UN ENVOY SACHS IN DJIBOUTI FOR MILLENNIUM PROJECT REPORT

UNCLAS SECTION 01 OF 02 DJIBOUTI 000726

SIPDIS

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STATE FOR AF AND AF/E
STATE ALSO PASS USAID
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E.O. 12958: N/A
TAGS: PREL EAID SOCI DJ UN
SUBJECT: UN ENVOY SACHS IN DJIBOUTI FOR MILLENNIUM PROJECT REPORT
LAUNCH


1. (SBU) Summary: In a visit to Djibouti July 27 on the occasion of
the launch of the second national report on the objectives of the
Millennium Development Project, UN Special Envoy and Millennium
Development Project Director Dr. Jeffrey Sachs spoke on the theme
"towards an entrepot economy." In his well-accepted speech before a
Palais du Peuple audience, including heads of missions as well as
Djibouti's cabinet, Sachs outlined his view of the elements of a
successful Djiboutian economy, described what was needed to bridge the
development gap in Djibouti and summarized the Millennium Project's
strategy for development implementation by 2015. Ambassador pulled
aside Sachs after his speech to advise him of the U.S. development
program in Djibouti and noted U.S. naval plans to lease fuel storage
space at the key Doraleh port project due to come on line in August.
End summary.


2. (U) UN Special Envoy and Millennium Project Development Director Dr.
Jeffrey Sachs visited Djibouti July 27 on the occasion of the launch of
the second national report on the objectives of the Millennium
Development Project. The highlight of his visit was a special
convocation in the Palais du Peuple in which Sachs outlined to an
invited audience of Cabinet officials, Chiefs of Mission, NGOs and
development experts his description of Djibouti's needs to reach the
Millennium Project's target development date of 2015. Sachs began his
remarks by acknowledging that Djibouti faces real challenges in
achieving the goals of the Millennium Project. It is a nation, he
said, of contrast between urgent needs today, a difficult situation
economically, and tremendous potential for the future. Yet, he said he
saw significant efforts by Djibouti's government to make progress
towards the millennium target year of 2015.

ELEMENTS OF A SUCCESSFUL DJIBOUTIAN ECONOMY


3. (U) Sachs laid out characteristics he expected to see in a
successful Djiboutian economy in 2015. They included a dynamic
entrepot economy involved in trade and finance; an active port handling
millions of containers annually; and shipping services being provided
including repair, refueling, and insurance. He said he also saw
Djibouti as a future information hub with several fiber optics and a
functioning telecommunications system. There would be a flow of
financial information through a banking sector. Business headquarters
would be in place for the Horn of Africa and a tourist industry would
be based in Djibouti managing a tourist trade from Ethiopia into the
Arabian Peninsula. Knowing where one needs to go, he declared, is as
important as getting there.

BRIDGING THE DEVELOPMENT GAP


4. (U) According to Sachs, Djibouti should move swiftly to accomplish
the following five elements, if it wishes to bridge its development gap

---Investment in Physical Infrastructure: Djibouti should focus on an
effective set of port facilities, a modern city, an adequate power
supply, roads, and water for industrial use.

---Investment in Human Capital: Djibouti needs to lead a modern
entrepot system. Human capital is built on good health, good
education, and good job skills development. All three, he said, are
deficient in Djibouti. In education, primary education is spoken of as
a goal, but it will not be sufficient for the economy the country
wants. Djibouti will need to focus on higher education. Government
willingness to devote half its budget to education is encouraging
because it is exactly the kind of commitment that is needed.

---Rural Development: Djibouti's economy will become more urban but
the transition has to be made with rural and urban populations.

---Full advantage of the Ethiopian relationship : Current
Ethiopian-Djiboutian relations are strategic for both nations.
Ethiopia is land-locked and Djibouti is likely to remain the primary
port for Ethiopia if it is sufficiently dynamic. Every entrepot
economy benefits from being on the major trading route. Djibouti will,
essentially, provide much to an economy of 70 million. He noted that
Ethiopia is rising from its slumber and can advance if it pursues its
politics and policies well. Djibouti can also benefit from that rise
through port services.

---Creative use of all national and natural resources: Sachs used the
example of Iceland to create an analogy with Djibouti. He said Iceland
is now a nation with an average per capita annual income of USD 35,000.
It became so by developing its fishing potential with a new
technology. It became a refueling stop for airplanes transiting the
Atlantic from the U.S. It developed both its tourism potential and
its geothermal potential. The similarities to Djibouti are many, he
said, and he recommended that Djibouti receive experts from Iceland on
geothermal energy for further discussion. He also recommended use of
other Iceland experts to advise the Djiboutian government on economic
development.

STRATEGY FOR IMPLEMENTATION


5. (U) Sachs explained the Millennium Project's strategy for
implementation of its objectives. First, he said, the strategy
recommends that each country assess its investment needs in order to
reach 2015 development. This would mean assessing what needs to be put
into the port, schools, clinics, desalination, electricity generation
etc.


6. (U) Second, methods of financing need to be examined. How does one
pay for what one needs? Lots of creativity will be needed and ideas
must include national efforts from communities all the way through to
the national budget process. There must also be assistance from the
international community, which for countries such as Djibouti is a
necessity.


7. (U) Third, there must be relief from debt service of some
international creditors. It is unrealistic to expect forward movement
without it.


8. (U) Fourth, there must be private financing on a significant scale.
Sachs cited the example of private non-profit financing. Perhaps, he
said, other institutions of higher learning can be persuaded to invest
in higher education here, such as a university in India. The French
Business School might open a campus. In addition, private corporations
and their foundations, such as CISCO or MICROSOFT, might be able to
assist.


9. (U) Fifth, Sachs recommended a governance and implementation
strategy which would have several dimensions. These dimensions would
be making sure the whole of society is involved, including women
playing a leadership role; making sure there is rural and urban
participation in government with opportunities for advancement; full
public participation in decision making; and macroeconomic stability
and rule of law with respect to contracts. In addition, there must be
vision and leadership as a way to help society see that a way out of
poverty is achievable and that all parts of society can contribute.


10. (U) Sachs concluded by saying that he was optimistic for Djibouti,
based on his conversations with its government. He told his audience
that the Millennium Project was "ready to work with Djibouti ."


11. (SBU) Comment: Ambassador was able to pull Sachs aside just
after his speech, and just before his meeting with President Guelleh,
to give a quick brief on the U.S. development program in Djibouti
(focused primarily on health, education and food security). Sachs
asked if there were significant U.S. involvement in and support of the
Doraleh port project. Ambassador told him that the U.S. Navy will be a
principal customer for Doraleh services when the port comes on line in
August, having leased several tanks for storage of fuel for naval
vessels. Although the Ambassador requested that Sachs arrange a
meeting with her to discuss our Djibouti assistance program more fully,
the intensity of his U.N.-sponsored Djibouti program did not permit
this to occur. End comment.