CHAD: POSITIVE DEVELOPMENTS, MIXED SIGNALS FROM GOC

UNCLAS NDJAMENA 000109

SIPDIS

SIPDIS

LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA,
ENERGY FOR GPERSON AND CGAY

E.O. 12958: N/A
TAGS: CD ECON EFIN ENRG EPET PGOV
SUBJECT: CHAD: POSITIVE DEVELOPMENTS, MIXED SIGNALS FROM GOC

REF: NDJAMENA 1875 AND PREVIOUS


1. (SBU) SUMMARY: While signs are emerging of a resumption
of dialogue between the World Bank and the Government of Chad
(GOC),the National Assembly's passage of a resolution highly
critical of the World Bank reveals significant obstacles
still remain between the two players. On a positive note,
the GOC signed the terms of reference for the Department of
Treasury-funded Technical Advisor to the College, and
President Deby has indicated that the College will play a
role in the management of funds from the Fund for Future
Generations. END SUMMARY.

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POSITIVE DEVELOPMENTS IN BANK-GOC NEGOTIATIONS
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2. (SBU) Following a week of actions that appeared to signal
a deterioration of relations, GOC and World Bank officials
now appear to be headed on a path toward resuming dialogue.
Officials from the GOC and Consortium agree that the visit by
World Bank Executive Director for Africa, Paolo Gomez, to
Chad on January 24, which followed President Wolfowitz's
January 20th letter, demonstrates an attempt by the Bank to
re-build the good will seemingly lost after weeks of punches
and counter-punches. For his part, Gomez announced to the
Chadian press following his meeting with President Deby that
there was never a rupture between the World Bank. He
affirmed that Chad's cordiality and a willingness to
compromise still existed, and that he would share information
from his meeting to begin the organization of a World Bank
"fact-finding" mission aimed at promoting furter dialogue
and an eventual resolution. In whatis presumably a
government-crafted effort to save face, the pro-government
newspaper "Le Progres" has described the most recent turn of
events as the World Bank backing down in the confrontation.


3. (SBU) Indications are also emerging of a possible meeting
between President Deby and President Wolfowitz. Minister of
Plan Mahamat Hassan told the Ambassador on January 23 that
Bank officials have suggested a high-level Chadian delegation
visit Washington. Hassan noted that the GOC has stated their
interest in seeing a World Bank mission visit Chad. Hassan
did note that the possibility of a middle point, such as
Paris, as a possible location of a meeting with the
respective presidents.


4. (SBU) Exxon-Mobil also appears to have convinced the
World Bank to provide a waiver for depositing January's
royalties into the Citibank escrow account (see reftels).
According to Esso Public Affairs Advisor Miles Shaw in a
meeting with E/C Officer and visiting Treasury Technical
Advisor Ken Torp on January 24, Exxon-Mobil's meetings during
the previous week with the World Bank in Washington were
important in convincing the Bank to allow the waiver and,
hence, additional time before the next payment of royalties
was due to be deposited in the escrow account. Shaw added
that while the Consortium was not obligated to inform the
Government when or if the waiver comes from the Bank, they
planned to notify the GOC. For its part, the Ministry of
Petroleum, according to Shaw, was willing to accept the Bank
waiving of the January royalties for the time being.

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GOVERNMENT STILL ON THE OFFENSIVE
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5. (SBU) Coinciding with these positive overtures, however,
is the continued bellicose public posture by the Government.
On January 24, preceding the passage of a resolution by the
National Assembly which was extremely critical of the World
Bank's actions, President Deby addressed the deputies of the
Parliament to re-affirm the Government's resolve against the
World Bank's actions. Saying that "we (the Government) do
not admit that we have done anything wrong," Deby contended
that no institution would cause Chad to deviate from its
objective of poverty reduction. The President announced that
revenues obtained from the elimination of the Fund for Future
Generations would be allocated to conform to the regulations
of the Oil Revenue Management Law, which, he contended, was

"to contribute to the reduction of poverty." He specifically
stated that the Revenue Management College would maintain its
prerogative of overseeing the allocation of oil revenues.


6. (SBU) Minister of Plan Hassan echoed these same
sentiments during his January 24 meeting with the Ambassador,
stating that the credit agreement between the World Bank and
the Government (which indicated that the GOC could not take
actions that have a substantial negative effect on the oil
revenue management process) was not being violated. After
all, the spirit of the law was still maintained, he claimed,
and measures allowing for the inclusion of revenues from new
oil fields into the existing framework and structural reform
of the Revenue Management College only strengthened the
revenue management process.

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TREASURY ADVISOR ACCEPTED, NOW THE HARD PART...
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7. (SBU) Concerning the position of the Resident Treasury
Advisor Linda Gregory, Ambassador Wall was able to finalize a
terms of reference for the Advisor's position with Minister
Hassan on January 23. The Advisor will begin her assignment
on January 30. President of the Revenue Management College,
Abdoulaye Lamana, expressed his thanks to the Embassy to Torp
and E/C Officer on January 24 for resolving the dispute with
the Ministry of Plan over the terms of the reference, and
noted that the College looked forward to restarting its
engagement with U.S. Treasury.


8. (SBU) At the same time, Lamana noted that Gregory will be
starting her position amid a very tense background. He
stated that the World Bank's letter and visit by World Bank
Executive Director Gomez were positive developments.
However, he believed that a resolution needed to be achieved
quickly, as the Bank's measures would eventually have serious
ramifications for the College. As Lamana explained, the
freezing of the escrow account meant that development
projects that were approved and programmed based on projected
oil revenues would be terminated if the escrow account
remained frozen. The College itself lacked sufficient
resources to satisfy operational costs, as the 2006 Budget
was still not prepared, and the College's operational
expenses were paid for from incoming oil revenues.

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COMMENT
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9. (SBU) Despite the highly critical National Assembly
resolution, recent overtures are a step in the right
direction. While we are pleased to see the Treasury
Advisor's position resolved, we still face the difficult task
of ascertaining the efficacy of the College in an environment
where oil revenues are blocked, and tensions are still high
between the Bank and the GOC.
WALL