Identifier
Created
Classification
Origin
09ANTANANARIVO693
2009-10-01 07:33:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Antananarivo
Cable title:
AGOA SUSPENSION COULD JEOPARDIZE 80 PERCENT OF SEA
how-toVZCZCXYZ0000 RR RUEHWEB DE RUEHAN #0693 2740733 ZNR UUUUU ZZH R 010733Z OCT 09 FM AMEMBASSY ANTANANARIVO TO RUEHC/SECSTATE WASHDC 2894 RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS ANTANANARIVO 000693
SENSITIVE
SIPDIS
STATE FOR AF/E - MBEYZEROV
STATE PLEASE PASS TO USTR FOR WJACKSON
E.O. 12958: N/A
TAGS: ECON ETRD MA
SUBJECT: AGOA SUSPENSION COULD JEOPARDIZE 80 PERCENT OF SEA
SHIPPING TO MADAGASCAR
UNCLAS ANTANANARIVO 000693
SENSITIVE
SIPDIS
STATE FOR AF/E - MBEYZEROV
STATE PLEASE PASS TO USTR FOR WJACKSON
E.O. 12958: N/A
TAGS: ECON ETRD MA
SUBJECT: AGOA SUSPENSION COULD JEOPARDIZE 80 PERCENT OF SEA
SHIPPING TO MADAGASCAR
1. (SBU) Summary: On September 29, DCM met with Maersk Madagascar
(MM) local lawyer and sales manager to discuss a commercial dispute
that occurred between MM and a local firm. MM sales manager advised
that if this legal problem is not resolved and AGOA is suspended,
Maersk may withdraw from Madagascar, leaving exporters high and dry
and further precipitating the ongoing economic decline of this
isolated island nation. End summary.
MM General Manager Accused of Slander
--------------
2. (SBU) Since 2005, MM has been involved in a legal case with a
local company called Genie. The initial case was about the attempted
theft of five containers of flour with false documents, for which MM
lodged a complaint against Genie who MM believed was involved in the
attempted theft. However, the investigating judge ordered MM to
retract its complaint, and Genie then filed a complaint against MM
for slander and the loss of the cargo. The case, which MM views as
pure harassment, led to a recent committal order against MM's
expatriate General Manager. On September 28, the MM General Manager
fled the country after a series of press articles reported that he
was to be arrested for defamation and calumny regarding the owner of
Genie. With regard to this legal concern, it appears that the
Ministry of Justice is by commission or omission tacitly urging an
out-of-court settlement to the benefit of the local businessman.
Arbitration court not an option and other lawless activities noted:
--------------
3. (SBU) MM's lawyer said that it is a pity that the Arbitration
Office - initially a USAID sponsored program - is no longer
operational because, in the past, it was very helpful in resolving
commercial disputes. The office, he noted, is now moribund. He
also noted the theft/seizure by government security forces of three
container loads of Maersk-shipped liquor from the port before they
even cleared customs. He noted wryly that not even the Maersk-owned
containers had been returned.
Maersk: Key Player in Malagasy Economy
--------------
4. (SBU) In terms of market share, Maersk Line is the leader of
containerized transportation to and from Madagascar, with 35 per
cent of Maersk's export volume and 60 per cent of its revenue being
AGOA-related. In terms of containers, these exports represent
between 1,200 and 1,500 Forty Foot Equivalent Units (FFE). MM
claims to transport more than 9Qercent of all AGOA exports from
Madagascar. The sales manager said that AGOA exports have a ripple
effect for the company and local economy since the generated revenue
allows MM to offer concessionary rates to artisanal and spice
exports. For imports, AGOA-related materials represent from 2,000
FFE to 2,500 FFE per year.
5. (SBU) Given these figures, the continuing court case tolerated by
local authorities, and the harassment of key MM personnel in
connection with it, the sales manager said that if AGOA-related
operations cease, MM would seriously consider terminating its
operations in Madagascar.
6. (SBU) Based on similar legal problems that Mediterranean Shipping
Company (MSC, MM's low-end competition) has encountered, the MM
sales rep and lawyer said there is a possibility that before they
realize what they have perhaps unwittingly engineered, the HAT may
see both firms suspend or terminate their operations in the country.
If that happens, it could mean a halt of 80 percent of all shipping
in and out of Madagascar.
Comment: Rule of Law Woes and Consequences
--------------
7. (SBU) This further failure by Malagasy authorities to respect the
rule of law risks driving away important contributors to the
Malagasy economy, and thereby creating a signiQcant snowball effect
if AGOA eligibility is suspended. As the AOGA decision becomes
closer, and the mounting, negative effects of rising uncertainty
increase further, we may become aware of other secondary impacts
negatively affecting this downward spiral. End comment.
MARQUARDT
SENSITIVE
SIPDIS
STATE FOR AF/E - MBEYZEROV
STATE PLEASE PASS TO USTR FOR WJACKSON
E.O. 12958: N/A
TAGS: ECON ETRD MA
SUBJECT: AGOA SUSPENSION COULD JEOPARDIZE 80 PERCENT OF SEA
SHIPPING TO MADAGASCAR
1. (SBU) Summary: On September 29, DCM met with Maersk Madagascar
(MM) local lawyer and sales manager to discuss a commercial dispute
that occurred between MM and a local firm. MM sales manager advised
that if this legal problem is not resolved and AGOA is suspended,
Maersk may withdraw from Madagascar, leaving exporters high and dry
and further precipitating the ongoing economic decline of this
isolated island nation. End summary.
MM General Manager Accused of Slander
--------------
2. (SBU) Since 2005, MM has been involved in a legal case with a
local company called Genie. The initial case was about the attempted
theft of five containers of flour with false documents, for which MM
lodged a complaint against Genie who MM believed was involved in the
attempted theft. However, the investigating judge ordered MM to
retract its complaint, and Genie then filed a complaint against MM
for slander and the loss of the cargo. The case, which MM views as
pure harassment, led to a recent committal order against MM's
expatriate General Manager. On September 28, the MM General Manager
fled the country after a series of press articles reported that he
was to be arrested for defamation and calumny regarding the owner of
Genie. With regard to this legal concern, it appears that the
Ministry of Justice is by commission or omission tacitly urging an
out-of-court settlement to the benefit of the local businessman.
Arbitration court not an option and other lawless activities noted:
--------------
3. (SBU) MM's lawyer said that it is a pity that the Arbitration
Office - initially a USAID sponsored program - is no longer
operational because, in the past, it was very helpful in resolving
commercial disputes. The office, he noted, is now moribund. He
also noted the theft/seizure by government security forces of three
container loads of Maersk-shipped liquor from the port before they
even cleared customs. He noted wryly that not even the Maersk-owned
containers had been returned.
Maersk: Key Player in Malagasy Economy
--------------
4. (SBU) In terms of market share, Maersk Line is the leader of
containerized transportation to and from Madagascar, with 35 per
cent of Maersk's export volume and 60 per cent of its revenue being
AGOA-related. In terms of containers, these exports represent
between 1,200 and 1,500 Forty Foot Equivalent Units (FFE). MM
claims to transport more than 9Qercent of all AGOA exports from
Madagascar. The sales manager said that AGOA exports have a ripple
effect for the company and local economy since the generated revenue
allows MM to offer concessionary rates to artisanal and spice
exports. For imports, AGOA-related materials represent from 2,000
FFE to 2,500 FFE per year.
5. (SBU) Given these figures, the continuing court case tolerated by
local authorities, and the harassment of key MM personnel in
connection with it, the sales manager said that if AGOA-related
operations cease, MM would seriously consider terminating its
operations in Madagascar.
6. (SBU) Based on similar legal problems that Mediterranean Shipping
Company (MSC, MM's low-end competition) has encountered, the MM
sales rep and lawyer said there is a possibility that before they
realize what they have perhaps unwittingly engineered, the HAT may
see both firms suspend or terminate their operations in the country.
If that happens, it could mean a halt of 80 percent of all shipping
in and out of Madagascar.
Comment: Rule of Law Woes and Consequences
--------------
7. (SBU) This further failure by Malagasy authorities to respect the
rule of law risks driving away important contributors to the
Malagasy economy, and thereby creating a signiQcant snowball effect
if AGOA eligibility is suspended. As the AOGA decision becomes
closer, and the mounting, negative effects of rising uncertainty
increase further, we may become aware of other secondary impacts
negatively affecting this downward spiral. End comment.
MARQUARDT