PRESIDENT BONGO TWISTS ARMS, ENDS STRIKE

C O N F I D E N T I A L LIBREVILLE 000691

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/29/2016
TAGS: EPET EINV ELAB PGOV GB
SUBJECT: PRESIDENT BONGO TWISTS ARMS, ENDS STRIKE

REF: A. LIBREVILLE 688


B. LIBREVILLE 624

C. LIBREVILLE 337

Classified By: DCM Katherine Dhanani. Reason: 1.4 (d).


1. (C) Summary: The imminence of legislative elections has
contributed to a rash of strikes, since workers expect the
government to act to resolve strikes quickly at election
time. Following a three-day strike by oil workers, President
Bongo instructed Mobil Oil Gabon to grant a wage increase and
pay extra severance to employees bought out in 2005. The
company felt it had little choice but to do as it was told.
This is the kind of incident that contributes to American
companies' perception of Gabon as a hostile business climate.
End summary.


2. (U) Strikes are a traditional part of Gabonese election
seasons, since politicians are more likely to intervene to
get workers back to work when they are concerned about
attracting votes. The current period before Gabon's December
17 legislative election (Ref A) is no exception. Workers for
the post office have been on strike since October 31, and one
teachers union went on strike November 16. Workers in the
petroleum sector carried out a three-day strike November
21-23, demanding higher wages from all oil companies and
resolution of grievances against several specific employers.


3. (SBU) Henri Soudan, General Manager of Mobil Oil Maroc,
currently managing Mobil Oil Gabon until shares are turned
over to Tamoil (Ref B),briefed Emboffs November 28 about
Mobil's experience with the strike. The petroleum workers
union had three grievances against Mobil. The first
concerned employees' desire to receive severance packages
from Mobil before Tamoil took over. Soudan said that
Gabonese law is fairly clear on this, and the union was
forced to give way. A second complaint concerned voluntary
buyouts Mobil carried out for 15 employees during 2005. The
union argued that the buyouts had been improper, and demanded
that Mobil pay fines to supplement the packages employees
voluntarily accepted. The third demand was for a 4.4% salary
increase retroactive to March 2006. In March, distributors
were granted an increase in their margin at the pump. At the
time, Total Gabon shared this with its workers by giving them
all a 4.4% wage increase. Mobil's employees wanted the same
deal.


4. (SBU) Soudan reported that Mobil felt it would be a
dangerous precedent to ignore the voluntary protocols signed
by the company and workers who accepted buyouts, and saw no
basis for the demand. It would also be difficult for Mobil
to adjust salaries at mid-year, he said. Soudan considered
it likely that Tamoil might choose to make a generous gesture
after taking over, but saw no reason for Mobil to do so.


5. (SBU) Soudan said that petroleum companies were invited to
a meeting at the Presidency on November 23 to resolve the
labor disputes. He said he quickly saw how the meeting would
go when workers' demands against Shell-Gabon were raised
first. President Bongo summarily told Shell, which was
offering about $2 million in layoff compensation while its
employees demanded $8 million, that it should pay $4 million.
He told Shell managers they should consider themselves lucky
that employees in Gabon are less militant than their
counterparts in Cameroon and Nigeria, where Shell executives
have been held hostage in labor disputes. Moving on to
Mobil, Bongo said he understood the company had acted
illegally when it laid off workers in 2005, and it should
accept the fines demanded by the union. Soudan initially
explained the company's point of view, but when he saw that
his argument did not go down well, agreed to sit down with
the Ministry of Labor and the union to settle the issue.


6. (SBU) Soudan was relieved that the question of general
salaries was not raised in the meeting, but his relief was
short-lived. On November 24, he received a copy of the
minutes of the meeting, which he was requested to sign. In
the minutes it was stated that President Bongo had determined
that Mobil should provide the 4.4% salary increase demanded
by employees. Soudan told Emboffs he signed the minutes,
recognizing that he had no choice.


7. (C) Comment: Despite the sale of most parastatals, the
Gabonese government continues to play an important role in
the economy. Managing labor disputes is one element of that
role; every strike affecting the public elicits government
mediation. The role, however, extends more generally into
the boardrooms of private corporations, as the Canadian
owners of Air Service learned earlier this year (Ref C).
American companies without extensive African experience take
poorly to such intervention, which contributes to what they
see as a hostile business climate.

WALKLEY