Cablegate: Chad Scenesetter

DE RUEHNJ #1073/01 2301122
R 181122Z AUG 06





E.O. 12958: N/A

1. (SBU) Summary: Chad sits precariously between the Darfur
conflict to its East, the chronically unstable Central
African Republic to its South, and Niger, an equally
impoverished neighbor to the West. Past a vast mine-pocked
desert -- home to a tenacious but isolated Chadian insurgency
-- lies Libya. Chad's post-colonial history has been one of
isolation, political instability, pauperization and deepening
ethnic divisions. But Chad is also an increasingly important
player for U.S. policy interests in central Africa.
President Deby's sixteen-year regime has brought the country
its longest period of peace since independence and allowed a
U.S.-led oil consortium to invest heavily in Chad's
previously untapped oil resources. Chad is host to over
200,000 Sudanese refugees fleeing perhaps the world's most
serious humanitarian crisis in Darfur. Notwithstanding
challenges from fundamentalist groups, Chad's leaders support
a moderate and tolerant Islam and welcome U.S.
counter-terrorism cooperation. Building democratic
institutions, countering corruption and encouraging a
peaceful democratic political transition in Chad remain
significant challenges to our diplomatic efforts. They are
also critical for peace and security in the central African
region. End Summary.

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2. (SBU) Fireworks and lavish banquets attended the
inauguration of President Deby for a third five-year term on
August 8, 2006. A referendum (widely viewed as rigged)
abolished presidential term limits in 2005, allowing him to
run for office indefinitely. The unprecedented price of oil
has sent his tax receipts skyrocketing, despite the poor
quality of Chad's "Doba Crude." He successfully trounced a
rebel attack on the capitol on April 13 with help from the
French (President Chirac is a staunch supporter.) A
much-publicized feud with the World Bank over use of oil
resources for poverty reduction has been resolved for the
time being, and -- even better -- publicly blessed by World
Bank President Wolfowitz in a rapid stopover in N'djamena
last month. While rebel groups in the south and east are
audacious and persistent, they face a President who is
himself a tested warrior. But dangers abound, primarily from
within his own family, some of whom have joined rebel groups
in Sudan, others of whom are in self-declared exile abroad.
The public enrichment of the President's Zaghawa clan is a
source of division, both from outsiders jousting for a share
of the spoils, and insiders scheming to maintain the family's
place at the public trough. The state of the President's
health - a constant source of speculation - has led some
observers to predict that he will not live through his
current term, adding to the uncertainty which veils Chad's
political future. Although President Deby has presided over
Chad's most peaceful era since independence, his legacy is
undermined by his unwillingness to move seriously toward
opening the political arena, and, more importantly,
demonstrating that a peaceful transition of political power
is possible in Chad.

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3. (SBU) Chad's make-up-to-break-up relationship with Sudan
has come full circle over the last year. Last year at this
time, Chad was still a mediator in the Darfur conflict. The
Cease-Fire Agreement, negotiated in N'djamena in 2004, marked
a significant step in the path to the May 2006 Darfur Peace
Agreement (DPA). But Sudan's support for Chadian rebels in
the fall and winter of 2005 forced Chad's hand, and Chad
withdrew from the scene as a mediator. Although it would
appear that President Deby has everything to gain from peace
returning to Darfur, DPA Signatory Minni Minnawi has publicly
accused the regime of supporting DPA non-signatories in their
attacks against Minnawi's forces. Chad has accused Sudan in
turn with providing arms and foot soldiers in the April 13
attack on N'djamena. Nonetheless, a very public hug between
President Deby and President Bashir at Deby's inauguration
ushered in the latest reconciliation between the two
countries. Chad and Sudan agreed July 26 to reinstate

NDJAMENA 00001073 002 OF 004

diplomatic relations, and desist from supporting Darfur rebel
movements (Chad) and Chadian rebels (Sudan). But the
cross-border nature of the Darfur conflict cannot be
overemphasized. The vast territory which comprises Western
Darfur and Eastern Chad is home to numerous ethnic groups
(not limited to the President's Zaghawa clan) which cross the
border indiscriminately, maintaining allegiance to their
group, and not to any state. Changing land-use patterns
which bring more settled agriculturalists into conflict with
pastoralist groups and the asymmetrical impact of Khartoum's
involvement in inter-ethnic clashes has forged a deadly
conflict that can no longer be resolved by traditional
dispute settlement procedures. Despite the recent
reconciliation, each regime may see it in its interests to
seek to maintain a destabilizing wedge in the other's
political affairs.

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4. (SBU) Chad's Eastern border hosts 12 refugee camps
containing over 200,000 Sudanese refugees. President Deby
feels strongly that the international community has failed to
recognize Chad's sacrifice in hosting these refugees. It is
true that Chad's environmentally fragile eastern region has
been negatively impacted by the presence of refugees
competing for water and firewood with the local inhabitants.
In recognition of the needs of the local population, both the
UN and donors (in particular, the United States) have
earmarked funding specifically to improve livelihoods and
living conditions for local populations. In April 2006, in
the wake of a rebel incursion into N'djamena, and needing to
reinforce vulnerable border points against armed Chadian
rebels in Sudan, President Deby announced that he was unable
to guarantee security for the refugees. Fears that Chad
might actually expel the refugees proved unfounded, but the
increasing insecurity in Eastern Chad -- manifested in the
rise in Chadian Internally Displaced Persons (IDPs) moving
away from the border and in increasing attacks on
humanitarian workers and recruitment of refugees by rebel
groups within the camps -- pose urgent challenges. In
recognition of the need to provide greater security for
refugee camps and humanitarian workers, the United States
recently earmarked $1.9 million to the UN High Commissioner
for Refugees to assist in beefing up security, including
hiring additional gendarmes and to provide protection for
IDP's. The United States has committed over USD 183 million
over the past three years to UNHCR, the World Food Program
and other relief agencies in Chad, making it by far the
largest donor to the humanitarian relief effort.

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5. (SBU) Chad's first oil began pumping in 2003 and flowing
down the 1070-kilometer pipeline to the Cameroonian coast.
The largest single U.S. private investment in Africa, the
over $4 billion project is managed by a consortium led by
ExxonMobil. Chad earned USD 260 million from oil revenues in
2005. Projected revenues for 2006 (from all sources) are
approximately USD 450 million and could balloon to over a
billion USD in 2007 if oil prices stay high. The pipeline is
now handling up to 170,000 barrels of oil per day and new oil
fields are being brought on line.

6. (SBU) As part of the financing package arranged by the
World Bank and other lenders, Chad agreed to an innovative
arrangement for managing its oil revenues whereby the bulk of
the royalties would be earmarked for social sectors such as
health and education. An oil revenue management body, with
members drawn from the government, civil society, religious
groups, and labor unions was to oversee expenditure. Not
surprisingly, this pathbreaking experiment in transparency
foundered in December 2005 when the President, strapped for
cash, unilaterally changed the Chadian law governing use of
oil revenues. This provoked a rupture with the World Bank
which has taken over five months to resolve. Last month
World Bank President Wolfowitz visited Chad to anoint a new
agreement which recommits the Government of Chad (GOC) to

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allocate a larger percentage of oil royalties for priority
poverty reduction sectors, and allows some wiggle room for
spending on security.

7. (SBU) In the meantime, the price of oil has eclipsed all
predictions, and Chad's indirect revenues (coming from taxes
paid by the oil consortium) have skyrocketed. Part of the
new arrangement with the World Bank is that these indirect
revenues -- in addition to the royalties -- will also be
used for poverty reduction. Chad's oil boom -- expected to
last less than a decade -- will severely test its absorptive
capacity and ability to manage and spend the resources so as
to promote sustainable economic growth and improve the
Chadian standard of living (currently ranked among the lowest
in the world.)

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8. (SBU) In March 2004, the Chadian army engaged in an
intense battle with members of the terrorist group GSPC. The
terrorist leader Al-Para was finally handed over to Algerian
authorities in October of that year. The cooperation of
Chad,s security services and army on counter-terrorism
issues has been excellent, and President Deby welcomes
additional U.S. counterterrorism assistance provided under
the Trans-Sahara Counterterrorism Initiative (TSCTI). In
July 2004, U.S. Marines finished training and equipping 179
Chadian soldiers as part of the Pan-Sahel Initiative (PSI),
the TSCTI precursor. These troops learned to respond to
internal threats from terrorism and banditry. In 2005 and
2006, Chad participated in several U.S. military training
programs, including the Flintlock exercise. U.S. assistance
continues with retraining of the PSI unit, and training of
additional recruits. For the most part, Chadian Muslims are
moderate and Muslim leadership in Chad is supportive of U.S.
programs throughout the country. Muslim leaders also work
closely with the government to rein in radical Islamic

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9. (SBU) Chad's human rights record remains poor and
government institutions lack the capacity and the will to
bring justice to average Chadians. In addition to Deby's
heavy-handed attempt to revise the Constitution to allow him
to run for another term, government harassment of the media
has surfaced periodically. The National Assembly is easily
manipulated by the Presidency. The international corruption
watchdog organization, "Transparency International" named
Chad (along with Bangladesh) as the world's most corrupt
country in 2005. Corruption permeates most aspects of
government operations. Civil society remains fragmented and
too weak to pose a counterbalance to government power. Aside
from oil, most Chadians earn a living through agriculture or
livestock. Once a significant source of revenue, Chad's
cotton producing sector has been unable to successfully
pursue opportunities offered by privatization. U.S. cotton
subsidies are frequently blamed as the source of the collapse
of Chad's cotton sector, but inefficient management by
parastatals has as much to do with the sector's failures.
Chad is eligible to export products under the African Growth
and Opportunity Act, but, aside from oil, has only managed to
export a negligible amount of gum arabic and shea butter.
Poor to non-existent infrastructure, corruption and absence
of a skilled work force hinder foreign and domestic

10. (SBU) The United States closed its USAID Mission in Chad
over ten years ago. A modest amount of U.S. assistance is
managed for the most part directly by the Embassy and
supports grass-roots efforts to improve education, access to
water, and promotion of human rights. The Mission also
maintains a strong outreach to Muslim communities.

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11. (SBU) Our primary message to President Deby concerns
the need to develop democratic institutions in Chad, allow
room for other political contenders to compete in credible
elections, and take steps to promote a peaceful transition.
Chad's role in supporting the Darfur Peace Agreement,
particularly given its recent rapprochement with Sudan, is
also extremely important. We recognize Chad's contribution
to counter-terrorism and to regional stability and its role
as host to over 200,000 Sudanese refugees.

-- Democracy: Chad's long-term political stability requires
the development of its democratic system, including a strong
civil society and respect for human rights and rule of law.
An inclusive political environment must be created which
allows for credible elections and a peaceful political

-- Refugees: We appreciate the welcome that Chadians have
given to the refugees from Sudan despite severely limited
resources. Our government has already provided over USD 183
million over the last three years for humanitarian relief in
Eastern Chad and will continue to provide support for the
on-going humanitarian efforts, some of which will assist
local populations.

-- Darfur Peace Agreement: We urge commitment by all to
support the Darfur Peace Agreement, to end violence and
restore security.

-- Development: We stress the importance of Chad's oil
resources being used for poverty reduction.

-- Anti-terrorism: We value our partnership with Chad in the
war against terror. We look forward to working with Chad on
TSTCI and other programs of bilateral cooperation.


12. (U) Tripoli minimize considered.

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