ANTANANARIVO POL/ECON WEEKLY UPDATE

UNCLAS SECTION 01 OF 02 ANTANANARIVO 000615

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/E - MBEYZEROV
PARIS FOR RKANEDA
LONDON FOR PLORD

E.O. 12958: N/A
TAGS: PGOV PREL ECON MA
SUBJECT: ANTANANARIVO POL/ECON WEEKLY UPDATE

REF: A) 09 ANTANANARIVO 604, B) 09 ANTANANARIVO 607, C) 09
ANTANANARIVO 613


1. (SBU) SUMMARY: This is U.S. Embassy Antananarivo's Weekly Update
for the week of August 24 to 28, an unclassified review of major
political, economic, and commercial events and information from the
U.S. Mission to Madagascar and the Comoros. END SUMMARY.

POLITICS
--------------


2. (SBU) POLITICIANS REMAIN DEADLOCKED: Three days of talks among
Madagascar's Big Four political leaders ended with no agreement on
the key position of transition president. Current President of the
High Transitional Authority (HAT) Andry Rajoelina, installed after a
military coup in March 2009, insisted that he and his Prime
Minister, Roindefo Monja, keep their jobs. Ousted President Marc
Ravalomanana was unwilling to "legitimize a coup", and this round of
talks was formally ended on the morning of August 28. Rajoelina has
returned to Madagascar, requesting time (until September 4) to
"consult" with other political parties about breaking up the
Rajoelina/Monja tandem. Septel to follow with more information and
analysis.


3. (SBU) POLITICS ON HOLD: Due to the overlap with the Maputo II
negotiations, the HAT's unilateral National Conference, scheduled
for August 24-28, was postponed. However, Blanche Nirina Richard,
National Coordinator for the HAT regional and national conferences
(CSR-AN),recently announced that decisions from the June "Regional
Meetings" are "the people's aspirations, and should not be ignored",
although any eventual success at the negotiation table will likely
supersede the HAT's efforts on constitutional reforms or transition
planning. Also delayed was election of 192 Fokontany (district)
Chiefs in the capital, scheduled for this weekend. Officially, they
were postponed by the Prefet de Police of Antananarivo to avoid
distracting from the negotiations in Maputo, but it is widely
believed that the current chiefs, appointed by the HAT, are
unwilling to cede their places before December's
previously-scheduled elections.


4. (SBU) EDGARD RAZAFINDRAVAHY HEADS TANA GOVERNMENT: Edgard
Razafindravahy replaced Michele Ratsivalaka as President de
Delegation Speciale (PDS - equivalent to appointed mayor) of Tana in
early August, giving the wealthy businessman a visible platform for
the beginnings of a political career - right where Ravalomanana and
Rajoelina got their start. This takes him out of the game for the
transition period, but permits him to gain exposure and experience
before an eventual presidential campaign. Ratsivalaka was made an
advisor to the HAT, but the hasty move was most likely to save face
after her replacement in the city government.


5. (SBU) PRISONERS RELEASED: All but three of the high profile
prisoners of concern have been released in recent weeks. Those
remaining are two colonels arrested with Ravalomanana's PM Manandafy
Rakotonirina in April, as well as Ralitera Andrianandraina, former
head of security at the High Constitutional Court (HCC). Of those
who have been released, none have benefitted from the
straightforward "immediate release" foreseen in Maputo I. First out
were the four accused of complicity in recent bombings, although
their case is still open; they spent almost a month in jail, and had
never been charged. Ihanta Randriamandrato, head of the Legalist
Women, has been "conditionally released" (on her own recognizance)
pending her trial. The four members of parliament arrested in April
were released with a 1-year suspended sentence, which they intend to
appeal. Manandafy Rakotonirina was released last, on August 24,
just in time to join the pro-Ravalomanana delegation headed to
Maputo.


6. (SBU) All but the four members of parliament were forced to sign
a letter committing to abide by the terms of the Maputo I accords,
although their respective parties denounced the move as unfair, and
not in the spirit of the accords themselves. Andrianandraina, of
the HCC, was denied bail on August 21, as he was "not among the
beneficiaries of the Maputo accords", according to the HAT Minister
of Justice. No news is available as to the status of the remaining
three prisoners, and no other lower-profile prisoners have been
released.

ECONOMIC AND COMMERCIAL
--------------


7. (SBU) TIKO RICE LOOTED BY OFFICIALS: On March 30, the HAT created
an Operational Unit ("Cellule operationnelle", or CO) tasked with
collecting money from the sale of 34,000 tons of rice belonging to
TIKO in Tamatave. This money will be deposited to the Treasury to
recover allegedly unpaid taxes from TIKO. The HAT noted that at

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least 20,000 tons were smuggled by high ranking officials including
army, mayors, and HAT members, and was sold at 500 ariary/kg (USD
0.26) instead of 800 ariary/kg (USD 0.41). On August 19, the HAT
transferred the sale of the rice to the Ministry of Trade, who then
alleged publicly on August 26 that that the CO is still smuggling
the rice with the help of the port authorities, the regional
government, and the army. TIKO's lawyers have filed suit against
the HAT, and the verdict is scheduled for August 28.


8. (SBU) E-GOVERNANCE IMPLEMENTATION: On August 12, 2009, Minister
of Telecommunications Augustin Andriamananoro officially launched
the "IMAILAKA" project. Thanks to the technical and financial
assistance of the Indian government, the IMAILAKA project is part of
the Pan Africa e-network aimed at linking 53 African countries by
satellite or optical fiber. The total cost of the project is USD
130 million and it is intended to benefit telemedicine, e-governance
and e-education services. To implement the project, the Indian
Government donated computers, decoders, and scanners to the
Government of Madagascar.

RECENT CABLES
--------------


9. (SBU) MADAGASCAR'S ECONOMIC PARTNERSHIP WITH EU UNDER THREAT
(TANA 607): Madagascar signed an interim Economic Partnership
Agreement (EPA) on December 11, 2007 and continues to enjoy trade
preferences on its exports to the EU. However, due to the ongoing
political crisis in Madagascar, the de facto GOM will not be allowed
to continue negotiation of the EPA, nor to sign another interim EPA
on August 28. A temporary waiver has been granted until the next
EU/Malagasy political dialogue. If the EU continues its suspension
of cooperation in early November, the costs of Madagascar's exports
to the EU may rise, adding another threat to the country's troubled
economy.


10. (SBU) LOW RICE PRICES COULD PRODUCE FUTURE SHORTAGE (TANA 613):
The farm gate price of rice is 20 percent lower this year compared
to 2008, dropping from MGA 500 to 400 (USD 0.26 to 0.21). Several
factors contributed to this decline, chief among them are increased
productivity in 2008, reduced demand from the country's largest
distributor (Tiko),and politically-motivated price caps imposed by
the current transition government.


STROMAYER