VZCZCXRO8030
PP RUEHMA RUEHPA
DE RUEHDK #1508/01 2010943
ZNR UUUUU ZZH
P 200943Z JUL 07
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 8821
INFO RUEHLMC/MCC WASHDC PRIORITY
RUEHAD/AMEMBASSY ABU DHABI 0041
RUEHDE/AMCONSUL DUBAI 0006
RUEHZK/ECOWAS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 DAKAR 001508 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE FOR AF/EPS AND AF/W 
 
E.O.12958 
TAGS: EAID KMCA PREL ECON SG
SUBJECT:  REACTION TO MCC DECISION AND JAFZA DEAL:  QUESTIONS FROM 
THE OPPOSITION, DISAPPOINTMENT FROM THE POPULATION, CONCERN ABOUT 
WHAT'S NEXT 
 
REF:  DAKAR 1276 
 
DAKAR 00001508  001.2 OF 002 
 
 
SUMMARY 
------- 
¶1.  (U) The Millennium Challenge Corporation's (MCC) decision to 
withdraw from the "Diamniadio" industrial platform project (reftel) 
has opened the door for Senegal's opposition politicians and press 
to challenge President Abdoulaye Wade's administration on 
governance, public finances, and commitment to poverty reduction. 
It has also brought anxiety and disappointment to Diamniado's 
population and locally elected officials.  Cheikh Bamba Dieye, a 
newly elected member of the National Assembly and advocate of the 
Diamniadio residents, the NGO umbrella group CONGAD, and opposition 
leaders have loudly condemned the decision and called for a public 
debate to clarify why the GOS chose Jafza international's Special 
Economic Zone proposal over  the country's MCC compact proposal.  A 
joint U.S.-GOS statement on the decision released on June 27 was 
widely covered by the local press.  Most public criticism has been 
directed at the GOS, with local media scrutinizing the terms of 
reference under the GOS-Jafza agreement, with more questions likely 
to be raised in the coming weeks.  The MCC's continued interest in 
completing a compact with Senegal, however, has also been noted. 
End summary. 
 
PUBLIC REACTION: NO ECONOMIC ZONE, WE WANT OUR PLATFORM IN 
DIAMNIADIO 
--------------------------------------------- - 
¶2.  (U) The joint statement issued on June 27 to explain the MCC's 
withdrawal from the Diamniadio Industrial Platform project has 
created a state of concern and mistrust between the Diamniadio-area 
population and the GOS.  The local population has expressed 
disappointment at losing the Platform project and its attendant 
projections of infrastructure development and employment.  Local 
leaders and groups have publicly challenged the GOS's credibility 
and leadership to have "removed" the Diamniadio project in favor of 
Dubai-based Jafza International's proposal to establish Special 
Economic Zones (SEZ) in Senegal.  The population's frustration and 
anger were widely reported by local press.  One resident stated, "We 
have lost job opportunities for youth and wealth creation for our 
population."  Others questioned "why the GOS is preferring Jafza's 
loan to MCC's grant?"  During a large demonstration on the street of 
Diamniadio on July 4, the residents chanted "No more Jafza, we want 
our platform from MCC." 
 
¶3.  (U) On July 2, the civil society group CONGAD, an umbrella of 
NGOs, sent a letter along with a petition signed by locally elected 
officials from the department of Rufisque (15 kms from Diamniadio) 
to the Ambassador to invite MCC to step back from its decision and 
to "pursue effort in implementing the platform project."  On July 6, 
CONGAD also held a press conference to condemn the U.S.-GOS joint 
statement and called the GOS's attitude "a failure." 
 
¶4.  (U) On the political side, Cheikh Bamba Dieye, a new opposition 
member of the Parliament and strong advocate of the Diamniadio 
Platform, criticized publicly, and in the National Assembly, the GOS 
actions that caused the MCC to withdraw from the Platform project. 
He also criticized the lack of transparency in the Jafza agreement. 
Following regular parliamentary procedures, Dieye tabled on July 9 
an oral question on the GOS-Jafza deal.  However, without his 
knowledge the question was subsequently removed from the list of 
items to be discussed.  Dieye told reporters, "I am scandalized by 
the PDS-controlled Parliament's attitude.  This demonstrates our 
authorities' lack of transparency and good governance." 
 
¶5.  (U) Dieye has stated he will "petition the U.S. government to 
reconsider its decision, claiming that "the Diamniadio platform is a 
partnership between the U.S. tax payers and the Senegalese 
population, and both the GOS and MCC are only intermediaries and 
facilitators."  Dieye told EconCouns "I am willing to pursue my 
fight in the U.S. Congress to have MCC return back to Diamniadio. 
He added that MCC's withdrawal will cause "damage" to Senegal's 
rural population because of the importance of the project in 
alleviating poverty.  Dieye, who was not a Deputy on February 6 when 
the National Assembly approved the law establishing special economic 
zones on behalf of Jafza, claimed that it was approved "under strong 
pressure from GOS," and added that "even the MPs who approved the 
project could not remember the content of the project."  [Note: it 
has since been reported in the press that the law was passed while 
only 16 of 120 Deputies were present.  End note.]  Omar Sarr, 
spokesman of Rewmi, former Prime Minister Idrissa Seck's party, has 
also weighed in, stating that he was "not surprised by MCC's 
decision" and said the Jafza deal would turn out to be "the scandal 
of the century." 
 
 
DAKAR 00001508  002.2 OF 002 
 
 
MEDIA REACTION 
-------------- 
¶6.  (SBU) The opposition-oriented newspaper Sud Quotidien, in 
particular, has continued to pursue this story.  In a recent edition 
it published a long history of the Diamniadio Platform project, 
highlighting its economic benefits and the important due diligence 
carried out by the MCC and the Senegalese implementing agency, 
AMPMD, during the project's first phase.  Sud Quotidien expressed 
concern about the secretive nature of the GOS' negotiations with 
Jafza and the quiet legislative maneuvering that created the special 
conditions for Jafza's proposed project.  The paper's editor claimed 
that the National Assembly was officially on recess at the time the 
law was passed.  The same edition also speculated that the agreement 
with Jafza hinged on the government's ability to "turn the MCC 
project over to" the Dubai-based company, and not follow MCC 
requirements for a fair and open public tender for the operator of 
the Platform. 
 
STILL TO COME 
------------- 
¶7.  (SBU) The law authorizing Jafza to establish the special 
economic zone is based on a feasibility study that offers extremely 
generous concessions to the Dubai Ports World subsidiary.  Sud 
Quotidien and Deputy Dieye have begun to expose and ask questions 
about the deal.  Should a final agreement be signed under these 
terms, Jafza would apparently: 
 
-- be offered an initial designation of 10,000 hectares for the 
Special Economic Zone, even though the feasibility study notes the 
near-term demand requiring the development of only 260 ha; 
 
-- be the sole entity authorized to run special economic or free 
trade zones (under a very liberal definition) in Senegal; 
 
-- be granted authority via Presidential decree to expand or 
establish a special zone in any location; and 
 
-- hold the authority within those zones to act on behalf of the 
Prime Minister or any other minister. 
 
COMMENT 
------- 
¶8.  (SBU) MCC's decision to withdraw from the Diamniadio platform 
does present a significant lost opportunity for economic development 
and jobs for the 20,000-plus residents of the Diamniadio area.  Even 
though there have been public rallies by that population for the 
MCC's return, the public blame for the end of the Diamniadio project 
has fallen squarely on the GOS for its unwillingness to follow 
strict MCC standards of transparency and accountability.  While some 
commentators have doubted the MCC's intentions to ever sign a 
compact with Senegal, this event seems to have recharged the press 
and some members of civil society to hold the GOS accountable for 
its deal-making.  We expect that the GOS will answer Dieye's "oral 
question" in the near future and work hard to get in front of this 
brewing controversy.  However, with Sud Quotidien beginning to dig 
up the incredibly favorable (read: irresponsible) terms of reference 
offered to Jafza to secure this agreement, this case may, in the 
end, shine some much needed light on the special and exclusive deals 
inked by the GOS over the past few months, including the contracts 
for a new international airport, mining rights to the country's iron 
reserves, management of the Port of Dakar container business, and 
much of the mega- projects ("grands travaux") underway in 
preparation for the proposed March 2008 Organization of the Islamic 
Conference Summit in Dakar.  While the MCC has already begun its 
discussions on possibly articipating in Senegal's toll road 
project, it's anybody's guess if Jafza will still make a majorinvestment in Senegal without the possibility of jumping on the 
Platform. 
 
¶9.  (U) Visit Embassy Dakar's Intranet site at: 
http://dakar.state.gov/htdocs/section/econSec tion.aspx and Embassy 
Dakar's SIPRNET Web site at http://www.state.sgov.gov/p/af/dakar 
 
SMITH