VZCZCXRO1774
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHAN #0727/01 2891032
ZNR UUUUU ZZH
R 161032Z OCT 09
FM AMEMBASSY ANTANANARIVO
TO RUEHC/SECSTATE WASHDC 2944
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RHMFISS/CDR USAFRICOM STUTTGART GE
RUEAIIA/CIA WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 ANTANANARIVO 000727 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR AF/E - MBEYZEROV AND FOR OES/ENV 
DOC FOR RTELCHIN 
TREASURY FOR FBOYE 
PARIS FOR WBAIN 
LONDON FOR PLORD 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON MA
SUBJECT: ANTANANARIVO POL/ECON WEEKLY UPDATE (10/16/2009) 
 
REF: A) ANTANANARIVO 710, B) ANTANANARIVO 707, C) ANTANANARIVO 701 
 
¶1. (U) SUMMARY: This is U.S. Embassy Antananarivo's Weekly Update 
for October 5-16, an unclassified review of major political, 
economic, and commercial events and information from the U.S. 
Mission to Madagascar and the Comoros. 
 
POLITICAL (paras 2-4) 
- Ambassador Carter Visit 
- Public Reaction to ICG 
- Human Trafficking to Lebanon 
 
ECONOMIC AND COMMERCIAL (paras 5-9) 
- Vanilla Sector: Another Victim of Corruption 
- Self-Help Site Visits in Comoros 
- Rice Imports Planned to Cover Shortage 
- Shipping Rates on the Rise 
- AmCham Breakfast 
 
END SUMMARY 
 
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POLITICS 
-------- 
 
¶2. (SBU) AMBASSADOR CARTER VISIT:  Ambassador Phillip Carter visited 
Madagascar October 2-7 to lead the USG delegation to the 
International Contact Group (ICG) meeting organized by the AU to 
pressure the Malagasy political leaders to implement the August 9 
Maputo accords for a power-sharing transition government. 
Ambassador Carter met with Embassy staff, members of civil society, 
the military, the mediation team, and the diplomatic corps during 
his stay (refs A, B, and C). 
 
¶3. (SBU) PUBLIC REACTION TO RECENT POLITICAL EVENTS: HAT President 
Andry Rajoelina has been branded a "traitor" by factions loyal to 
outgoing Prime Minister Roindefo Monja, following Monja's recent 
replacement with a consensus candidate, Eugene Mangalaza.  Monja's 
subsequent refusal to step aside in the face of domestic and 
international pressure, however, has tarnished his own image, 
leading some former supporters to accuse him of wishing to prolong 
the crisis for personal interest.  On the other side, Ravalomanana 
is also reportedly losing credibility with the "silent majority" for 
his categorical refusal to cede the transition presidency to 
Rajoelina.  Callers to radio programs generally express fatigue on 
all sides, with many hoping that planned talks this weekend would be 
the last.  With Ravalomanana refusing to attend, talks have again 
been postponed (septel), and the public's already low opinion of the 
feuding politicians will only sink further. 
 
¶4. (U) HUMAN TRAFFICKING TO LEBANON: Malagasy domestic workers in 
Lebanon have resurfaced as a trafficking concern.  A recent article 
reported on a Malagasy woman who returned after just eight months in 
Lebanon, and has been sent to the Antananarivo psychiatric asylum 
upon her arrival.  She is the seventh returnee from Lebanon received 
at this asylum.  Another woman reportedly died in Lebanon, and the 
repatriation is currently being facilitated by the MFA.  The 
Malagasy recruiting agency has offered no explanation to family 
members, and authorities have thus far been unresponsive to media 
inquiries. 
 
----------------------- 
ECONOMIC AND COMMERCIAL 
----------------------- 
 
¶5. (SBU) CORRUPTION DESTROYING VANILLA SECTOR: A representative of 
the leading American buyer of Malagasy vanilla told Emboff October 9 
that "ridiculous" pricing policies were killing Madagascar's 
successful vanilla sector.  Doug Daugherty explained that the 
current export price floor of USD 27 per ton, set by the Malagasy 
government, made legal Malagasy exports uncompetitive with the world 
market price of USD 20, even though Madagascar has the lowest global 
costs of production.  Daugherty alleged that two large international 
buyers - Vanipro and Authentique Product - had bribed the commerce 
and finance ministers to implement the price floor to keep Malagasy 
vanilla off the global market so that they could unload stock held 
outside of Madagascar, which they had accumulated in anticipation of 
higher international prices due to vanilla blight.  As a result, 
vanilla farmers (previously estimated at around 100,000) now unable 
to sell their product are switching from vanilla to rice or banana 
production, while vanilla collectors are focusing on lucrative 
illegal hardwood smuggling. 
 
ANTANANARI 00000727  002 OF 002 
 
 
 
¶6. (U) SELF-HELP SITE VISITS IN COMOROS: Emboff visited several 
ongoing SSH projects in Comoros, and conducted site visits for 
potential new projects.  Out of the 11 projects from FY 2008, for 
which USD 60,000 was obligated, three have already finished while 
most of the others are near completion.  An additional USD 60,000 
will be obligated before December 31, 2009 for new projects. 
 
¶7. (U) RICE IMPORTS: The Director General of internal trade at the 
Ministry of Trade declared that the country will import rice to 
cover the upcoming shortage period (from December to April).  Rice 
producers, importers, and the government met in August and decided 
that with a national consumption of 2.4 million tons per year, the 
country needs to import 125,000 tons of rice before the end of 2009. 
 
 
¶8. (U) RISING SHIPPING RATES: Beginning October 15, French shipping 
company CMA/CGM will increase its freight cost between Europe and 
the Indian Ocean by EUR 150 per 20 foot container, citing their 
desire to continue offering customers the same quality and 
reliability of services.  This increase will have an impact on the 
cost of imported goods, as 80 percent of imported goods are sent by 
sea.  The two other major shipping services, Mediterranean Shipping 
Company (MSC) and Maersk, said that they plan to keep their current 
rates. 
 
¶9. (U) AMCHAM BREAKFAST: On Oct 15, around 70 people attended the 
monthly AmCham breakfast which featured guest speaker Patrick 
Hickey, the manager of the USD 4.5 billion Ambatovy mining project. 
The nickel and cobalt mine, the largest investment in Madagascar's 
histQ, is scheduled to complete construction in late 2010.  Hickey 
explained that although the project only pays one percent in 
royalties for its refined product, the project is subject to several 
additional taxes and fees that, if considered as a whole, provide a 
fair take for the government (approximately 40 percent for 
government/60 percent for Ambatovy assuming nickel prices of USD 7). 
 Based on projections over the thirty year lifespan of the project, 
using an average nickel price of USD 5, the government take is 
estimated to reach USD 1.7 billion.  Hickey noted that, at least for 
now, pressure from the government to revise the terms of the 
investment, which is based on the large mining law, has ceased.  He 
added that although there is turbulence at the top, the government 
at the working-level continues to function. He noted the trend of 
increasing corruption on the island, and encouraged the AmCham 
members to "just say no", as Ambatovy had done. 
 
 
STROMAYER