UNCLAS SECTION 01 OF 02 DAKAR 001276

SIPDIS

SIPDIS
SENSITIVE

STATE FOR AF/EPS, AF/W AND EBB/IFD/ODF - VBELON

E.O.12958: N/A
TAGS: EAID KMCA PREL ECON SG
SUBJECT: MCC TELLS GOS IT HAS ENDED SUPPORT OF ORIGINAL COMPACT
PROPOSALS; OTHER PROJECTS ARE POSSIBLE



1. (U) Possible action request for the Department, Johannesburg and
Cape Town in para 7.


2. (SBU) SUMMARY: The MCC has informed President Wade and Prime
Minister Macky Sall that it will not continue supporting Senegal's
MCC Compact proposal, the Diamniadio Platform. The MCC remains keen
to work with Senegal on a compact to support the construction of the
Dakar-Diamniadio toll road. The GOS' private deal with Dubai-based
Jafza International to develop a Special Economic Zone, with many of
the same benefits as the Platform, has rendered the MCC project
redundant since there is not enough economic demand for both
projects. We do not yet have President Wade's reaction, but Prime
Minister Sall told MCC Vice President John Hewko and the Ambassador
that the decision was "understandable." We requested a response
from the GOS within a week so that the MCC Compact does not become a
major issue for a planned June 25-26 FLOTUS visit to Dakar. Mr.
Hewko offered to be available to President Wade to discuss this
development further during the World Economic Forum June 13-15 in
Cape Town, South Africa. The MCC's decision could impact Senegal's
anticipated government reshuffle, and also Karim Wade, the dealmaker
for the Jafza project. END SUMMARY.

THE BAD NEWS . . .
--------------

3. (SBU) On June 11, MCC Vice President for Operations John Hewko
told Senegalese Prime Minister Macky Sall that Senegal's Compact
proposal, the construction of a major industrial platform at
Diamniadio, will no longer be considered for MCC funding since
Senegal has found a private partner to invest in a similar project.
Concurrently, the Embassy delivered a letter to President Wade from
MCC CEO John Danilovich providing the MCC's decision. Mr. Hewko
confirmed that the MCC still hopes to sign a compact with Senegal in
FY08, and is committed to proceeding with due diligence for joining
other donors in funding the Dakar-Diamnidio toll road, whose
construction has already begun. In explaining why the MCC has ended

its work on the Diamniadio Platform proposal, Hewko (who was
accompanied by the Ambassador, MCC Managing Director for Africa
Jonathan Bloom, and Econ Counselor) made the following points:

-- The MCC has learned that the GOS is working with Dubai-based
Jafza International to build a Special Economic Zone (SEZ) in the
area of the Platform and the planned new airport at Diass;

-- Senegal is to be congratulated for attracting a private investor
for a project of this magnitude;

-- It is clear that there is not enough demand for two Special
Economic Zones in Senegal, and it would not make sense to build
Diamniadio and the SEZ;

-- It is preferable to have a project of this kind financed by the
private sector;

-- Therefore, the MCC has ended its work in pursuit of this
Diamniadio Platform;

-- This decision was made after extensive review, consultation, and
consensus with senior officials at the State Department and the
NSC;

-- This decision does not reflect a lack of diligence or competence
on the part of Senegal's implementing agency for the Platform, the
AMPMD.


4. (SBU) Hewko also noted that in addition to pursuing the toll
road, the MCC would be willing to consider other proposals from
Senegal, but that in order to move quickly to completion of an
initial Compact, it might be best to just focus on that project and
consider other proposals in the future after the completion of the
toll road.

. . . TAKEN WELL - SO FAR
--------------

5. (SBU) Prime Minister Sall appeared not to be surprised by the
MCC's decision, and it is likely that the Director General of AMPMD,
Sogue Diarisso, had highlighted for the Prime Minister that there
was not enough economic demand for both industrial platforms, and
that the two projects could not be merged due to the MCC's
requirements for transparency and open competition for contracts.
Sall stated that he "understood" the MCC's decision, and was pleased
that the MCC could join the World Bank, the French Development
Agency (AFD), the Islamic Development Bank, and a too-be-determined

DAKAR 00001276 002 OF 002


private partner in the construction of the much-needed toll road.
In explaining why the Government had concurrently pursued both
industrial platform projects, Sall said the GOS was allowing both to
move forward on their own as a type of "competition" to see which
one would best serve the country.


6. (SBU) As of this writing, we have not received any feedback on
the Danilovich letter to President Wade. Sall undertook to assure
that Danilovich's letter was received by President Wade, who was
still in Europe following the G-8 Summit, and who was planning to
head next to the World Economic Forum, June 13-15, in Cape Town,
South Africa.


7. (SBU) Possible action for the Department, Pretoria and Cape
Town: Mr. Hewko noted that he will also be attending the World
Economic Forum and offered to make himself available for a meeting
with President Wade if requested to clarify the MCC decision. MCC,
via the Department, may request a note taker and other assistance
organizing such a meeting.

NEXT STEPS
--------------

8. (SBU) Hewko requested an initial response to the MCC decision on
the platform and the interest in pursuing a Compact on the toll road
within one week. The quick response is important to avoid having
Senegal's MCC program become an overriding issue during a planned
June 25-26 FLOTUS visit to Dakar. A quick response would also
permit the MCC to go ahead with a planned mid-July mission to
Senegal to begin due diligence work on the toll road proposal. In
the meeting on the PM's side was Aminata Niane, the Director General
of Senegal's investment promotion agency (APIX), which is also the
overall project manager for the toll road.


9. (SBU) The MCC's Jonathan Bloom also noted the MCC has produced a
tremendous quantity of detailed analysis of the issues that could
affect the populations in the project area, and all of this analysis
is the property of the Government. Bloom recommended to the PM and
his team, including Diarisso and Niane, that the Government or Jafza
make use of this valuable resource in the development of its Special
Economic Zone.

COMMENT
--------------

10. (SBU) The timing of the delivery for the MCC's message was not
ideal because President Wade is planning a major cabinet shuffle in
the coming days or weeks. PM Sall will most likely be replaced.
The President's reaction may be predicated, in part, on where he
believes the Diamniadio Platform fits into his economic development
plans for the coming years. One person who will perhaps be impacted
by the MCC decision is Wade's son, Karim Wade, who was by all
accounts the key player in securing the Jafza deal. If that deal
included promises of MCC resources or infrastructure development,
Karim could have some explaining to do.


11. (SBU) It will also be instructive to learn what happens to the
AMPMD and Diarisso. After many false starts, AMPMD in recent months
has become a very effective partner to the MCC, and is now arguably
Senegal's most advanced organization for managing major
infrastructure projects. Mr. Hewko highlighted to the Prime
Minister the MCC's high regard for Diarisso and his staff, and it
would be a loss for Senegal if it did not take full advantage of
this organizational resource in pursuing other major projects. END
COMMENT.


12. (SBU) Visit Embassy Dakar's SIPRNET Web site at
http://www.state.sgov.gov/p/af/dakar.

Jacobs