ANTANANARIVO POL/ECON WEEKLY UPDATE

UNCLAS SECTION 01 OF 02 ANTANANARIVO 000669

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

REF: A) Antananarivo 662
B) Antananarivo 659
C) Antananarivo 657
D) Antananarivo 654
E) Antananarivo 653
F) Antananarivo 646
G) Antananarivo 634
H) Antananarivo 667


1. (U) SUMMARY: This is U.S. Embassy Antananarivo's Weekly Update
for September 7 to 18, 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) POLITICAL UPDATE: Opposition leaders have called for
widespread demonstrations on September 19, in advance of their
September 20 deadline for a return to negotiations. Possibly
signaling a lack of concern, HAT President Andry Rajoelina plans to
travel to New York on the 19th for the UN General Assembly (ref C),
leaving Prime Minister Monja Roindefo to deal with events in his
absence. With the opposition increasingly united against Rajoelina
(ref B),this weekend's demonstrations could be an indicator of the
opposition's ability to advance its agenda, as well as the coup
regime's ability to maintain control (ref A) in the face of rising
popular discontent and widespread international condemnation.


3. (SBU) RECENT DEMONSTRATIONS: Following the September 8 nomination
of the new HAT government "of national unity" (an erroneous title,
see ref G),supporters of the three other movements restarted street
demonstrations on September 10 and 11. Attempts to gather on
"Democracy Square" in central Tana were met with rapid intervention
and teargas from local security forces. The demonstrations have
resulted in several injuries, including three European bystanders.
The HAT used the incidents as a pretext to postpone negotiations,
after originally accepting to meet on September 13, and has created
a crisis management team to address the recent "trouble-making and
breach to public order."


4. (SBU) NEW POLITICALLY-MOTIVATED ARRESTS: In addition to the
arrests of a few "looters" during recent demonstrations, the HAT has
arrested two new high-profile political figures. Former TIM Senator
Eliane NAIKA was reportedly violently arrested in a hotel on
September 12, then put under house arrest. TIM spokesperson, and
former National Assembly Deputy, Raharinaivo ANDRIANANTOANDRO was
brought back into custody for a "breach of public order, criminal
conspiracy and destruction of property", as he was present during
the unauthorized September 10 and 11 sit-in outside Democracy
Square. Others currently wanted are two pro-Ravalomanana Legalist
leaders, Ambroise RAVONISON and Andrianalijaona NDREMANAMPY a.k.a.
Satrobory, for organizing an unauthorized public demonstration and
breach to public order. Tabera RANDRIAMANATSOA, a federalist
activist from Zafy's movement, and former TIM Deputy Yves Aim
RAKOTOARISOA a.k.a. Meme, are also wanted for incitement to
violence, in reference to their September 9 speeches at MAGRO.


5. (U) IFTAR DINNER: In an effort to strengthen ties with the
various Muslim communities of Madagascar, the Ambassador hosted an
Iftar dinner on September 15 that was attended by around 65 guests.
The guests included an IV program participant, who was eager to
share his experiences from his recent trip to the U.S. on interfaith
dialogue. A number of Comorans resident in Madagascar also
attended. The Ambassador's speech regarding Islam's role in America
and USG efforts to promote freedom of religion abroad was well
received.


6. (SBU) LIBYAN MILITARY ASSISTANCE: Following Madagascar's
attendance at Libyan leader Muammar Qadhafi's recent celebration of
his 40th year in power, media sources announced Libya's donation of
four MI-8 helicopters and a cargo plane to the Malagasy military.
In a recent cabinet meeting, the HAT reportedly has also decided to
invite the Libyan military to Madagascar to support their Malagasy
counterparts in "their fight against rural insecurity". No further
details have emerged to indicate that Tripoli was aware of this
decision, or has any intention of responding.


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

7. (SBU) TOTAL OIL INVESTMENT: The General Manager of the French
company Total Exploration and Production Madagascar, Lionel Levha,

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told the Ambassador that Total's joint venture with U.S. company
Madagascar Oil (MO) in northeastern Madagascar to mine oil sands was
going well, with good cooperation from the government on
administrative matters. The company has not been extorted or
pressured, and intends to maintain its low profile to avoid such
harassment. Total, the operator on the Bemolanga block, for which
MO holds the license, plans to invest USD 70 million during the
first phase of drilling, which began July 25, 2009. They plan to
drill around 150 shallow wells; Levha noted that the oil can be seen
just lying on the surface. If the initial testing is positive, a
pilot project may begin in mid-2011. The next phase would involve
an investment of hundreds of millions of dollars, with production
possibly beginning in another ten years. Total has 28 expats in
country, including two that have experience in oil sands mining in
Alberta. Levha was optimistic that the mining could be more
productive here than in Canada or Venezuela because the project has
an enormous area in which to work; unfortunately, the environmental
impact in this sparsely populated, lightly-forested area will be
equally large.


8. (U) MINIMUM EXPORT PRICE OF VANILLA: On July 7, 2009, the
Ministry of Trade fixed the minimum export price of vanilla at USD
27 per kilogram. At present, the market rate is USD 18/kg in the
vanilla-intensive SAVA area (Sambava, Antalaha, Vohemar, and Andapa
regions). As vanilla export prices were liberalized in 1995, many
business associations consider this minimum price as illegal, and
unfair to free competition. IMF Representative Pierre Van de
Boogaerde has publicly expressed his concern for Madagascar's
competitiveness as a result of the move.


9. (SBU) PROTECTION OF ENVIRONMENT AND HARD WOODS: On September 15,
the GOM created a task force to prevent the looting of hard woods
(ebony and rosewood) in Masoala and Mananara parks. The task force
will be composed of the Ministry of Environment, the armed forces,
the Ministry of the Interior, the Ministry of Decentralization, the
Ministry of Justice, and the Ministry of Budget, under
(unfortunately) the leadership of the Prime Minister's Office.
Since the beginning of the 2009 political crisis, major
environmental donors, including WWF, WCS, and CI, have warned the
GOM about the looming environmental disaster in these areas,
including in joint communiqus led and coordinated by the U.S.
Mission.


10. (U) THE 2009 SIIT: The 2009 International Fair of Innovation and
Technology (SIIT) will take place at Futura Andranomena from
September 16 to 20. Despite the current political situation, the 46
participating companies are hoping to re-launch Madagascar's IT
market through this fair.


11. (U) RICE PRICE: Since the beginning of September, the price of
rice has increased in Antananarivo. Media reports indicate that the
increase averaged 5 to 10 percent, although variations across the
country ranged from negative 6 percent to positive 7 percent
depending on the region and the type of rice. The availability of
rice for the upcoming shortage period constitutes a major concern
for the country, given that during the last three months, only 1,024
tons of rice were imported compared to 24,711 tons in 2008 during
the same period. Reduced imports are, however, in part due to lower
demand for imports resulting from the bumper domestic harvest of

2009.


12. (U) ENFIN, A SECOND MALAGASY BREWERY: Despite earlier
administrative obstacles and rumored sabotage by its entrenched
competitor, new beer producer NBM will soon receive definitive
authorization from the Ministry of Water to use the Manjakatompo
spring for its production, Minister of Water Nirhy Lanto
Andriamahazo recently confirmed. The Minister of Environment has
already signed off on the land use, leaving only final authorization
from the Ministry of Economy before Madagascar's second brewery is
able to start production. This will effectively end one of
Madagascar's most enduring monopolies.

MARQUARDT