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