ANTANANARIVO POL/ECON WEEKLY UPDATE

UNCLAS SECTION 01 OF 02 ANTANANARIVO 000629

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/E - MBEYZEROV
DOC FOR BERKUL
TREASURY FOR FBOYE
PARIS FOR RKANEDA
LONDON FOR PLORD

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

REF: A) ANTANANARIVO 607 B) Antananarivo 533


1. (SBU) SUMMARY: This is U.S. Embassy Antananarivo's Weekly Update
for the week of August 31 to September 4, 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) MAPUTO II DEADLINE REACHED: During the last round of
political negotiations of the "Big 4" in Mozambique, consensus was
not reached on who would fill the top three posts of the transition
government outlined in the charter signed in Maputo August 9. The
Rajoelina delegation asked for an extension, granted until September
4, to confer with supporters on ceding the post of prime minister to
the Ratsiraka movement. Rajoelina is expected to announce his
decision late today (see septel for more details).


3. (SBU) RELEASED DETAINEES' PROBLEMS CONTINUE: The trial of
Manandafy Rakotonirina, Ravalomanana's shadow Prime Minister, has
been rescheduled to September 22 (Rakotonirina remains out of prison
on provisional release). Ihanta Randriamandrato and two army
colonels, all arrested with Rakotonirina in April 2009, will likely
be tried on the same day. All have had their trials postponed at
least once, widely believed to be a result of the ongoing political
negotiations. Manandafy's lawyer, arrested August 8, has been
transferred from remote Manjakandriana women's prison to the
Antanimora main prison (in Tana),at her request. She had a court
hearing on August 28, during which the Bar Association requested
temporary release in accordance with the Maputo I agreements. Her
request was rejected on the grounds that her charges (alleged
involvement in the armed attack at VIVA TV and a series of bomb
attempts in town) constitute a "blood crime" and are specifically
excluded from the agreement.


4. (SBU) EMBASSY DONATION FOR RAMADAN: The U.S. Mission held a
Ramadan charity drive, and collected three large boxes of food items
- rice, sugar, oil, pasta, cookies, etc. - from both American and
Malagasy staff. Charge Eric Stromayer presented the donations to
the Sunni mosque of 67 Hectare (an economically disadvantaged
neighborhood in central Tana),which also houses the headquarters of
the Malagasy Muslim Association (FSM). In addition to the FSM and
Mosque leaders, the DCM also met with women preparing the Iftar
dinner. The recipients were very appreciative of the American
community's consideration to the Malagasy Muslim community.

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

5. (SBU) VISIT TO SELF-HELP FUND PROJECT: Last October the Special
Self-Help program granted $3,000 to Association Tiako Vehivavy
Antsirabe-Nord Mandroso (TI-VAM) to complete a clean water project
in two rural villages outside of Sambava. TI-VAM worked with these
communities to construct two wells that now provide safer drinking
water to over 600 people. Two embassy employees visited these sites
last week, where community officials expressed their gratitude to
the US government for funding this project that will improve the
health of those living in these villages.


6. (SBU) MADAGASCAR SIGNS INTERIM EPA AGREEMENT: Although the EU has
frozen its aid to Madagascar pending a final decision under the
Cotonou Agreement in early November, Madagascar was permitted to
sign an interim Economic Partnership Agreement (EPA) on August 29th
(ref A),along with Mauritius, Seychelles, and Zimbabwe. According
to the Economic and Trade Section Chief of the EU Delegation in
Madagascar, Monica Pambianco, the European Commission delegated the
decision on whether or not to allow Madagascar to sign the EPA to
the other countries in Madagascar's negotiating block from the
Common Market for Eastern and Southern Africa (COMESA),which
approved. Regarding this signature, "normal channels were not
respected", said Pambianco, as the EPA was signed by the Malagasy
Ambassador in Mauritius, while the Trade Minister was not invited.
The EU permitted Madagascar to sign on in order to avoid
compromising its trade relationship with the COMESA group, Pambianco
explained. The interim EPA offers duty free, quota free access for
all exports from Madagascar to the EU, with transition periods for
rice and sugar. Madagascar will liberalize 81 percent of its
market, with exceptions mainly in the agricultural, chemicals,
paper, and textile sectors. The agreement also contains provisions
on rules of origin (still open to discussion),development
cooperation, fisheries, defense, and dispute settlement mechanisms.


7. (SBU) AMBATOVY ON TRACK: The transition regime (HAT) has ceased

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(at least for now) its harassment of Ambatovy, a USD 4.5 billion
nickel and cobalt mining/refining project, the largest investment in
Madagascar's history, following a public denunciation by the project
of the HAT's actions. The HAT had previously threatened to change
the terms of the Canadian/Japanese/Korean venture (Ref B),and
although it has backed down from demands for a larger cut, partial
ownership, or "signing bonuses", the project's lenders are still
wary of advancing needed working capital.


8. (SBU) MADAGASCAR OIL MOVES AHEAD: Madagascar Oil's new CEO Laurie
Hunter visited Madagascar to meet with local managers, staff of its
joint-venture partner Total, and working-level contacts in the
government. Hunter told the Ambassador that MO plans to fulfill its
commitments, keep its six exploration blocks, and move full steam
ahead. The French firm Total, the operator for its Bemolanga block,
has begun a production pilot with promising initial results. Total
has approximately 300 staff on site in northeastern Madagascar and
plans to invest USD 100 million over 2.5 years. If the block
eventually enters into production, which would require a total USD 7
billion investment, it could be fully operational by 2019, producing
upwards of 200,000 barrels of oil per day by mining oil sands.
Hunter also mentioned that MO is eager to begin production on its
other fully self-owned blocks, which contain lighter oil, to raise
money for an eventual Bemolanga investment.


9. (SBU) MAERSK'S WOES: A Danish embassy representative from South
Africa told the DCM August 31 that the Danish shipping company
Maersk was being harassed by a local Malagasy firm, Genie, whose
spurious commercial and criminal law suits were too easily
entertained by the malleable, corruptible Malagasy justice system.
Following the issuance of an arrest warrant against Maersk
Madagascar's general manager, a French citizen, the manager fled the
country for fear of his physical safety. Two additional Maersk
employees have also been sentenced to six months in prison for
calumny. Although the first complaint against the company by Genie
was lodged in 2006 for the loss of cargo, the seven recent claims
have grown increasingly far-fetched, while the response of Malagasy
law enforcement has become increasingly threatening, according to
Maersk representatives.


10. (SBU) ILMENITE EXPORTS CONTINUE ON TRACK: On August 23, Rio
Tinto Qit Madagascar Minerals (QMM) shipped its second batch of
ilmenite from Ehoala port in Fort-Dauphin. Exact quantities have
not been revealed to the public for commercial reasons, but QMM
announced in July that the company expects to export at least
750,000 tons per year.


11. (SBU) OIL TANKER SINKS OFF CAPE ST. MARIE: On August 26, a
possible environmental disaster was precipitated when Turkish vessel
M/S Gulser Ana sank off Cape Sainte Marie in southern Madagascar.
Reports indicate that about 23 crew members were on board, with a
cargo of 39,000 tons of phosphate, 383 cubic meters of fuel, and
7,000 liters of lubricants. Sambalis Jerome, General Manager of the
Port, Maritime, and Water Agency (APMF) said that the exact reason
of the accident remains unknown. The captain of the vessel said
that the vessel documents as well as the cargo documents have
disappeared. The Malagasy Government is launching an international
investigation to track the exact routing and a description of the
cargo transported by the vessel. The press reports great concern
about the possible environmental threat caused by the spill. The
magnitude of the possible environmental damage is unclear at this
time. The high concentration of phosphate has already killed
thousands of small fish which are washing up on the beaches, and the
authorities have forbidden fishing in the area.

MARQUARDT