ANTANANARIVO POL/ECON UPDATE

UNCLAS SECTION 01 OF 03 ANTANANARIVO 000032

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/E MARIA BEYZEROV
DEPT PASS TO USAID/AFR/EA ASHLEY MARCUS
DOC FOR RTELCHIN
TREASURY FOR FRANCOIS BOYE
PARIS FOR WALLACE BAIN
LONDON FOR PETER LORD

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

REF: A)


1. (U) SUMMARY: This is U.S. Embassy Antananarivo's Update for
January 4 to 20, a periodic unclassified review of major political,
economic, and commercial events and information from the U.S.
Mission to Madagascar and the Comoros.

POLITICS (Paragraphs 2-4)
-Crack Down Against the Opposition
-State Council's Independence Jeopardized
-The Ecclesiastic's Movement is Born

ECONOMIC AND COMMERCIAL (Paragraphs 5-12)
-Unrealistic Budget Law Passed by Ordinance
-New Oil Code on Horizon
-Precious Wood Destruction is Authorized
-Mining Exploitation
-Regional Environment Officers' Visit
-French Ambassador Speaks at AMCHAM on Franco-Malagasy Relations

COMOROS (Paragraphs 13-15)
-Comoran Teachers on Strike
-Former President Azali Opposes Extension for Sambi
-Sarkozy Visits the Indian Ocean

END SUMMARY

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POLITICS
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2. (SBU) CRACK DOWN AGAINST THE OPPOSITION: The de facto
authorities ramped up their repression tactics against the
opposition in late December and early January. On December 22,
attempts by the opposition to install one hundred members of the
transition congress, outlined by the Maputo Accords, were rebuffed
by security forces that used tear gas to disperse the crowds. In
early January, the director and a journalist of Radio Fahazavana, a
station sympathetic to Ravalomanana, were arrested and continue to
be held. Despite hopes that political detainee Ralitera
Andrianandraina, who has been held for nine months already, would be
released on January 6 when his retaining order expired, a new order
was issued for another six months on January 6, 2010. In
mid-January, an arrest warrant was issued against co-president and
leader of the Ravalomanana movement, Fetison Rakoto Andrianirina,
who has denied having received any summons. Aside from isolated
skirmishes with police, Tana is generally calm as the various
political movements and actors await the visit of AU Commission
President Jean Ping later this week.


3. (SBU) THE STATE COUNCIL'S INDEPENDENCE JEOPARDIZED: One day
before Qe State Council - the branch of the supreme court with
jurisdiction over administrative actions - was to announce its
decision regarding the legality of the HAT's move to annul the
decree that had nominated the consensus Prime Minister Eugene
Mangalaza, the de facto government issued a tailored ordinance
forbidding its nomination decisions to be questioned; another
measure considered as a political maneuver to reinforce its
unilateral power. As a result, the state council decision has been
postponed for a second time. Although the nomination decree of the
de facto Prime Minister Camille Vital should have been suspended as
soon as the State Council received the request to review Mangalaza's
dismissal, Colonel Vital has continued to fill the role of prime
minister. The high constitutional council (HCC) has remained silent
about the constitutionality of this new HAT ordinance. Reportedly,
the HAT threatened the State Council with being abolished if they
insisted on issuing their opinion on the legality of Mangalaza's
dismissal.


4. (SBU) THE "ECCLESIASTICS' MOVEMENT" IS BORN: A group of around
thirty preachers, mainly composed of and led by Protestant FJKM
Pastors, has since late December organized religious meetings to
denounce the state monopoly on public media; to demand the cessation
of censorship of news and a call-in program on FJKM's Radio
Fahazavana; to demand the immediate release of two Radio Fahazavana
journalists detained for suspected complicity in a mutiny; and also
to call for the neutrality of the army and the justice system. With
the presence of some TIM leaders, and despite a press conference
denying its political "affiliation", this group has been considered
by the some in the media as another political tool used by former
President Ravalomanana - formerly Vice-President of the FJKM - to
oppose the current regime and to reinforce the actions to be taken

ANTANANARI 00000032 002 OF 003


by the three opposition political entities, now joined together in
the "Madagascar Movement". The group has addressed a written appeal
to embassies in 'Tana, including the U.S., regarding the recent
crackdown against press freedom.

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ECONOMIC AND COMMERCIAL
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5. (SBU) UNREALISTIC BUDGET LAW: The 2010 budget law was passed by
presidential ordinance on December 31 and approved by the high
constitutional court in early January. The finance ministry is
still in the process of editing it and correcting errors. The
normal legislative procedure was not followed due to the dissolution
of the parliament in 2009 by the de facto authorities. The budget
projects the receipt of over USD 500 million in foreign aid,
equivalent to approximately one-third of the total budget or 70
percent of the public investment budget. Given the ongoing
political stalemate, this funding is unlikely to materialize.


6. (SBU) NEW OIL CODE: The ministry of mines has stated that it will
draft a new oil law in 2010 to govern the oil sector for the next
ten years. The code will reportedly offer beneficial terms, as
compared with those in other African countries, to attract
investors. Currently, two oil exploration projects are moving ahead
in Madagascar: Bemolanga (French Total and American Madagascar Oil
joint venture) and Sakaraha (Sunpec of Hong Kong).


7. (U) PRECIOUS WOOD DESTRUCTION: On December 31, 2009, the
recently appointed Prime Minister Camille Vital signed an executive
order allowing the export of rosewood from Madagascar to continue.
This authorization overrides a previous order which stated that it
was illegal to export rosewood after November 30, 2009. It is
estimated that 200 containers of rosewood valued at 40 million USD
in the Sava region will now be exported. Ambassador Marquardt is
hosting a meeting of financial and technical partners on January 21
to determine a joint response to this unwelcome development.


8. (SBU) UNSUSTAINABLE NATURAL RESOURCE EXPLOITATION: Given the
suspension of donor funds, to raise revenue, the GOM is turning
increasingly to natural resource exploitation. In addition to the
unsustainable logging of precious hard woods, the mining ministry
recently announced that it would grant 1,200 mining licenses this
year. The ministry will also promote the exploitation of coal
reserves in the Southwest; Thai and Australian companies hold
interests in those mining zones.


9. (SBU) ENVIRONMENT VISIT: The Regional Environmental Officers
from U.S. Embassy Addis visited Madagascar January 7 - 14. They met
with conservation NGOs, USG agencies, World Bank representatives,
mining companies, and a local judge to discuss the environmental
degradation occurring in Madagascar. The NGOs stressed that they
support vulnerable human populations as an integral part of their
conservation efforts, and thus argued that the donors, including the
USG, should reopen the funding taps. In addition to regretting the
lack of political will on behalf of the de facto regime to combat
illicit logging, NGO representatives lamented the current lack of
donor funds and donor oversight in the environmental sector, which,
they argued, have contributed to the current climate of lawlessness
and open resource exploitation.


10. (SBU) FRENCH AMB AT AMCHAM: French Ambassador Jean-Marc
Chataigner spoke to the American Chamber of Commerce on Jan 14
regarding French commercial and political relations with Madagascar.
His EconOff noted the there are 650 French companies in Madagascar
with more than 50 employees each, that France was the fifth largest
foreign investor here, and that France was the primary importer of
Malagasy products (38 percent) in 2009. However, he also pointed
out that Madagascar is not of strategic interest for France in
general trade terms, as commerce with the island only accounts for
less than 0.1 percent of overall French trade.


11. (SBU) The French Ambassador said that France's main interest in
Madagascar is promoting stable, democratic order because of the
large French ex-pat community here (25,000),concern for regional
stability affecting Mayotte and La Reunion, and a desire to avoid a
power vacuum in Madagascar that could result in drug trafficking and
piracy operations. He denied accusations that French government
policy was based on special business interests, noting that
potentially the largest French investor, Total, signed its contract
for investing in Madagascar's oil sector prior to the March 2009

ANTANANARI 00000032 003 OF 003


change of government here.


12. (SBU) He argued that the French and the USG share the same
ultimate goal of democratic stability, but differ on tactics as the
French believe in diplomacy and discussions with the "bad guys", but
the US "believes in force and sanctions". He said that "perhaps we
don't like some people" but that France did not have a preference
for any particular presidential candidate, but only a desire for a
stable government. He argued that the Maputo and Addis agreements
focused too much on the transition rather than elections and that a
compromise solution must be found. He reiterated the need for
elections, but with certain guarantees following discussions on the
date, the national electoral council, the unity government, etc. He
urged that the people be given the floor through elections to choose
which political movements have support and should thus be involved
in further negotiations.

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COMOROS
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13. (U) COMORAN TEACHERS ON STRIKE: Comoran teachers from all levels
(primary, secondary, university) began an unlimited general strike
the week of Jan 11, when classes had been scheduled to resume. The
strike was largely followed, and paralyzed educational
establishments throughout the country. The strikers are protesting
non-payment of salaries (up to eight months, in some cases),
administrative regularization of teachers currently working on
temporary contracts, and the overall salary scale.


14. (U) FORMER PRESIDENT AZALI OPPOSES EXTENSION FOR SAMBI: Former
Comoran president Azali Assoumani broke his long silence on national
affairs at a press conference held in Moroni. While supporting in
theory President Sambi's desire for harmonization of the electoral
calendar, Azali warned Sambi that this should not be done by anyone
extending their current mandate. Opposition leaders were quick to
praise Azali for his stand. However, it is not clear what effect
his position will have on the current debate in the Union National
Assembly, where supporters of President Sambi hold an overwhelming
majority of the seats.


15. (U) SARKOZY VISITS THE INDIAN OCEAN: French President Sarkozy
visited French overseas territory Mayotte on Monday and French
department la Reunion on Tuesday, overflying Madagascar and the
Union of the Comoros en route. It was the first visit of a French
President to Mayotte since Comoran independence. Sarkozy reasserted
France's claim to Mayotte following the 2009 referendum in which
over 90 percent of the island's voters expressed their desire for
full "Departement" status. There was no popular reaction in the
Comoros to either the visit or his statements, which merely
reiterated standing French policy. The Comoros consider Mayotte
("Maori") to be Comoran territory illegally administered by France.


MARQUARDT