SUBJECT: COMOROS POLITICAL FIGHT PUTS IMF DEAL IN JEOPARDY

UNCLAS ANTANANARIVO 000778

SENSITIVE
SIPDIS

DEPT FOR AF/FO AND AF/E
DEPT FOR EB

E.O. 12958: N/A
TAGS: ECON, EFIN, PGOV, CN
SUBJECT:
SUBJECT: Comoros Political Fight Puts IMF Deal In Jeopardy

1. (SBU) SUMMARY: The Union of the Comoros (GOC) has taken steps to
obtain approval December 15 for emergency IMF assistance, but
opposition leaders of Grande Comore and Moheli are not willing to
cooperate for the good of the country. END SUMMARY.

2. (SBU) Foreign Minister Jaffar told the DCM November 20 the GOC
had taken several steps to qualify for IMF Emergency Post Conflict
Assistance (EPCA). On a recent tour of the Gulf, they secured
pledges from Kuwait and Saudi Arabia, as well as interest from
others, to raise the USD 20 million required to pay down domestic
arrears. Union salaries and new hires have been frozen. In the
near future, the number of Ministries is to be reduced from 15 to
eight. All of this, FM Jaffar concluded, to demonstrate to the IMF
that the Comoros is serious about qualifying for the EPCA and
eventually getting into a Program. According to FM Jaffar, the IMF
Board will meet to discuss the Comoros December 15 - he asked the
United States vote in favor of the EPCA.

3. The island government of Anjouan, led by pro-Sambi "president"
Toybou, has followed suit, freezing spending. In contrast, Grande
Comore island "president" Abdouwahabi reshuffled his cabinet and
expanded the number of ministers. President Sambi invited all three
island executives to Moroni for talks November 19; in particular to
talk about steps to qualify for the EPCA. Both Grande Comore and
Moheli refused.

4. Further complicating matters, on top of recent talks of
referendum (REFTEL),President Sambi on November 8 replaced the
Director Generals of several state-owned enterprises and agencies in
Moheli (hospital, utility, petroleum, and customs). He also removed
the Gendarmes serving as Moheli island "president" Ali Said's body
guards and replaced them with a Union presidency security
detachment. President Sambi's bold move alienated not only Ali
Said, but also his opposition allies the Grande Comore island
president and National Assembly President. By unilaterally
replacing these directors, Sambi asserted Union authority over state
enterprises. This has long been a key point of contention in the
"competencies" (federal authorities) issue.

5. COMMENT: The GOC is virtually bankrupt, eight months behind on
salaries and barely able to pay fuel imports (and that only with
help from Arab friends). Debt payments are a tremendous budget
burden, thus the GOC's efforts to meet IMF requirements for the
EPCA. The GOC tells us the six-month EPCA would lead to a Poverty
Reduction and Growth Facility under which, with good performance,
the Comoros could finally qualify for Heavily Indebted Poor
Countries (HIPC) and Multilateral Debt Relief Initiative (MDRI) debt
forgiveness. Other donors, notably France and UNDP, are concerned
the GOC may not qualify for the EPCA, thus jeopardizing all
international development efforts in the Comoros. END COMMENT.

MARQUARDT