LIBERIA: INDEPENDENCE DAY TO MARK THE ECONOMIC

UNCLAS SECTION 01 OF 03 MONROVIA 000896

SIPDIS

SIPDIS

DEPARTMENT FOR AF/W AOKEDIJI, AF/EPS CTRIMBLE, EB/ESC
SSAARNIO, INR/AA BGRAVES

E.O. 12958: N/A
TAGS: AID ECON LI PGOV
SUBJECT: LIBERIA: INDEPENDENCE DAY TO MARK THE ECONOMIC
REBIRTH OF GRAND BASSA COUNTY

REF: A. MONROVIA 780

B. MONROVIA 840


1. SUMMARY: In advance of celebrations marking the 160th
anniversary of Liberian Independence on July 26, Emboffs
traveled to Grand Bassa county on July 6-7, visiting the
capital of Buchanan, Liberia's second largest port, and the
Liberian Agricultural Company (LAC),the second largest
rubber plantation in the country and the site of legislative
by election runoff on July 24 (Ref B). Independence Day
celebrations will attract government and diplomatic
dignitaries to Buchanan on July 25-26. In the future, Grand
Bassa county's economy is likely to be dominated by three key
commodities, iron ore, rubber and oil palm, but for the
moment economic activity has not met the expectations of a
growing influx of job seekers. END SUMMARY.

--------------
BACKGROUND
--------------


2. Grand Bassa county is located about 120km southeast of
Monrovia, along the coastline of the Atlantic Ocean. The
county capital, Buchanan, is Liberia's second city. The road
from Monrovia to Buchanan is mostly asphalt but has many
badly damaged sections due to lack of maintenance. It
currently takes about three hours to navigate the heavily
potholed highway. The World Bank has committed funding to
rehabilitate this stretch of highway. Work is scheduled to
begin in October.


3. Prior to the civil war, Grand Bassa county enjoyed a
vibrant economic atmosphere and a bustling harbor, hosting
companies such as the Liberian American Mining Company
(LAMCO),the rubber plantation at LAC, the palm oil
plantation, Liberian Incorporated (LIBINC),and several
logging companies. For much of the Taylor era, Buchanan was
the Oriental Timber Company's (OTC) base of operations.
During the war, the area was first controlled by the National
Patriotic Front of Liberia (NPFL),then by West African
peacekeepers of ECOMOG, and in 2003 by the Movement for
Democracy in Liberia (MODEL). During the latter period,
Buchanan's productive infrastructure was massively looted and
completely destroyed, including the total dismantling of a
$50 million plywood factory in 2004. As a consequence, many
companies vacated the county and the local economy became
largely dormant. According to the Buchanan Port Authority,
the port of Buchanan has received only one large cargo vessel
in the last two years.


4. Independence Day festivities July 25-26 are meant to
highlight the rebirth of Grand Bassa's economy. On July 25,
President Johnson Sirleaf will dedicate several donor-funded
development projects and preside over a ceremonial launch of
the Acelor Mittal Steel project. Activities on July 26
include an award ceremony, a parade, an inspection of new AFL
troops, and a reception for government, diplomatic and
community leaders at the Buchanan fairgrounds. Liberia's
first fireworks show in twenty years will occur in Buchanan
July 26 (and Monrovia on July 28).

--------------
ECONOMY
--------------


5. Grand Bassa's economic revival will likely be driven
initially by three traditional economic engines: iron ore,
rubber and palm oil. The Mittal Steel concession includes a
mining and processing project in Nimba county, with
infrastructure upgrades to port and rail facilities in Grand
Bassa (Ref A). Thus far, Mittal has only introduced minimal
support staff to the region, and most skilled workers are
likely to come from Monrovia. UNMIL Civil Affairs County
Coordinator Lino Sciarra told Emboffs that there has already
been an influx of people to the region hoping for jobs from
the Mittal project, but the number of local jobs will likely
fall significantly short of expectations.


6. LAC has controlled the second largest rubber plantation
concession (approximately 600,000 acres) in Liberia since

1959. At present the company employs about 4,000 people as
employees and subcontractors. The Belgian-owned LAC is
seeking to expand but has encountered resistance from
villagers in the surrounding area. Sciarra said LAC is often
accused of exhibiting a "mini-state" mentality, seeking to

MONROVIA 00000896 002 OF 003


operate beyond government bounds in collusion with local
judges and officials reportedly sponsored by the company.


7. There is potential for economic growth in other sectors as
well, particularly oil palm. LIBINC (commonly known as the
Palm Bay Plantation) is the largest privately owned oil palm
plantation in Liberia, covering 162,000 acres with roughly
48,000 acres planted with palm trees. The plantation had a
modern mill and provided jobs for 3,000 citizens before the
war, but has been looted and abandoned for the last several
years. A British Firm, Equatorial Biofuels Plc, is
reportedly seeking to purchase all or part of the plantation
as part of its MOU with the GOL for oil palm development.


8. Economic development will continue to be constrained by
the dilapidated state of the once thriving port of Buchanan.
Port Operations Chief George Astley told Emboffs that the
last significant cargo vessel left the port almost two years
ago. The commercial wharf is 300 meters long with a depth of
8 meters, but there are no channel markers, navigational
aids, tug service, cargo handling equipment, or fire and
safety equipment. A derelict ship leans across the foot of
the wharf and the previous crane equipment has been
destroyed. Part of Mittal Steel's agreement includes the
renovation of the iron ore key, dredging the entrance channel
and repairing the fuel jetty in Buchanan, but there are
currently no proposals for renovation of the National Port
Authority commercial side of the port.

--------------
SECURITY
--------------


9. The security situation in Grand Bassa remains stable, but
tense, according to UNMIL representatives. Small protests
have occurred in recent months when money flowing to
ex-combatants was slow to arrive. On June 20, 225
ex-combatants rioted in front of the UNDP offices when their
school fees had been delayed three months. Another group of
150 stormed a donor-funded computer training school when they
were not given a set of tools upon graduation. The real
uncertainty, according to UNPOL Chief Andrew Shilelo, will
occur in September when the GOL, rather than the UN, will
become responsible for the payments to these demobilized
groups. There are currently over 1,500 ex-combatants
involved in vocational skills training in Buchanan.


10. LAC is also a focal point for security incidents,
primarily skirmishes between illegal rubber tappers and LAC's
private security arm, the Plantation Protection Department
(PPD),made up of 60 officers, many ex-combatants or ex-AFL,
several of whom reportedly have weapons. A Bangladeshi
battalion is stationed at LAC, and UNPOL helps patrol the
area, but there are only 58 Liberian National Police (LNP)
officers in the whole county, most in the capital Buchanan.
UNMIL has a military strength in the county of roughly 800
troops.


11. Population pressures will continue to challenge
authorities, according to Sciarra. Many people have returned
to the region since the end of the war, with many new
arrivals looking for jobs from the well-publicized Mittal
deal. Sciarra said lodging prices have risen from $10 to $25
a night in the last year, and criminality is increasing.
UNMIL burned a 700kg cache of cocaine in June that had been
recovered from various arrests -- mostly Nigerians -- in the
county over the course of the last few months. As LAC and
Mittal (and possibly oil palm producers) ramp up operations
and wall off their concessions, squatters are likely to seek
redress, and UNMIL is working with the companies and
communities to strike a balance between the security of
private concessions and humanitarian concerns from
displacement.

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


12. The revival of the once active Grand Bassa county will
require not only investment, but good governance as well.
Weak local government coupled with an influx of labor and
large companies without any counterpart for oversight on
issues such as labor and environment, could lead to
instability in the region. In addition, expectations for the
impact of Mittal Steel on the area are exceedingly high, with

MONROVIA 00000896 003 OF 003


many government officials (and even a few donors) expecting
the company to completely renovate the road, rail, and port
infrastructure as public goods. Mittal's footprint will be
large, but the scale of need is much larger.

Booth