however, with the pace
of delivery of equipment promised or pledged under the
Foreign Military Financing (FMF) program and has voiced its
concerns with the Ambassador, to which we have been
responsive.



4. (C) On issues outside the region, President Guelleh
supported recent elections in Iraq and his government issued
a public statement to that effect. He has in recent months
expressed disappointment with the lack of progress in ending
the conflict between Israelis and Palestinians. End Summary.



--------------------------


Focus on Domestic Development Priorities


--------------------------





5. (C) The top domestic priorities for the Government of
Djibouti are combating poverty, improving the nation's health
and education infrastructures and services, and promoting
economic development. Through the U.S. Agency for
International Development (USAID), the U.S. Embassy is
assisting the Government of Djibouti to implement a
nationwide education reform program with Economic Support
Funds (ESF) of USD 14 million over three years. The Embassy
is also assisting the Government of Djibouti to increase, at
a funding level of USD 12 million in ESF over three years,
equitable access to health care, particularly of the poor,
and the provision of quality and efficient health care to
reduce infant, child and maternal mortality. We are joined in
these efforts by the numerous small school and clinic
rehabilitation and refurbishment projects undertaken
successfully by the Combined Joint Task Force - Horn of
Africa (CJTF-HOA) at Camp Lemonier.



6. (C) We also assisted Djibouti, through USAID's Regional
Economic Development Services Office (REDSO), to increase
opportunities for international sale of its livestock and
spent USD 5 million in ESF and other funds to construct a
holding pen for livestock destined for the Arabian Peninsula
and to provide veterinary inspection and certification for
the livestock. The Government of Djibouti was not fully
satisfied with the pace of construction of the facility and
expressed doubt about its ability to meet import standards of
Saudi Arabia and other Gulf countries. Djibouti engaged a
Saudi investor to do further work on the facility and USAID
officially turned over the project to the Government of
Djibouti on December 19, 2005. The investor has indicated to
Djibouti that he will have the facility operational in five
to eight months. His target export volume is four million
head of livestock annually, including cattle, goats, sheep
and camel.



7. (C) President Guelleh is the driving force behind economic
ventures that the Djiboutian government hopes will boost the
nation's economy. He is most proud of the port of Doraleh,
and the economic potential he sees in this joint-venture
construction project with Emirates National Oil Company
(ENOC). Doraleh is being touted as an integral part of
Djibouti's economic future. Once all phases are complete, it
will have a Free Zone, an oil storage terminal facility, a
container terminal and a bulk terminal. The oil terminal is
already accepting fuel for storage. Oil companies operating
in Djibouti have received notice of the requirement that they
relocate their operations to Doraleh by the end of 2005.
Four of the terminal's six oil storage tanks have been
reserved for exclusive use of the U.S. navy, plus one for use
by Camp Lemonier, under open-tender Defense Energy Support
Center (DESC) contracts with ENOC. However, U.S. naval
vessels have not entered Doraleh port for refueling because
the port has not yet met all U.S. naval requirements for port
security.



8. (C) Djibouti remains committed to becoming eligible for
additional economic development assistance under the
Millennium Challenge Act of 2003. The Act authorizes the
provision of economic assistance to countries that support
internal policies and programs that advance the prospects of
lasting economic growth and poverty reduction. Eligibility
will depend on a nation's ability to demonstrate its
commitment to just and democratic governance, economic
freedom and investment in its people. Djibouti still has
much work to do in these areas and we are working with the
Millennium Challenge Corporation (MCC) and the Government of
Djibouti to provide the data needed for an earnest
assessment. Djibouti has expressed concern that much of the
data used by the MCC is from external organizations, not all
of whom have had direct contact or engagement with Djibouti.



--------------------------


THE HORN OF AFRICA, DJIBOUTI
AND THE U.S.


--------------------------





9. (C) President Guelleh met with U.S. Secretary of State
Rice in May, 2005 in Washington. Guelleh and Rice discussed
the continued cooperation and close U.S.-Djiboutian
partnership in the Global War on Terror, the situation in
Sudan, political progress in Djibouti, and the border dispute
between Ethiopia and Eritrea. At the end of the meeting,
Guelleh expressed frustration at the lack of Development
Assistance (DA) funding for Djibouti and expressed hope that
the U.S. would place Djibouti on the list for DA from USAID.
Secretary Rice promised that she would look into the issue

SIPDIS
further. Some limited amounts of DA were allocated to
Djibouti in the interim, but there is no current plan to
augment those levels on a continuing basis.



10. (C) President Guelleh is also urging the international
community to provide assistance and support to the Somali
reconciliation process. Djibouti has followed the African
Union and other nations, including the U.S., in embracing a
unified Somalia as policy. Nevertheless, Guelleh agreed to
host a Somaliland Interests Office in Djibouti and Somaliland
continues to press the U.S. and other nations for political
recognition. Most recently, Somaliland Foreign Minister Edna
Ismail invited CJTF-HOA to establish civil affairs operations
in Somaliland. This has not occurred and has not been
endorsed to date at U.S. policy levels. U.S. foreign affairs
agencies have begun a process of reexamining core U.S.
strategy for counter-terrorism, political and economic
engagement in Somalia and Somaliland, and our long-term
policy with respect to both.



11. (C) Djibouti is keen to avoid a renewed Eritrea-Ethiopia
conflict and sees such a conflict as having a detrimental
impact on the progress of Djibouti's economy and development.
The vital port supply line between Ethiopia and Djibouti
could be severed, or negatively impacted, as a result of
conflict and Djibouti would also face the unwanted burden of
refugees from both states. Moreover, the implications of
such conflict for the overall stability of Djibouti and the
rest of the Horn cannot be overlooked.



--------------------------


Strong U.S.-Djibouti Military and
Anti-terrorism Cooperation


--------------------------





12. (C) The attitude of the Government of Djibouti and the
general population continues to be favorably disposed towards
the United States. U.S.- Djibouti military and
anti-terrorism cooperation remain strong and Djibouti is
supporting our ongoing efforts at terrorist interdiction.
Training programs under the East Africa Counter-terrorism
Initiative (EACTI) have taken place with law enforcement,
military and intelligence personnel. Djibouti is less than
satisfied, however, with the pace of delivery of equipment
promised or pledged under FMF. General Fathi Ahmed Hussein,
Commander of the Djiboutian Armed Forces, has raised this
concern several times with Ambassador, with the U.S. Liaison
Office (USLO) Chief, and with the Commander of CENTCOM. The
issue was raised again with Ambassador in September 2005.
General Fathi sees the continued slow pace of delivery and
the delay in planned construction of the Obock naval base as
directly impacting his nation's ability to be an effective
partner with the U.S. in the global war on terrorism.



13. (C) Since September, 2004, the U.S., under Defense
Department auspices, has been in negotiations with Djbiouti
on renewal of the U.S. military's lease agreement for Camp
Lemonier. The lease, which officially expired in August,
2004, is temporarily extended in the interim. Lead U.S.
negotiator Theresa Whelan, Deputy Assistant Secretary of
Defense for Africa, has provided Ambassador Robleh Olhaye,
Djibouti's lead negotiator, with a draft agreement. Accord
on certain details remain to be worked out, but it is
expected that an agreement will be signed in Washington the
week following your visit here. Current base lease
negotiations are expected to lead to an increase in the
military's annual payment for use of Djibouti's land and
facilities to continue its presence at Camp Lemonier. For
his part, President Guelleh reiterated in a letter to
President Bush in June, 2005, Djibouti's full support for the
global war on terrorism and for the global efforts of the
U.S. to spread peace, freedom and democracy in the world.



--------------------------


CONCERNS ABOUT THE
MIDDLE EAST


--------------------------





14. (C) President Guelleh has not been very vocal publicly in
either supporting or condemning the U.S.-led campaign in
Afghanistan or in Iraq, perhaps out of deference to his
country's hosting of the U.S. military. However, he did
embrace December, 2005 parliamentary elections in Iraq. His
Foreign Ministry issued a statement congratulating Iraq on
the elections and expressing the hope the elections will lead
to formation and putting into place a new Iraqi government.



15. (C) By contrast, Guelleh has been consistently vocal
about his deep disappointment with a lack of progress in
ending the conflict between Israelis and Palestinians. He
has specifically criticized Israel's separation wall, which
he stated "makes an already explosive situation worse and
creates irreversible facts on the ground." Following
Israel's formal withdrawal from the Gaza Strip, Guelleh made
note of the departure of the Israelis in a public speech at
the end of Ramadan on November 3, 2005 and attributed the
departure to "the heroic struggle of the Palestinian people."

RAGSDALE