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Cablegate: National Assembly Approves Privatization of Cotton

VZCZCXRO8855
RR RUEHMA RUEHPA
DE RUEHBP #0722 2251625
ZNR UUUUU ZZH
R 121625Z AUG 08
FM AMEMBASSY BAMAKO
TO RUEHC/SECSTATE WASHDC 9532
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS BAMAKO 000722

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAGR ECON EIND ELAB EINV PGOV KDEM ML
SUBJECT: NATIONAL ASSEMBLY APPROVES PRIVATIZATION OF COTTON
COMPANY

REF: A. BAMAKO 00660
B. BAMAKO 00589

1.(U) On August 2 the Malian National Assembly passed
legislation authorizing the Malian government to sell its
holdings in the until now state-owned cotton company CMDT.
One hundred and seventeen Deputies voted for privatization,
while 20 Deputies voted against. The vote occurred after ten
hours of debate on the last day of a two week special session
called by Prime Minister Modibo Sidibe after the Assembly
failed to even bring the controversial privatization bill to
a vote during its April-June regular session (Ref. A). Even
though the National Assembly in the end ratified the
privatization bill proposed by President Amadou Toumani
Toure, the protracted back-and-forth between the National
Assembly and President Toure's cabinet over CMDT
privatization underscored the growing independence of Mali's
legislative branch.

2.(SBU) Although allies of President Amadou Toumani Toure
(ATT) hold a firm majority in the Assembly, Deputies from key
cotton growing regions of Segou, Koulikoro and Sikasso broke
with the President during the Assembly's regular session in
order to avoid voting on a bill highly unpopular with
powerful unions of local cotton farmers and CMDT employees.
In addition to pressure from the Presidency to pass the
privatization bill, the local representative of the World
Bank sent a letter on July 11 to the Government of Mali (GOM)
warning Mali of its obligations to privatize the CMDT by the
end of July. Agadiou Dama, Deputy Director of the
Agriculture Section of the World Bank Office in Bamako, told
the Embassy that this letter was not a threat, but rather a
reminder that privatization must be completed before the next
cotton planting season which begins in May 2009. Dama said
failure to meet this deadline would complicate Mali's ability
to attract investors willing to purchase stock in the four
new cotton companies created by the privatization plan.
Missing the deadline would also be detrimental to the Malian
economy, as CMDT privatization is an important step toward
attracting outside investment.

3.(U) The new law divides the CMDT into four private
subsidiaries, with stock of each subsidiary to be transferred
to the following groups: 20% to cotton growers, 2% to CMDT
workers, 17% to the GOM, and 61% to private investors via
public offering (Ref. B). Proceeds from the sale of the
subsidiary companies are intended to cover the CMDT's debt,
which was estimated as of June 30 to be around USD 180
million, with USD 100 million (44 billion FCFA) owed to
external debtors and the remainder to internal debtors.

4.(SBU) Comment: The CMDT legislation was one of three
high-profile bills introduced by the President and tabled by
Assembly Deputies. The other two bills involved abolishing
the death penalty and providing improved civil rights for
women and children. The Assembly's decision to table key
pieces of legislation submitted by the President indicates
that the legislative branch retains a measure of independence
from the executive even though an overwhelming majority of
Assembly Deputies belong to political parties aligned with
President Toure. The Assembly's reversal on CMDT
privatization during the special session called by Prime
Minister Modibo Sidibe, however, reveals that ATT can still
force issues through the Assembly. The CMDT debate between
the Assembly and ATT also reflects the interesting fact that
external pressure on an immediate and tangible issue, even if
hugely unpopular with a broad swath of the Malian population,
was deemed worthy of such strong-arm tactics, while sensitive
social issues - such as improved rights for women and
abolition of the death penalty - opposed by powerful
religious interests in Mali, were not.
LEONARD

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