U.S. INVESTOR AT WIT'S END IN DOMINICA

UNCLAS BRIDGETOWN 000649

SENSITIVE
SIPDIS

STATE FOR EB/CBA - DENNIS WINSTEAD
STATE ALSO FOR WHA/CAR - JON MITHCELL
COMMERCE FOR ADVOCACY CENTER
SANTO DOMINGO FOR FCS

E.O. 12958: N/A
TAGS: EINV KTDB ETRD PGOV SENV XL
SUBJECT: U.S. INVESTOR AT WIT'S END IN DOMINICA

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SUMMARY
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1. (SBU) AGGPIT Caribbean, L.L.C. (incorporated at 14900
Intracoastal Drive, New Orleans, LA 70129),a startup quarry
investment into Dominica, is facing difficulties in obtaining the
final permits needed to start operations and has requested U.S.
government assistance. This US $1 million investment is one of the
largest new investments into Dominica, and could provide badly
needed jobs and diversified exports to this small island nation,
while improving the current health, safety, and environmental
protection standards currently employed by existing producers.
Aggpit believes the government's foot dragging may be partly a
result of well-intentioned but poorly informed environmentalists,
but also partly a blackballing effort by French quarry operators
with existing operations. We have helped the government produce
model legislation for the mining sector, and are working with Aggpit
and the Dominican government to try to resolve the problem, but
after eight months of waiting, senior management at Aggpit is close
to pulling the plug on the investment. End Summary

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GOVT, CIVIL SOCIETY SLOW-ROLL U.S. INVESTMENT
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2. (SBU) When Aggpit's local director, Amcit Sam Holland, first
approached the Government of Dominica regarding opening a quarry in
Dominica in Spring of 2007, he was warmly welcomed and encouraged to
invest in Dominica by the Prime Minister and senior government
officials. His corporation has now invested almost US $1 million
and has acquired the land, hired staff, and obtained the license to
buy and develop the site. However, they still need a permit to
begin operations.


3. (U) The permit has been held up for the last eight months.
Government ministers have told Holland that they want to wait until
Parliament passes an updated quarry and mining act. USAID, through
its COTS program, has provided some US $40,000 to draft and prepare
a model law. That draft has been completed and is awaiting final
approval by the parliament.


4. (U) The government has been under pressure from some
environmental groups to delay granting any new licenses until the
proper legislation has been approved. Local environmentalists have
been active on similar issues in the past, most recently getting the
government to reverse a decision to build a Venezuelan-backed oil
refinery on the west coast of the island. Environmentalists believe
any extractive or heavy industrial investments into the country
could detract from Dominica's efforts to become an environmental
tourism leader in the Caribbean (Dominica markets itself as "the
nature island.") These groups also complain that existing quarries
have been allowed to develop without proper oversight or regulation,
resulting in visible scarring of the landscape and an increase in
aerial pollutants on the island.

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AN "UNSEEN HAND"?
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5. (SBU) Perhaps more problematically, Holland believes existing
local quarry businesses, many of whom are French owned joint
ventures, have been putting pressure on the government to delay
granting a license to Sam's company, in hopes of driving him out of
business. He notes, too, that local companies may be attempting to
stifle passage of the new Mining Law, which would create model
regulatory standards for the industry - and many local companies
would not make the grade under the new standards. Holland has
assured us that Aggpit Corporation is committed to the highest
environmental standards in the industry, and that his corporation is
willing to follow any updated changes to the law. Aggpit's
investors, meanwhile, are threatening to pull out of the project
altogether and leave Dominica if the permit is not issued soon. The
board of directors will be in Dominica the week of November 3rd to
make a final decision whether to continue with the project or cancel
the investment.

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COMMENT
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6. (SBU) This case illustrates some of the pitfalls facing foreign
investors in the Eastern Caribbean, where entrenched local interests
often can prevent foreign competitors from entering the market
through informal veto power over applications and permits. This
investment, and the new regulatory regulation we helped Dominica
prepare, would both be good for that country, helping it to
diversify exports, create jobs, and improve environmental and health
and safety standards that some less scrupulous foreign investors are
currently skirting. The Ambassador will call Prime Minister Skerrit
to encourage Dominica to pass the pending legislation, issue
Aggpit's permit, and get this investment back on track.

OURISMAN