SEYCHELLES SCENESETTER - UPCOMING VISIT OF GENERAL WILLIAM

UNCLAS PORT LOUIS 000247

SENSITIVE
SIPDIS

STATE FOR AF, AF/E AND AF/RSA
PARIS, LONDON FOR AFRICA-WATCHER
AFRICOM AND CJTF-HOA FOR POLAD

E.O. 12958: N/A
TAGS: PREL PGOV SE
SUBJECT: SEYCHELLES SCENESETTER - UPCOMING VISIT OF GENERAL WILLIAM

E. WARD


1. (SBU) SUMMARY. Embassy Mauritius warmly welcomes AFRICOM
Commander General Ward and his delegation to the Seychelles. The
U.S. government enjoys positive but limited relations with the
government of Seychelles (GOS). Over the past few years, Combined
Joint Task Force-Horn of Africa (CJTF-HOA) civic assistance programs
have provided the bulk of U.S. activity in the country and port
calls by U.S. Navy ships bolster these ties. Decade-long Status of
Forces Agreement negotiations between the US and Seychelles ended
positively just last month, with the Seychelles Assembly unanimously
approving the new SOFA. President Michel, who has served since 2004
but won his first elected term in July 2006, dissolved the National
Assembly in March 2007, leading to early elections in May 2007. On
the economic front, in October 2008, Seychelles was declared
bankrupt and has since implemented radical reform programs with the
help of a two-year $26 million stand-by IMF loan. Over the past two
years, Seychelles has faced increasing pirate attacks within its 1.3
million square kilometer EEZ, putting additional pressure on its
limited naval surveillance capacity and added stress to the economic
and political situation of this island nation. END SUMMARY.


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COUNTRY BACKGROUND INFORMATION
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2. (U) The Republic of Seychelles consists of 115 islands with an
English, French and Creole speaking population of 82,000. The three
main islands are Mahe, where the capital city Victoria is located,
Praslin, and La Digue. The head of state is President James Michel,
who was appointed in 2004 and elected to his first full term in July

2006. On June 2, the SPPF's National Congress changed the party's
name to Parti Lepep (The People's Party) in a move to change the
party's leadership structure. In past elections, the opposition
party complained of freedom of press limitations and unfair campaign
practices.

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U.S.-SEYCHELLES BILATERAL RELATIONS
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3. (SBU) The USG enjoys positive, but somewhat limited relations
with the Seychelles government. A U.S. Air Force Tracking Station,
the U.S. Embassy, and a Peace Corps program were closed in the
mid-1990s. Many Seychellois, both public and private sector,
regularly call for a reopening of our Embassy in Mahe. Since
Embassy closure, bilateral relations have been handled by the U.S.
Embassy in Port Louis, Mauritius, and Embassy officers make regular
visits. The Victoria-based Consular Agent, responsible for
provision of American Citizens Services only, handles issues such as
passports, consular reports of birth abroad, notarial services, and
emergency assistance to U.S. citizens. Seychellois must travel to
Mauritius to apply for U.S. visas. The bilateral relationship is
much bolstered by frequent R&R port calls by the U.S. Navy and civic
assistance projects by CJTF-HOA.


4. (SBU) The Defense Attache for Seychelles is Commander John E.
Ries, based out of the U.S. Embassy in Antananarivo, Madagascar.
The U.S. Defense Representative for Seychelles is Colonel David
McNevin, chief of the Kenya-U.S. Liaison Office (KUSLO) based in
Nairobi. KUSLO is responsible for security assistance programs to
Seychelles. FY09 training programs include: basic combined armed
tactics; Infantry basic officer training; health care specialists
training; and machinery technician rating.


5. (SBU) In September 2008, the Embassy's Public Affairs Section
(PAS) carried out a Speaker program on drug prevention with
participants from NGOs and government officials, and conducted a
series of outreach workshops in secondary schools.

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U.S. MILITARY ACTIVITIES IN SEYCHELLES
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6. (SBU) The Seychelles government highly values the frequent
(approx. 20/year) U.S. ship visits for their positive economic
impact and for the perceived indication that the U.S. government
deems the Seychelles to be a safe and desirable destination.
Seychelles had no trouble accommodating an increase in ship visits
in the past year; many of these ships were involved in anti-piracy


operations off the Somali Coast. The Status of Forces Agreement
(SOFA) between our two countries was ratified by the National
Assembly in July 2009, and thereby came into full effect.


7. (U) In the past three years, CJTF-HOA completed several major
civic assistance programs, including the refurbishment of St.
Elisabeth's Orphanage on Mahe, the Anse La Blague Clinic on Praslin,
the Baie St. Anne Hospital Morque on Praslin, Rehabilitation Sewing
Center in Mahe, and the construction of a protective seawall at
Logan Hospital in La Digue. Major refurbishment of the Grand Anse
Clinic on Praslin was completed and dedicated in May 2008. The
estimated value of these projects is over USD 800,000. These
projects are highly visible to the public and officials, and
provided for very successful people-to-people encounters between the
U.S. military and members of the public and government officials.
Since 2007, the Government of Seychelles sent three Liaison Officers
from the Seychelles Coast Guard to the staff of CJTF-HOA at Camp
Lemonier, Djibouti.

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FOREIGN RELATIONS
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8. (SBU) In February 2007, Chinese President Hu Jintao visited
Seychelles as the last leg of a multi-nation trip to Africa.
Seychelles supports the "One-China" policy and has received
assistance from China such as housing and educational projects,
cultural exchanges, and medical support. President Hu's trip, which
reciprocated President Michel's visit to Beijing in November 2006,
was widely publicized as the most important foreign visit in recent
history and resulted in the signing of new loans and trade
agreements. Seychelles also enjoys active exchanges with the UN,
UK, India, France and the EU, particularly and most recently on
anti-piracy matters.


9. (SBU) Until recently, Seychelles' international presence was
limited to two embassies: New York and Paris. In February 2008, the
Seychelles Ministry of Foreign Affairs announced the opening of new
embassies in Beijing, New Delhi, Rome, Brussels, and Pretoria. The
impetus and funding for the sudden increase in diplomatic
representation are unknown. Despite the presence of a Seychelles
Permanent Representative to the UN, Seychelles rarely votes and is
absent frequently.

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POLITICAL
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10. (SBU) In the July 2006 Presidential Elections, President Michel
of the SPPF prevailed in a contentious election against opposition
leader Wavel Ramkalawan of the Seychelles National Party (SNP).
Although international observers deemed the elections credible, the
SNP maintains that campaign practices were unfair.


11. (SBU) President Michel dissolved the National Assembly in March
2007 to call for early parliamentary elections, held in May 2007.
The National Assembly elections did not change the balance of power
between the ruling SPPF party and the opposition SNP. The SPPF has
23 seats, just one seat short of being able to amend the
Constitution, and the SNP retained 11 seats. Minor complaints of
electoral irregularities were filed at the Electoral Commissioner's
Office, although international observers found the elections to be
generally credible. In October 2006, police beat SNP leaders during
a rally protesting a law prohibiting political parties from owning
radio stations. Additionally, a government case against the SNP
newspaper forced it to temporarily suspend operations. Aside from
such restrictions on the freedoms of press, reports of bias, and
inefficiency in the judiciary, the government of Seychelles
generally respects human rights. On June 2, the SPPF's National
Congress changed the party's name to Parti Lepep (The People's
Party) in a move to change the party's leadership structure.
Additionally, President Michel officially assumed leadership of
Parti Lepep, while former President, France Albert Rene, was demoted
to the role of founding father.


12. (SBU) Although the USG believes that the 1931 U.S.-UK
extradition agreement, extended to Seychelles, is in force, the
Government of Seychelles has refused two requests to extradite
individuals to the U.S., claiming the treaty may no longer be in

force. Embassy officials regularly raise this issue with government
officials at all levels and believe it is crucial to the prevention
of Seychelles being perceived as a safe haven for criminals.

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ECONOMY
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13. (SBU) The economy is primarily based on tourism and fishing.
Economic growth was strong in 2006 and 2007, with real GDP growing
by 5.4 percent and 7.3 percent, respectively. However, growth slowed
in 2008 to 3.1 percent, due to external shocks, lower tourism
earnings and the persistence of structural constraints-reflected in
a rising debt burden and foreign exchange shortages. Years of
socialist-oriented economic policy characterized by price, trade and
foreign exchange controls, a prominent role for parastatal
companies, and robust debt-funded development spending led to rapid
economic development, but also created serious economic imbalances.
These problems included large fiscal and external deficits and
mounting debt arrears, which contributed to the persistent foreign
exchange shortages and slow growth of recent years. Persistent and

widespread press reports indicate that high-level corruption
contributed substantially to these problems.


14. (SBU) Seychelles has pursued a controlled exchange rate regime
since independence in spite of intermittent adjustments. Moreover,
in recent years the rupee was priced differently with respect to the
U.S. dollar and the Euro. This multiple currency practice led to
exchange rate misalignment and severe foreign exchange shortages,
while benefitting political elites. The Government adjusted the
exchange rate in October 2006 and then again in October 2007 when
the exchange rate was set at SCR 8 to the dollar. In spite of these
adjustments, the parallel market persisted, with a premium of about
30-40%.


15. (SBU) In October 2008, facing the near depletion of official
foreign exchange reserves, Seychelles defaulted on interest payments
due on its $230 million Eurobond, issued two years previously,
severely damaging its credibility as a borrower. The government
subsequently turned to the IMF for support and in an attempt to meet
the conditions for a stand-by loan, started to implement a program
of radical reforms. These include a fundamental liberalization of
the exchange rate regime, involving the devaluation and floatation
of the rupee and the elimination of all foreign exchange controls.
In light of the economic and financial reforms, the IMF approved a
two-year USD 26 million stand-by loan in November 2008, which
represents the Fund's first ever formal program in Seychelles.


16. (SBU) According to a first review of its stand-by agreement
undertaken by the IMF in February 2009, Seychelles remains on track
with the sweeping reform program. The 2009 Government budget closely
follows the stand-by agreement and reinforces the spending curbs and
tax rises implemented at the start of the program. The IMF noted
that the reform program is being implemented with "determination and
a high degree of ownership." The approval enabled Seychelles to draw
USD 1.3 million. Following a second IMF review carried out in May
2009, Seychelles received a disbursement of USD 1.4 million. Apart
from the USD 26 million provided by the IMF, most of the remaining
funding for Seychelles' reform program is scheduled to come from the
African Development Bank (AfDB) and the World Bank. In the latest
development, an AfDB team visiting Seychelles in May signed a
preliminary agreement for USD 20 million concessional loan which
will be directed towards strengthening public finance management
under a Financial Governance Reform Program. Seychelles is
reforming quickly but the adjustment will be very painful, leading
to a 10 percent contraction in real GDP in 2009, according to the
latest IMF forecasts.

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SECURITY
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17. (SBU) The President controls the security apparatus, which
includes a National Guard Force, the Army, the Presidential
Protection Unit, the 150-person strong Coast Guard, 35 Marines and
575 police officers. The Police force includes an armed
paramilitary Police Mobile Unit. Commissioner of Police (CP) Ernest
Quatre was appointed on April 24, and reports directly to the
President.




18. (SBU) Between March 27 and May 12, the GOS reported that ten
Seychellois nationals onboard the Seychelles-flagged privately owned
vessels "Serenity" and "Indian Ocean Explorer" (IOE) were captured
and held hostage by Somali pirates. To date the GOS has captured,
with the help of the joint European Union naval forces, 23 suspect
Somali pirates in its territorial waters. These 23 are awaiting
trial.


19. (SBU) On June 22, the GOS claimed that it negotiated the release
of the seven Seychellois hostages captured aboard the IOE.
According to Reuters, Somali pirate negotiators had hoped to
exchange the seven Seychellois hostages for some of their colleagues
held in Seychelles. The GOS did not confirm the exchange of
prisoners and hostages or the payment of ransom, press reports
claimed that pirate leaders claimed that the Seychellois company
that owned the IO paid them 450,000 USD in exchange for the IOE
crew. After releasing the captives, the pirates intentionally sank
the vessel, claiming the owners refused to pay the full, agreed
ransom. Mr. Joel Morgan, Minister of Transport and head of the
Seychelles negotiation team, said that negotiation was ongoing for
the release of the remaining three Seychellois hostages. The GOS
consistently seeks USG assistance to counter pirate activities in or
around its 1.3 million square kilometer EEZ. The Government is
particularly concerned about expected uptick in pirate activity
anticipated to begin in October.

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ENVIRONMENT ISSUES
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20. (SBU) As a Small Island Developing State (SIDS),Seychelles is
characterized by the inherent vulnerabilities of SIDS, such as
limited natural resources, heavy reliance on tourism and fisheries,
risks from tsunamis and climate change. An Environmental Management
Plan 2000-2010 was prepared by the GOS with the assistance of the
World Bank. The overall aim is to achieve excellence in
environmental management. There was a significant level of local
participation in the formulation of the plan. In its 2007-2017
Strategic Plan, the GOS reiterated its commitment to adhere to the
highest national and international ecological standards in its
management of Seychelles natural resources. Seychelles has strong
incentives to maintain its environment, which is one of the main
draws of the tourism industry.


21. (U) Seychelles is a party to many international Conventions,
including the Convention on Biological Diversity, the Convention on
International Trade in Endangered Species of Wild Fauna and Flora,
the UN Framework Convention on Climate Change, the UN Law of the Sea
Convention, the Basel Convention on the Control of Transboundary
Movements of Hazardous Wastes, the Rotterdam Convention, the
Convention on Desertification, and the Montreal Convention.

BLASER