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OO RUEHWEB

DE RUEHAN #1251/01 3511103
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O 171103Z DEC 07
FM AMEMBASSY ANTANANARIVO
TO SECSTATE WASHDC IMMEDIATE 0792

UNCLAS ANTANANARIVO 001251 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR AF/FO -- ASSISTANT SECRETARY FRAZER 
DEPT FOR AF/E -- MBEYZEROV 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON OVIP MA CN
SUBJECT:  SCENESETTER FOR A/S FRAZER'S VISIT TO MADAGASCAR 
 
¶1. (SBU)  SUMMARY.  Welcome to Antananarivo!  Your visit to 
Madagascar and the Union of the Comoros comes at an important time 
as both countries - in quite different circumstances - face 
challenges that are likely to define the future character of their 
governance.  Your arrival, as the highest ranking State Department 
official to visit in decades, provides you some ability to help 
steer this process in each country.  In Madagascar, President Marc 
Ravalomanana has staked the future of his presidency on a bold 
vision for rapid development described in the Madagascar Action 
Plan, or the MAP.  Immediately following a month of unprecedented 
public consultation on the strategy for attaining the eight 
different MAP goals, the president suffered a crushing defeat in the 
Antananarivo mayoral elections, with the president's candidate 
losing 2-1.  Ravalomanana's vision for the future and his determined 
efforts to shake his countrymen into more assertive action to 
improve their well-being are laudable; however, he is always 
headstrong and he can be capricious, so the days ahead will 
determine whether he opens political space for the victorious 
mayoral challenger or seeks to grasp the reins of power even 
tighter.  Initial indications are positive, and you can support him 
in the notion that losing elections is as much a part of democracy 
as winning them.  Septel provides a scenesetter for the Comoros. 
END SUMMARY AND INTRODUCTION. 
 
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MADAGASCAR - Political 
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¶2. (U)  Relative political stability, significant natural resources, 
a strategic location in the Indian Ocean, and a distinctly 
pro-American government make Madagascar a country of growing 
interest to the United States.  Madagascar is important because, 
almost alone among African countries, it is making simultaneous 
progress in consolidating democracy, developing as a free market 
economy, combating corruption and trafficking in persons, fighting 
HIV-AIDS before it takes hold, and protecting its unique 
environment.  In recognition of these accomplishments, Madagascar 
was selected as the first Millennium Challenge Account (MCA) 
country.  However, these advances are fragile and susceptible to 
setbacks in a country of heartbreaking poverty and shallow-rooted 
democratic traditions. 
 
¶3. (U)  You will recall well that Madagascar's 2001 presidential 
election, rife with irregularities, sparked a six-month political 
and economic crisis and temporarily split the country in two, 
bringing the country to the brink of civil war.  Former President 
Didier Ratsiraka attempted to blockade the capital by attacking 
inbound infrastructure, particularly the bridges; however, the 
Ravalomanana forces steadily gained control over the entire country, 
ultimately forcing Ratsiraka into exile in July 2002.  The United 
States government played a pivotal role in assisting the country to 
come to a peaceful resolution - still vividly remembered here -- but 
Madagascar emerged from this crisis and nearly 25 years of socialist 
mismanagement with a crumbling economy and a fractured political 
system.  The 2006 presidential elections, by contrast, were 
generally free and fair and President Ravalomanana won with a 
landslide 57 per cent despite facing 13 challengers. 
 
¶4. (U)  In power, Ravalomanana has moved with decided, and at times 
controversial, swiftness to move Madagascar onto a path of rapid 
growth and development, most recently through an ambitious five-year 
development program called the Madagascar Action Plan (MAP); you 
will hear repeated references to the MAP as the country's 
over-arching development blueprint, and your interlocutors will seek 
your support for the "MAP Road Show" they will take to Washington in 
February.  Throughout November 2007, Ravalomanana and his government 
hosted the Presidential Dialogue talks, essentially a public comment 
period on the eight MAP topics ranging from good governance to 
economic growth to health and education.  A cabinet reshuffle in 
late October put a number of more competent ministers in place, in 
line with the overall theme set by the President for his second 
term: "results, results, results."  The big surprise was the 
appointment of the first ever woman and civilian Minister of 
Defense.  Explaining that Madagascar needs to empower women to 
proceed on the path of development, the President pointed to 
Condoleezza Rice's former role as national security advisor in the 
U.S. as his model. 
 
¶5. (U)  The promotion of democracy remains a top U.S. foreign policy 
objective in Madagascar.  To advance this goal, we have worked with 
the Malagasy government and civil society to ensure free, fair, and 
transparent elections as a top priority.  In the past year alone, 
the Malagasy have gone to the polls four times: for presidential 
elections in December 2006, a constitutional referendum in April, 
National Assembly elections in September, and municipal elections 
last week.  Although dominated by the President's TIM political 
party, all were considered by international and domestic election 
observers to be generally free and fair despite minor 
irregularities.  However, repeated calls for electoral reforms, such 
as a truly independent national electoral commission and a single 
ballot, have gone unheeded; we have indications that the GOM will 
take up electoral reform in April, 2008, after Senatorial and 
regional elections are held - something you should encourage. 
Whether due to voter fatigue or the sense that the ruling TIM 
party's victory was inevitable, the last four elections were marked 
by progressively lower voter turnout.  The one clear exception was 
TIM's humiliating upset in the mayoral elections in Antananarivo 
last week, when Andry Rajoelina, a successful businessman but 
political unknown, won a landslide victory against the appointed TIM 
incumbent.  His victory was considered a vote of protest against the 
high cost of living, power outages, and infrastructure problems in 
the capital and may serve as an "alert" to the President that 
changes are in order throughout the country.  It may also be viewed 
as a vote for democratic diversity and against monolithic TIM 
domination.  President Ravalomanana was initially gracious in 
conceding his candidate's defeat, but the weeks ahead will test his 
ability to work cooperatively with the young new mayor and his 
team. 
 
¶6. (U)  Through a USD 1.1 million ESF-funded program launched in 
October 2006, the National Democratic Institute (NDI) has worked to 
consolidate democratic practices in Madagascar by bolstering the 
capacity of the Consortium of National Election Observers (CNOE) and 
other civil society actors, training a cadre of domestic election 
and media monitors, conducting civic education throughout the 
country, and promoting dialogue among political heavyweights on the 
need for electoral reform.  However, the program is set to expire in 
early 2008. 
 
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MADAGASCAR - Economic 
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¶7. (U)  With a per capita GDP of about USD 255 per year, Madagascar 
is one of the poorest countries in the world.  More than 70 percent 
of the population is estimated to live below the poverty threshold 
and much of the rural population survives through subsistence 
farming.  However, the country does have significant economic 
potential that stems from an industrious, competitive labor force 
and a variety of natural resources.  Sustainable development of the 
country's natural resources remains a major challenge.  In the short 
and medium terms, considerable economic growth can arise from more 
effective allocation and use of these resources. 
 
¶8. (U)  Agriculture plays a central role in Madagascar's economy, 
contributing more than 60 percent of the country's export earnings 
and 32 percent of GDP.  Agriculture, fishing, and forestry employ 
between 70 and 80 percent of the people.  The major agricultural 
exports are shrimps and spices such as vanilla and cloves. 
Agriculturally based products have the greatest potential to spur 
growth in the medium term and to provide broad-based poverty 
reduction.  However, agricultural productivity is extremely low, 
even by African standards.  In addition, poor natural resources 
management, limited investment, poorly functioning domestic markets, 
and weak linkages to international markets characterize the sector. 
Weak organization of producers and traders further constrains 
efforts to surmount these problems. 
 
¶9. (U)  The industrial sector accounts for about 13 percent of 
output but rapid growth is occurring, especially in extractive 
industries.  Until the mines come on line, the growth comes mainly 
from the strong performance of the food, tobacco, and beverage 
industries where Ravalomanana's TIKO company dominates -- and U.S. 
company Seaboard has had difficulty in obtaining a level playing 
field.  However, the President's opening speech on November 5 at the 
Presidential Dialogues promised publicly, for the first time, a 
level playing field and welcomed competitors in all sectors; this 
attention to conflict of interest issues here is to be welcomed. 
The major industrial exports are apparel and textiles, minerals, and 
gemstones such as sapphires.  The textile and apparel industry, 
which hires about 100,000 workers, is a major source of formal 
employment and Madagascar is one of the main exporters of textiles 
and apparel to the U.S. under AGOA.  Mining is dominated by two 
major foreign projects; the QMM ilmenite mine (ore of titanium 
dioxide, used primarily as a paint whitener) is already under 
development and transforming the southern port of Fort Dauphin. 
That investment is Anglo/Australian/Canadian in origin, as part of 
the Rio Tinto group.  Dwarfing that project is Sherritt's Ambatovy 
nickel/cobalt mine, a 3.2 billion USD investment that is just 
getting underway; the investors are Canadian, with Korean and 
Japanese partners.  Exxon is preparing to drill its first 
exploratory well offshore in the Mozambique Channel, among a number 
of foreign firms with oil/gas exploration rights here. 
 
¶10. (U)  The service sector, accounting for 55 percent of output, 
has been a significant source of growth in recent years.  Service 
sector expansion is led by the tourism industry, transport services, 
telecommunications, and infrastructure improvements such as road 
construction or rehabilitation.  However, ongoing power shortages 
and the perennial mismanagement of the state utility JIRAMA 
constrain the service sector and ensure that all large industrial 
projects include an independent power-generation component. 
 
¶11. (U)  The macroeconomic situation is generally considered stable, 
owing in part to adequate policy.  Madagascar attained the 
completion point under the Heavily Indebted Poor Country (HIPC) 
initiative in 2004, thereby qualifying for substantial debt relief. 
In 2005 Madagascar qualified for additional debt relief under the 
IMF's Multilateral Debt Relief Initiative (MDRI).  The IMF estimates 
GDP growth for 2007 and 2008 at 5.6 per cent, whereas the MAP target 
is for Madagascar to reach 8-10 per cent growth by 2012.  Inflation 
is dipping into single digits and the currency is appreciating, in 
part due to the influx of foreign mining investment.  The 
government's budgetary performance is hobbled by an ineffective 
revenue collection system rife with corruption, and by insufficient 
controls over extra-budgetary spending.  Structural economic reform, 
including privatization, is proving to be slower and more difficult 
than anticipated.  Apart from the extractive industry firms, new 
foreign investors do not consider the investment climate 
sufficiently attractive; but without greater foreign direct 
investment, the MAP growth goals will remain a distant dream. 
Engaging U.S. investors, and improving the climate awaiting them 
here, remain major mission goals. 
 
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MADAGASCAR - Millennium Challenge Account 
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¶12. (U)  In April 2005 Madagascar was selected as the first 
Millennium Challenge Account (MCA) country with a USD 110 million 
program.  Poverty in Madagascar is overwhelmingly rural.  Rice 
yields have consistently been among the world's lowest over the last 
forty years, and fertilizer use is one-twelfth the African average. 
In this setting, the most effective vehicle to reduce poverty is for 
the rural poor to invest in their land, employ proven technology to 
enhance productivity, improve farming methods, and sell to new 
markets.  The MCA Madagascar program seeks to establish the right 
conditions for economic growth to ensure foreign aid effectiveness 
through three projects: Land Tenure, Finance and Agricultural 
Business Investment. 
 
¶13. (SBU)  The cachet of being selected first has now worn off - 
particularly with the president.  He has seen subsequent MCA 
compacts, some going to smaller countries, dwarf his in size.  He 
also perceives - somewhat unfairly in our opinion - that the 
Madagascar project is moving too slowly and without sufficient 
impact.  His signature impatience leads him to swing between sudden 
and arbitrary changes in the existing compact - such as his 
dismissal of the director some six months ago - to clamoring for a 
"Second Compact" that would presumably be many times larger than the 
existing one.  Complicating matters further, Madagascar is now 
failing all five of its "Investing in People" indicators, meaning a 
second compact will not be possible without remediation.  In fact, 
given the political will, remediation is certainly possible and we 
are not asking anything of Madagascar that is not already a MAP goal 
they have enunciated themselves.  Nonetheless, this may be a prickly 
topic in your discussions with the president.  Offsetting this is 
the fact that your visit will come in the immediate wake of a DVC we 
are hosting on Tuesday between MCC officials and five concerned GOM 
ministers and their staffs.  We are encouraged that the GOM, though 
belatedly, is becoming fully engaged on the MCA eligibility issues. 
 
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MADAGASCAR - Health and Environment 
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¶14. (U)  Madagascar's major health problems include childhood and 
maternal health, malnutrition, malaria, sexually transmitted 
infections (STIs), and access to potable water.  The HIV prevalence 
rate in Madagascar remains low, at about 1 per cent, but Madagascar 
has some of the highest rates of STIs in the world, which 
significantly enhances the risk for an accelerated HIV/AIDS 
epidemic.  Nonetheless, President Ravalomanana is committed to 
fighting the spread of HIV aggressively, and the Government of 
Madagascar has taken bold steps to control its spread.  With the 
recent launch of the President's Malaria Initiative (PMI) here, we 
are now deeply engaged in helping Madagascar address what is perhaps 
its most insidious public health challenge. 
 
¶15. (U)  Madagascar is a world biodiversity "hotspot" with over 80 
percent of its flora and fauna occurring nowhere else on earth.  The 
natural richness of the country is unsurpassed.  However, Madagascar 
faces the challenge of conserving this global endowment in 
biodiversity for future generations given current rates of 
deforestation due primarily to slash and burn agricultural 
practices.  In an unprecedented response to the continued loss of 
biodiversity, President Marc Ravalomanana made a commitment at the 
September 2003 World Parks Congress to increase Madagascar's 
protected area coverage from 1.7 million hectares to 6 million 
hectares by 2008, a commitment that has been extended in the MAP. 
 
Through USAID, we are directly engaged in helping the GOM create the 
additional protected areas. 
 
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MADAGASCAR - Security Challenges 
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¶16. (SBU)  In terms of security, Madagascar's maritime borders 
continue to be of concern as a possible conduit of transnational 
crime, terrorism, and illegal immigration.  Madagascar cooperates 
closely with us in combating terrorism and seeking to prevent 
possible Al Qaeda members or others using the porous border to 
transit from mainland Africa to Madagascar to train, recruit, and/or 
build terrorist infrastructure.  However, the human and material 
resources available for this effort are limited; an island nation, 
Madagascar only recently procured (from the EU) its first vessel 
capable of circumnavigating its own territory.  Other Malagasy 
concerns, which we share, tend to be more economic in nature: 
poached fisheries amounting to hundreds of millions of dollars 
annually, illegal logging, and smuggling of gemstones and narcotics; 
President Ravalomanana is likely to raise these concerns directly 
with you.  Within its limited capacity, the GOM has been a willing 
partner on counterterrorism, international security, and maritime 
security issues.  The GOM has a small contingent in Darfur; hosted 
the first international Maritime Security Conference in July 2006; 
continues to maintain and use Excess Defense Article (EDA) boats 
donated to Madagascar in 2003 to protect their maritime domain; 
invested in increased port and airport security; and has responded 
positively to AFRICOM. 
 
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MADAGASCAR - The People 
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¶17. (SBU)  The Malagasy people, isolated on their "Red Island," 
scarcely consider themselves "African" and tend to be inward-looking 
and little engaged on the issues of the mainland.  Of mixed 
Malay-Polynesian, African, and Arab descent, they are divided into 
18 tribes, a term without pejorative overtones in the country. 
There are also minorities of Indo-Pakistani, Comoran, and Chinese 
heritage in the country.  Ethnicity is a potential source of social 
tension and conflict in Madagascar.  The grievances of coastal 
people against the Merina of the high plateau - grievances that 
center on the issue of economic dominance - continue to simmer.  The 
Merina ruled much of the island prior to colonization and, with the 
arrival of the French and the British, formed alliances in the 
highlands with them.  During the colonization period, the French 
continued to develop the high-plateau, and the gap between the high 
plateau and the coastal regions widened.  Even though all of 
Madagascar's past presidents have been from coastal areas, little 
development has found its way to these outlying provinces. 
Contemporary politicians have used this gap between high-plateau and 
coastal regions to heighten ethnic tensions and consolidate power. 
Marc Ravalomanana is the first president of Merina ethnicity and 
took a bold step - which was surprisingly well-accepted - when he 
named another Merina, General Charles Rabemananjara, as Prime 
Minister after the 2006 election; additionally, every minister but 
two are Merina in origin. 
 
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MADAGASCAR - Your Message 
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¶18. (SBU)  In your time here, you can make a lasting impact by 
encouraging the GOM's path towards consolidating democratization, 
good governance, and economic reform, with an emphasis on U.S. 
support for the MAP objectives.  Given Madagascar's poor performance 
on the MCA "Investing in People" indicators, you should urge 
improvement on the indicators in order not to close the option of a 
second compact.  Your visit will also be a good opportunity to 
congratulate Ravalomanana for holding four successful elections 
within the past year and inquire of any plans for political reforms 
in the coming months.  You can also emphasize to the new Minister of 
Defense the importance of maritime security and the need to prevent 
Madagascar's maritime border from becoming a conduit of 
transnational crime, terrorism, and illegal immigration.  While 
Madagascar is focused on its own development, insular by nature, and 
thus hesitant to engage outside its borders, you might encourage 
them to start doing so, perhaps by helping push for a resolution of 
problems in the neighboring Comoros.  Finally, your meetings can 
provide a reminder of the importance of a truly level playing field 
in order to attract U.S. investors. 
 
MARQUARDT