MAURITANIA TURNS TO CHINA, LIBYA AND IRAN FOR AID

C O N F I D E N T I A L SECTION 01 OF 02 NOUAKCHOTT 000236

SIPDIS

E.O. 12958: DECL: 04/01/2019
TAGS: ECON EAID EINV ETRD PREL MR CH IR LY
SUBJECT: MAURITANIA TURNS TO CHINA, LIBYA AND IRAN FOR AID
AND INVESTMENT

Classified By: Charge d'Affaires Dennis Hankins for reasons 1.4 (b) and
(d).


1. (C) Summary: China agreed to provide a low-interest loan
to the Government of the Islamic Republic of Mauritania to
finance a $294 million expansion of the Port of Nouakchott.
The port will be expanded from 500 meters to 1400 meters,
allowing it to accommodate four ships at a time. China also
announced a $100 million investment in Mauritania to finance
several new projects including a new hospital, commercial
center and housing. Chinese private investors announced an
additional $12 million investment, which will be closely tied
to the public investment. In addition to the new Chinese
investments, Libyan leader Mouamar Qadhafi announced during
his March visit to Mauritania that the Libyan-Africa
Investment Fund will finance the 30 million euro construction
of a new five star hotel in Nouakchott. A separate agreement
will give Libyan investors in Mauritania's agriculture,
fishing, and real estate sectors special privileges.
Following his March 23-24 visit to Mauritania, Iranian
Foreign Minister Manuchehr Motaki signed an agreement with
the Mauritanian "Foreign Minister" to increase Iranian
cooperation in Mauritania's health, petroleum, energy, and
commerce sectors as well as make investments in Mauritanian
agriculture and mining. Iran may be particularly interested
in Mauritania's mining sector because of its proven uranium
reserves. End Summary.


2. (SBU) Mauritanian "Minister of Economy and Development"
Sidi Ould Tah and Chinese Ambassador to Mauritania Zhang Shun
signed an agreement January 11 to expand the Port of
Nouakchott. The port expansion will be financed by a loan
from the Chinese government for $294 million. The Government
of the Islamic Republic of Mauritania (GIRM) will have 20
years to repay the loan at an interest rate of 2%. A Chinese
company is expected to carry out the expansion. As it has
done with other projects that it has financed in Mauritania,
the Chinese government will most likely pay the construction
company directly for the work rather than funneling the money
through the GIRM. The current port, built by the Chinese in
1986, is 500 meters long. The expansion will enlarge the
port to 1400 meters, allowing it to accommodate four ships at
a time. The port expansion follows a 2008 agreement by the
Chinese to finance a new railroad line from Nouakchott to the
southern town of Kaedi, which will be used for the eventual
exportation of Mauritania's gypsum reserves. Tah called the
agreement "a leap ahead not only for relations between
Mauritania and China but also between our country the rest of
its development partners."


3. (U) The Chinese government signed an agreement with the
junta February 18 to finance several new projects in
Mauritania. The agreement was signed by Sidi Ould Tah and
Zhang Haijun, vice-president of the Agro-Alimentary and
Technical Sciences Commission of China. The investment,
worth approximately $100 million, includes the construction
of a new hospital, a housing complex, a wholesale commercial
center where Chinese products will be sold, a depot at the
Port of Nouakchott for Chinese equipment and products, a
solar energy project, a 500 hectare agricultural pilot
project, and an urban transport project for Nouakchott.
Mauritanian "Minister of Health" Mohamed Abdallahi Ould Siyam
and the Director General of China Geo Engineering Corporation
Lin Jian Yong signed the agreement to construct the new
hospital March 29. The construction of the hospital will
cost approximately $10 million and will take 18 months to
complete. The hospital, to be located in the Arafat
neighborhood of Nouakchott, will have 86 beds and will
provide both general and specialized services.


4. (C) A dozen Chinese investors led by former Chinese
Ambassador to Mauritania Li Guoxue made two visits to
Mauritania in February and March. Li and Mauritanian
"Commissioner for Investment Promotion" Ba Houdou Abdoul
announced March 17 that six Chinese companies would make
investments in Mauritania, totaling approximately $12
million. The six companies involved include OADI

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Agriculture, the Sino-Mauritanian Commercial Company,
Atlantic Energy Company, International Friendship Hospital, a
housing construction company, and the Free Trade Zone
Company. Little is known about any of these companies and
they appear to be newly created specifically to operate in
Mauritania. These private investments appear to be closely
tied to the recent investments announced by the Government of
China. The GIRM reportedly made very favorable concessions
to entice Chinese private investment.


5. (C) During his visit to Mauritania, Libyan leader Mouamar
Qadhafi announced that the Libyan-Africa Investment Fund will
finance the construction of a new five star hotel in
Nouakchott. Qadhafi and General Aziz participated in a
ceremonial laying of the first brick for the new hotel March

12. The 22 story building, which is supposed to be built in
the shape of a palm tree, will include 234 rooms and 16
suites. The hotel is expected to cost 30 million euros.
Many Mauritanians are extremely skeptical about whether the
hotel will actually be completed given that many of Qadhafi's
other projects in Africa remain unfinished. In addition, the
grandiose scale of the project seems out of place for
Nouakchott. The 22 story building will be more than twice of
the height of the current tallest building. It is also
unclear if the market could sustain 300 more hotel rooms
given the relatively few visitors that come to Nouakchott
each year. Following Qadhafi's visit, the junta signed
another investment agreement with the Libyan-Africa
Investment Fund March 26. The twelve year agreement will
give special privileges to Libyan companies investing in
agriculture, fishing and real estate in Mauritania.


6. (C) Iranian Foreign Minister Manuchehr Motaki visited
Mauritania March 23-24 to meet with General Aziz and "Foreign
Minister" Mohamed Mahmoud Ould Mohamedou. The Iranian Deputy
Ministers of Agriculture, Industry, Energy, Social Affairs
and Health accompanied Motaki. One of the "highlights" of
Motaki's visit was a trip to the Israeli-built oncology
hospital in Nouakchott. Motaki promised that Iran would
rebuild the hospital and provide training for its staff. At
the end of the visit, Motaki pledged increased cooperation
between Iran and Mauritania. Motaki and Mohamedou signed an
agreement to increase Iranian cooperation in health,
petroleum, energy, and commerce as well as investments in
Mauritania's agriculture and mining sectors. Mauritania has
proven uranium reserves, which may be of great interest to
Iran. The agreement has not been made public yet, so the
exact nature of Iran's investment in Mauritania's mining
sector is not clear. Post will continue to follow Iranian
activities in Mauritania and try to obtain further details
about the investment agreement.


7. (C) Comment: While China remains quietly opposed to the
coup, its political position has done little to limit its
continued investments in Mauritania. China seems able to
separate its political interests from its commercial
interests. Libya and Iran, on the other hand, strongly
support General Aziz and are using these investments and
promises of increased assistance to strengthen their
bilateral relations with Mauritania. The junta appears to be
looking to China, Libya and Iran to keep money and financing
flowing into Mauritania to make up for assistance that other
donors have cut off since the coup. The junta also appears
to be trying to demonstrate that it can still attract aid and
investment from foreign partners. End Comment.

HANKINS