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RR RUEHGI RUEHJO RUEHTRO
DE RUEHNJ #1073/01 2301122
ZNR UUUUU ZZH
R 181122Z AUG 06
FM AMEMBASSY NDJAMENA
TO RUEHC/SECSTATE WASHDC 4260
INFO RUEHGI/AMEMBASSY BANGUI 1231
RUEHDJ/AMEMBASSY DJIBOUTI 0111
RUEHKH/AMEMBASSY KHARTOUM 0320
RUEHLO/AMEMBASSY LONDON 1533
RUEHFR/AMEMBASSY PARIS 1948
RUEHSA/AMEMBASSY PRETORIA 1040
RUEHTRO/AMEMBASSY TRIPOLI 0305
RUEHYD/AMEMBASSY YAOUNDE 1335
RUEHJO/AMCONSUL JOHANNESBURG 0016

UNCLAS SECTION 01 OF 04 NDJAMENA 001073 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
PLEASE PASS TO CODEL OBAMA 
 
E.O. 12958: N/A 
TAGS: PREL PREF PHUM PGOV CD SU
SUBJECT: CHAD SCENESETTER 
 
¶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. 
 
- - - - - - - - - - - - - - 
THE DOMESTIC LANDSCAPE 
- - - - - - - - - - - - - - 
 
¶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. 
 
- - - - - - - - - 
THE SUDAN FACTOR 
- - - - - - - - - 
 
¶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. 
 
- - - - - - - - - - - 
REFUGEES IN CHAD 
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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. 
 
- - - - - - - - - - - 
DEBY, OIL, AND DONORS 
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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 
 
NDJAMENA 00001073  003 OF 004 
 
 
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.) 
 
- - - - - - - - - - - - - - - - - - - - 
DEBY'S DEDICATION TO FIGHTING TERRORISM 
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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 
elements. 
 
- - - - - - - - - - - - - - - - - 
DEBY, DEMOCRACY, AND DEVELOPMENT 
- - - - - - - - - - - - - - - - - 
 
¶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 
investment. 
 
¶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. 
 
- - - - - - 
OUR MESSAGE 
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NDJAMENA 00001073  004 OF 004 
 
 
 
¶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 
transition. 
 
-- 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. 
 
SIPDIS 
 
¶12. (U) Tripoli minimize considered. 
WALL