1. (C) During Ambassador's 6/22 meeting with Djibouti's
Minister of Foreign Affairs, Mahmoud Ali Yousuf, on several
matters, Ambassador expressed her regret that the Minister
had only just arrived from a visit to Qatar and Tunis and
had been unable to see General Abizaid during the latter's
6/19-6/20 visit to Djibouti. Yousuf said he had been
briefed on the General's meetings. He was aware that
President Guelleh had sent a letter to President Bush on
base lease renewal and wanted to say that the letter was at
the behest of Ambassador Olhaye and was based on a two-part
rationale.



2. (C) First, Yousuf explained, Djibouti is making progress
in structural reforms designed to improve its long-term
economic development. It will soon host a meeting of
donors to foster planning for a development assistance
program that would cover the next five years. Already,
there is investment in projects such as Doraleh port and
new plans are focused on energy and water. The money that
Djibouti gets from major Funds, such as the Kuwait and Arab
Funds, for example, will be primarily loans. It would be
difficult for Djibouti to finance projects over the long
haul with loans because of the impossible debt load that
would accrue to the country. Rental of the base at Camp
Lemonier can provide a cash infusion that would help
Djibouti achieve its development goals without taking on
greater debt.



3. (C) Second, he continued, was the ten-year access
agreement already signed with the French military. Under
that agreement, according to Yousuf, France pays about
200,000 Euros annually to support civil-military projects,
an additional 5,000,000 Euros for equipment (similar to
U.S. Foreign Military Financing), and a direct infusion of
about 25,000,000 Euros in cash. This equals 30 million
Euros (about USD 42 million). Other technical assistance,
economic aid in health, education and other fields, plus
French spending on the local economy are "extra," according
to Yousuf. The intent was to have the sum that the U.S.
would pay fall within the proximity of what the French are
already paying. It is, he said, only "a ballpark figure."



4. (C) Comment: Djibouti is indeed a small place. We are
already beginning to receive comments from Djiboutian
military, business, and Ministry of Foreign Affairs
contacts about the sum demanded and the future of the U.S.
military presence at Camp Lemonier. There are those, such
as Abdurahman Boreh (see ref b), who state definitively
that Guelleh's request to President Bush for USD 50 million
was a mistake and that there are long-term benefits of the
U.S. presence that cannot be measured in immediate dollars.
Fear exists that the U.S. military might indeed pull up
stakes. The Minister's unsolicited explanation of the
"rationale" behind the letter may be interpreted as
evidence of this fear. Yousuf also implied that Djibouti
might accept less. We reiterate, though, that it is
President Guelleh who will ultimately decide what Djibouti
will accept. End comment.
RAGSDALE