RESOURCE NATIONALISM - KENYA

UNCLAS NAIROBI 004279

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR EEB/ESC/IEC/EPC - GRIFFIN
DEPT ALSO FOR AF/E, AF/EPS

E.O. 12958: N/A
TAGS: ECON ENGR EPET EINV KE
SUBJECT: RESOURCE NATIONALISM - KENYA

REF: A. STATE 150999, B. Nairobi 2144

Sensitive-but-unclassified. Not for release outside USG channels.


1. (SBU) Summary: "Resource nationalism" is not an issue in Kenya,
a country whose only commercially viable natural resources at the
moment are its landscapes and abundant wildlife. End summary.


2. In response to ref A queries:

-- Q: Report and describe examples of actions or policies that are
motivated by resource nationalism.

A: None. Kenya is believed to have onshore and offshore
hydrocarbon deposits, but none have been discovered in commercially
viable quantities to date (please see ref B). A Canadian company
was recently given rights to mine titanium in coastal Kenya. In
general, Kenya is encouraging foreign participation in the
extractive industries. Foreign companies are free to bid on
exploration blocks for oil and gas, for example. If they are the
sole bidders, they can achieve exclusive rights to explore the block
after entering into a production sharing contract with the
government in the event of a viable discovery. There are no equity
restrictions on companies that deal with natural resources in
Kenya.

-- Q: Does there appear to be an increasing number of such actions?


A: No.

-- Q: What group, company or set of individuals appears to be the
major beneficiary of resource nationalist policies in actions?

A: None. Note: Although Kenya has not had a major oil or gas
discovery, it has already committed itself to participating in the
Extractive Industries Transparency Initiative in the event of a
major discovery.

-- Q: Does Post have any recommendations about possible USG actions
to address growing resource nationalism?

A: Given the responses above, no USG actions are necessary in Kenya
on this issue at this time and likely for the foreseeable future.
Ranneberger