FRENCH ECONOMIC COUNSELOR ADDRESSES COTE

C O N F I D E N T I A L ABIDJAN 001253 SIPDIS SIPDIS TREASURY FOR DAN PETERS TUNIS FOR AFDB USED E.O. 12958: DECL: 11/09/2016 TAGS: EFIN ECON IBRD IV PREL SUBJECT: FRENCH ECONOMIC COUNSELOR ADDRESSES COTE D'IVOIRE'S DEBT TO WORLD BANK REF: ABIDJAN 1099 Classified By: DepPolEconChief EMassinga, Reasons 1.4 (b,d) ¶1. (SBU) Econ Chief met with French Economic and Commercial Counselor Jean Dolle at the French Embassy on November 8. Dolle began by discussing French economic interests in Cote d'Ivoire, which, despite the political crisis and its resultant effects on the economy, remain strong. Economic activity generated by French companies and their subsidiaries constitute, according to statistics provided by Dolle, 30% of Cote d'Ivoire's GDP, and these companies pay over 50% of all business taxes. Dolle said that Cote d'Ivoire and France would likely maintain close economic links, and that French companies, despite having to "do what they have to do" to remain profitable in the Ivorian environment, provide legal structures and norms to the Ivorian economy in a way that Lebanese business enterprises (which have grown in importance since the events of November 2004),for example, do not. ¶2. (C) In discussing the question of Cote d'Ivoire's arrears to the World Bank, Dolle clearly indicated that France is anxious to see reengagement with the IFIs and was accordingly somewhat upbeat on Abidjan's progress on the three-pronged conditionality required. Aside from movement on the peace and security front (where Dolle said things were moving in the right direction until August),Dolle said Cote d'Ivoire made some progress reducing the "opacity" in both oil/gas and cocoa accounts through the creation of governmental committees designed to oversee the flow of funds. Pressed, Dolle conceded that whether these committees are actually effective performing their tasks is open to question. ¶3. (C) Turning to the arrears, the final prong in IFI's conditionality formula, Doll was initially optimistic about the government'sprogress, touting its bond floatation in May andJune. Pressed, he acknowledged that the funds raied are not sufficient to repay the arrears, whichcontinue to mount, and that increasingly the chaces that the Ivorian government will actually pa the debt is remote. In discussing alternatives Dolle freely stated that Paris is "flexible" onthe question of partial payments, willing to considr either a "down payment" or accepting what has een raised so far and negotiating a solution forthe rest. (Note: Econ Chief reported Washingtonagencies' discomfort with such an approach. End ote) Dolle did indicate doubts as to whether the government would be able to keep itself from eventally spending the money as it did in 2005, despie the fact that it is ostensibly in an escrow acount at the BCEAO. (Note: Econ Chief heard sepaately from a well-placed German diplomat that Berlin would not be well disposed to accepting partil payment of the arrears. However, EU solidarity ould play a decisive role should the question coe before the WB's Board. End Note) ¶4. (C) ddressing the question of the permanent location of the African Development Bank, Dolle said Paris spports the eventual return to Abidjan, and was uaware of any plans or ideas to distribute the HQfunctions to different cities. Hooks