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Cablegate: Antananarivo Pol/Econ Update

VZCZCXRO3992
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHAN #0115/01 0570853
ZNR UUUUU ZZH
R 260853Z FEB 10
FM AMEMBASSY ANTANANARIVO
TO RUEHC/SECSTATE WASHDC 3376
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RHMFISS/CDR USAFRICOM STUTTGART GE
RUEAIIA/CIA WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 03 ANTANANARIVO 000115

SENSITIVE
SIPDIS

DEPARTMENT FOR AF/E JAMES LIDDLE
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 ECPS MA
SUBJECT: ANTANANARIVO POL/ECON UPDATE

REF: A) ANTANANARIVO 114 (AU sanctions)
B) ANTANANARIVO 97 (Reactions to ICG)
C) ANTANANARIVO 111 (Local French views)
D) ANTANANARIVO 112 (New minister)

1. (U) SUMMARY: This is U.S. Embassy Antananarivo's update for
February 8-26, a periodic unclassified review of political,
economic, and commercial events and information from the U.S.
Mission to Madagascar and Comoros.

POLITICS (Paragraphs 2-6)
- ICG-M MEETS, AU MOVES TO SANCTION
- RAJOELINA REMAINS DEFIANT, APPOINTS NEW FM
- MADAGASCAR UNDER THE OHCHR MICROSCOPE
- HRWG ON CIVIL RIGHTS IN AMERICA
- NURSES ON STRIKE

ECONOMIC AND COMMERCIAL (Paragraphs 7-10)
- HIGHER FEES IN THE MINING SECTOR, NEW OIL BLOCKS TO BE GRANTED
- MINIMUM WAGE INCREASE
- DEPRECIATION LEADS TO PRICE INFLATION
- TEXTILE SECTOR HARASSED BY HAT

COMOROS (Paragraphs 11-12)
- TEACHER STRIKE ENDED
- CONVOCATION OF CONGRESS

END SUMMARY

--------
POLITICS
--------
2. (SBU) ICG-M MEETS, AU MOVES TO SANCTION: The International
Contact Group on Madagascar (ICG-M) met on February 18 in Addis
Ababa, and generally agreed that the 2009 Maputo/Addis accords
represented the only path forward. Since de facto President Andry
"TGV" Rajoelina remains the primary obstruction to their
implementation, the ICG-M empowered Senior Mediator Joaquim Chissano
to engage in one final round of negotiations, and threatened further
measures (including sanctions) if the Malagasy parties don't comply
(ref A). On February 19, the AU Peace and Security Council (PSC)
further strengthened this message, stating its intention to impose
targeted travel and financial sanctions if the de facto GOM failed
to implement the accords by March 16. Most observers in country
support targeted sanctions to bring Rajoelina back into the process
(ref C), as the country prepares to mark the one-year anniversary of
the military-backed coup.

3. (SBU) RAJOELINA REMAINS DEFIANT, APPOINTS NEW FM: On February 25,
Rajoelina appointed Vice Admiral Hyppolite Ramaroson as the new Vice
Prime Minister for Foreign Affairs (ref D), quashing any hopes that
he might form a true unity government before the AU deadline.
Ramaroson is a controversial choice: he is not well-liked within the
current military leadership, he has little experience in the
practice of foreign affairs, and his appointment is unlikely to
please the opposition or the international community. On the
evening of the 25th, Rajoelina gave a speech in which he blamed the
opposition for the current impasse, called for elections as soon as
possible, and announced plans for another "all-inclusive" national
meeting on March 4-5 to discuss election planning with opposition
parties and civil society. It is unlikely they will participate.

4. (U) MADAGASCAR UNDER THE OHCHR MICROSCOPE: Madagascar was up for
its quadrennial Universal Periodic Review, under the UN Office of
the High Commissioner for Human Rights in Geneva. Rajoelina's de
facto Minister of Justice, Christine Razanamahasoa, led the Malagasy
delegation, which resulted in a boycott by some African countries,
but 24 countries did participate. Razanamahasoa focused on social
and economic rights, but avoided discussion on political and civil
rights. She mentioned the arrests of several journalists and
political figures in recent months, but opined that these are
criminal rather than political issues. The de facto GOM accepted 65
recommendations (mainly concerning the pending ratification of
several conventions and optional protocols on human rights),
postponed 17, and rejected two, which called for an independent
investigation into the events surrounding the coup, and the
appointment of an independent ombudsman. The draft report will be
published by the OHCHR in mid March.

5. (U) HRWG ON CIVIL RIGHTS IN AMERICA: The Human Rights Working
Group meeting on February 24 featured an ARS speaker from Paris,

ANTANANARI 00000115 002 OF 003


Sheldon Austin, who discussed the Civil Rights Movement in the U.S.
The event was attended by over 70 members of civil society, and
Austin fielded a wide variety of questions concerning both U.S.
history and the extent to which the American experience related to
Madagascar.

6. (SBU) NURSES ON STRIKE: Nurses and midwives across Madagascar
have been on strike since February 22, and have stopped reporting to
their posts. They are reportedly disappointed with the current
regime's response to their request for a pay increase, as they have
been told they must wait until the new government is in place before
changes to their salary scale will be considered. They are
currently awaiting an appointment with de facto President Rajoelina
to discuss the matter. This is only the latest in a series of
salary disputes involving medical professionals, as well as civil
servants in other sectors. The de facto GOM has had difficulty
balancing its populist urges with an increasingly difficult fiscal
situation, having already caved to a number of such demands in
2009.

-----------------------
ECONOMIC AND COMMERCIAL
-----------------------
7. (SBU) HIGHER FEES IN THE MINING SECTOR, NEW OIL BLOCKS TO BE
GRANTED: On January 25, the Ministry of Mining adopted a decree that
doubles the administrative fees for mining prospection. According
to mining operators, this new decree does not comply with the
current mining law, because the National Mining Committee should be
consulted on any such increase. In the oil sector, the Office of
Mining and Strategic Industries (OMNIS) announced that around 200
new blocks would be granted in 2010.

8. (SBU) MINIMUM WAGE INCREASE: On February 8 business associations
and unions agreed to increase the private sector minimum wage by 10
percent, to 70,000 Ariary per month (approximately USD 35.00). This
increase will take effect following the adoption of a decree by the
Ministry of Labor. Enforcing compliance may be difficult, given the
current political and economic crisis, and many of the largest
formal-sector employers in the EPZ are already facing cutbacks due
to the cancellation of AGOA benefits and the general economic
malaise.

9. (SBU) DEPRECIATION LEADS TO PRICE INFLATION: Since the beginning
of the year, the Ariary has depreciated by 10.8 percent against the
US dollar, and by 5.9 percent against the Euro. As a result, pump
prices of gasoline have increased by 7.3 percent in January, and 4.1
percent by mid-February. The prices of basic commodities have
soared as well during recent weeks; monthly inflation in January
2010 was estimated at 1.4 percent, compared to 1 percent over the
same period last year.
10. (SBU) TEXTILE SECTOR HARASSED BY HAT: The Ambassador hosted an
unofficial meeting of five textile sector representatives, the VP of
AmCham, and Rajoelina's chief of staff at the CMR Feb 23 to give the
business owners, including two American investors, the opportunity
to raise their concerns about harassment by the HAT. The companies,
who are reducing their workforces following the suspension of AGOA,
explained that they fear for their personal safety and the security
of their investments because of the actions of the Ministry of
Population and the Commission for the Defense of the HAT, including
threatening managers with arrest, searching their premises, blocking
them from leaving the country, threatening that factories will be
declared "red zones" and sealed, hinting that if their demands are
not met the workers may "burn down your factories", and instructing
the workers to go on strike. These government agents are employing
strong arm "negotiation" tactics to try to force the companies to
give the workers more than legally required upon lay-off and then
publicizing their interventions as having been helpful to both the
workers and the factories. The chief of staff promised to
intervene, and called the Ambassador back to report that the Prime
Minister had taken measures to restore order. The businesses were
highly appreciative of the intervention and have since reported no
untoward activities at their sites.

-------
COMOROS
-------
11. (U) TEACHER STRIKE ENDED: After a six-week long general
teachers' strike which had paralyzed the country's educational
system at all levels, President Sambi has signed a decree
regularizing the status of temporary Comoran teachers and agreeing
to pay part of their salary arrears (currently about eight months

ANTANANARI 00000115 003 OF 003


pay). In response, the teachers have agreed to return to work.
Classes resumed on Monday, February 22 -- timidly at first, but with
greater regularity as the week progressed. The budgetary impact of
this presidential action is expected to be about 120 million KMF
(USD 400,000). It is not clear where this money will come from, nor
is it clear how the IMF will react to this unanticipated fiscal
shock. The Ministry of Education has indicated that the school year
will still end on June 23 as planned. This will be achieved by the
cancellation of normal vacation periods and a slight intensification
of classes.

12. (SBU) CONVOCATION OF CONGRESS: President Sambi has yet to issue
his highly anticipated decree convoking the Comoran Congress (the
combined meeting of the Union National Assembly and the three island
assemblies) to consider the question of "harmonization" of mandates
of the Union President and the island chief executives. It is
believed that the President's hesitation is due to the greater than
expected public discontent over what is widely believed to be a
rather transparent attempt to extend his term of office. While the
President enjoys the necessary majorities to push any
"harmonization" through the Congress, he is clearly hearing the
grumbling -- even from some he counts as supporters. If Sambi does
not issue the decree this week, there is a good possibility that the
Congress will be significantly delayed, as the EASBRIG chief of
state meetings (scheduled for two weeks in Moroni during the first
half of March) and the Doha investors conference in Qatar (also in
early March) loom on the horizon, and are certain to occupy the
President's time and attention.

MARQUARDT

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