VZCZCXYZ0004
RR RUEHWEB

DE RUEHNK #0658/01 2861219
ZNR UUUUU ZZH
R 131219Z OCT 09
FM AMEMBASSY NOUAKCHOTT
TO RUEHC/SECSTATE WASHDC 8826
INFO RUEHZK/ECOWAS COLLECTIVE
RUCNMGH/MAGHREB COLLECTIVE
RUEHLO/AMEMBASSY LONDON 0872
RUEHFR/AMEMBASSY PARIS 1232
RHMFISS/HQ USAFRICOM STUTTGART GE
RUEHDS/USMISSION USAU ADDIS ABABA

UNCLAS NOUAKCHOTT 000658 
 
SIPDIS 
 
FOR AF/WA, AF/EPS FOR GABRIELLE MALLORY, USTR FOR CONSTANCE 
HAMILTON, DEPT. OF COMMERCE FOR KEVIN BOYD, DEPT. OF 
TREASURY FOR ANTHONY IERONIMO 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ECON ENRG ETRD PHUM MR
SUBJECT: MAURITANIA'S 2009 AGOA ELIGIBILITY REVIEW 
 
REF: STATE 97769 
 
Country: Mauritania 
 
Country Background Summary: The Islamic Republic of 
Mauritania has an estimated population of 3.12 million.  Real 
GDP in 2008 was USD 3.0 billion and grew by 3.0%. Forecasts 
for 2009 indicate an economic contraction with real GDP 
expected to decline by 1.2-1.8% due to political instability 
and the global financial crisis. Mauritania ran a 9% budget 
deficit in 2008. 
 
Mauritania was suspended from eligibility for AGOA benefits 
in 2008 following the August 6, 2008 coup d'etat that 
unseated democratically elected President Abdallahi. The 2008 
coup d'etat drew widespread condemnation from the 
international community and resulted in a decrease in 
economic activity and international aid in Mauritania.  Many 
western countries, as well as the World Bank and the 
International Monetary Fund halted their assistance programs 
with Mauritania following the coup d'etat.  Following a 
Senegalese brokered political agreement in July 2009, former 
General Mohamed Abdel Aziz, the leader of the 2008 coup 
d'etat, won the presidential elections that were recognized 
by the international community. Many international 
organizations, including the IMF and World Bank, have since 
re-engaged with Mauritania.  Bilateral sanctions imposed by 
the United States following the coup have been removed 
following the constitutional transfer of power. 
 
 
¶I. MARKET-BASED ECONOMY 
 
 
¶A. Major Strengths Identified 
 
 
- Mauritania offers a small, under-developed market with room 
for potential growth.  Large-scale private foreign 
investments are occurring in the petroleum, mineral, 
telecommunications and fishing sectors. 
 
- Copper, gold, and uranium mining, which commenced in 2007 
are potential revenue generating activities. Following the 
2009 presidential elections there has been increased 
investment from foreign mining companies in Mauritania. 
 
-The African Development Bank recently signed a USD 175 
million loan agreement with Mauritania's largest parastatal 
company, SNIM (Societe Nationale Industrielle et Miniere de 
Mauritanie), to invest in a new iron ore mine, which hopes to 
increase production from a current 11 million annual tons of 
iron ore to 14 million tons/year. 
 
-A six-year 2006 EU-Mauritanian Fisheries Partnership 
Agreement valued at 86 million Euros per year provides a 
source of foreign currency revenue for the Mauritanian 
government. 
 
-Oil, gas and mineral exploration permits continue to be 
granted to foreign companies.  Mauritania has no 
discriminatory policies regarding foreign investment or 
imports and there is significant interest in pursuing 
business agreements with U.S. companies and investors. 
 
-Trade with the United States, while not numerically large, 
is growing rapidly, with Mauritania importing USD 106 million 
worth of American products in 2008; mostly industrial 
equipment for the mining and oil exploration industries. 
-Mauritania reached its "completion point" under the Heavily 
Indebted Poor Countries (HIPC) Initiative in 2002. After the 
government took remedial actions on its macroeconomic 
performance in 2006, Mauritania was declared eligible for 
nearly USD 550 million in debt relief under the Multilateral 
Debt Relief Initiative (MDRI) in June 2006. 
 
-A number of prominent Mauritania businessmen have inquired 
about the status of Mauritania's AGOA eligibility, viewing 
AGOA as an opportunity to strengthen U.S.-Mauritanian 
relations, while helping their businesses to explore the 
relatively untapped American market for Mauritanian goods. 
¶B. Major Issues/Problems Identified 
 
 
-Real GDP is forecast to decline by 1.2-1.8% in 2009. 
 
-Political isolation during the 12-months of the coup d'etat, 
coupled with recent security issues, severely damaged 
Mauritania's international standing, developmental assistance 
and foreign investment in Mauritania. 
 
-The global financial crisis and the resulting decline in 
commodity prices have damaged Mauritania's primary export 
industries in the fishing, iron ore and petroleum extraction 
industries. 
 
-While Mauritania successfully engaged with the IMF and World 
Bank in the past, the IMF's 2007 Poverty Reduction and Growth 
Facility (PGRF) program review stated that all 2007 
performance criteria and benchmarks were met, the 2008 coup 
d'etat halted Mauritania's relationship with the IMF for 
nearly 12 months. 
 
-The IMF conducted a brief visit to Mauritania in September 
2009 to announce its re-engagement with Mauritania. The IMF 
team noted that Mauritania's 2008 budget deficit of 9% 
exceeded the previously agreed upon IMF parameter of 3%.  The 
official 2009 budget deficit is estimated to be at least 5-6% 
of GDP, although many fear the actual deficit may be higher. 
 
-There remains a great deal of uncertainty regarding 
Mauritania's financial situation.  During the coup d'etat all 
communication with the IMF and other financial institutions 
was severely curtailed, leading many to speculate about the 
true status of the Mauritanian financial situation. 
 
-Average oil production fell considerably from a high of 
54,000 barrels/day in February 2006 to approximately 11,000 
barrels/day in September 2009. Estimates of Mauritanian oil 
reserves have been revised downward to 53 million barrels of 
oil equivalent, from an initial estimate of 123 million 
barrels. 
 
-Inflation has been a major problem in Mauritania, with 
consumer price inflation of 7.3% in 2008. Significant 
increases in basic food good prices in 2008 lead to food 
riots and political instability.  While price increases were 
brought under control in 2009, there are indications 
inflation could become a problem in the 4th quarter of 2009 
or early 2010. 
 
-During the fall of 2009, Nouakchott was plagued by daily 
power outages due to lack of capacity and aging equipment at 
the only power production facility in the capital. The 
frequent and lengthy power outages placed severe strains on 
Mauritanian citizens and businesses operating in Nouakchott. 
 
-According to the World Bank's 2009 Doing Business Report, 
Mauritania was ranked 160 out of 181 countries surveyed in 
terms of ease of doing business. 
 
 
II. POLITICAL REFORMS/RULE OF LAW/ANTI-CORRUPTION 
 
 
¶A. Major Strengths Identified 
 
 
-One of President Aziz' main election promises was to engage 
in a fight against corruption at all levels of the 
government.  Some prominent arrests for corruption have taken 
place since President Aziz took office. 
 
-The Abdallahi government, in conjunction with UNHCR, began 
repatriating Mauritania refugees living in Senegal.  Of the 
estimated 24,000 refugees, approximately 11,000 have been 
repatriated.  This program has continued under the Aziz 
government, and the UNHCR hopes to complete the repatriation 
program by January 1, 2010. 
 
 
¶B. Major Issues/Problems Identified 
-Many of the good governance initiatives began under the 
Abdallahi government were halted after the coup d'etat. 
President Aziz has continually stressed the importance of 
good governance, but it remains too early to measure his 
administration's performance in this domain. 
 
-Preferential treatment remains common in government 
procurement and allocation of resources. 
 
-The executive branch exercises significant influence over 
the judiciary through its ability to appoint and remove 
judges.  In addition, poorly educated and trained judges are 
susceptible to social, financial and tribal pressures, 
limiting the judicial system's fairness. 
 
-Favoritism and corruption remain widespread. Transparency 
International's Corruption Perception Index ranked Mauritania 
115th out of 180 countries in 2008. 
 
-Government officials reportedly receive frequent favors from 
authorities, such as unauthorized exemption from taxes, 
special grants of land and favorable treatment during bidding 
on government projects. 
 
 
III POVERTY REDUCTION 
 
 
¶A. Major Strengths Identified 
 
 
-In September 2009 the IMF agreed to a re-engage with 
Mauritania and plans to commence a new three-year Poverty 
Reduction and Growth Facility Program in January of 2010. 
 
-In September of 2009 the World Bank agreed to restart their 
Country Assistance Strategy (CAS), which had been canceled 
due to the coup d'etat. The World Bank agreed to release USD 
16 million of frozen funds for the CAS, which will focus on 
strengthening economic governance, building public sector 
capacity, helping to improve the investment climate and 
fighting both rural and urban poverty. 
 
-Following the certified elections in July 2009, many foreign 
governments and international organizations are restarting 
their foreign assistance programs in Mauritania. 
 
 
¶B. Major Issues/Problems Identified 
 
 
-The World Bank projects that Mauritania will not be able to 
meet all of the Millennium Development Goals by 2015, 
particularly in the area of health. 
 
-The Global Fund for the Prevention of AIDS, Tuberculosis and 
Malaria suspended Mauritania from the Global Fund program in 
September of 2009 when a financial audit indicated over USD 4 
million in funds were unaccounted for or fraudulently spent. 
The Mauritanian Government moved quickly to promise 
restitution of misappropriated funds and arrested the senior 
Mauritanian officials responsible for the alleged fraud. 
 
-Poverty rates remain high and approximately one third of the 
rural population faces food insecurity. 
 
-The government estimates that unemployment is at least 32%. 
 
-Mauritania lost eligibility for AGOA and an MCC Threshold 
Program following the August 2008 coup d'etat. 
 
-Mauritania has received only a small percentage of the USD 
2.1 billion pledged at the 2007 Mauritania Consultative Group 
meeting in Paris, France.  Following the coup, many donors 
did not fulfill their pledges.  The new Government has 
suggested the need for a new conference based on a new 
development plan. 
 
 
IV. WORKERS' RIGHTS/CHILD LABOR/HUMAN RIGHTS 
 
 
¶A. Major Strengths Identified 
 
 
-The right to organize labor unions was recognized in 1993 
and a number of unions exist. Most workers may form and join 
unions of their choice without authorization or excessive 
requirements. Unions may organize workers freely without 
government or employer interference. 
 
-The minimum age for the employment of children is 14 in the 
non-agricultural sector and 13 in the agricultural sector. 
 
-Mauritania has ratified all eight core ILO conventions, 
including Conventions 182 on the worst forms of child labor 
and 138 on the minimum wage. 
 
-The labor code includes criminal penalties for human 
trafficking in all of its recognized forms and includes 
increased penalties for cases dealing with forced labor. 
 
-The government enacted a new law in 2008 criminalizing the 
practice of slavery, which included a budget of approximately 
USD 7.5 million for a national antislavery campaign to 
eradicate all forms of slavery, but the law has not been 
actively enforced since the 2008 coup d'etat and nobody has 
been convicted under this law. 
 
-UNICEF, the World Food Program and other international NGOs 
are active and instrumental in providing programs that 
enhance children's welfare in Mauritania. 
 
-The governments of Mauritania and the UAE established a 
repatriation and reintegration program in 2007 for child 
camel jockeys from Mauritania working in the UAE. The program 
compensated 497 child jockeys with amounts between USD 
1,000-USD 6,000 per child. 
 
 
¶B.  Major Issues/Problems Identified 
 
 
-According to the Department of State's 2009 Trafficking in 
Persons Report, Mauritania is a Tier 3 country primarily due 
to issues related to the remaining vestiges of slavery in 
Mauritanian society. 
 
-Following the August 2008 coup d'etat, the military junta 
restricted freedom of assembly by denying demonstration 
permits to groups opposed to the coup and using tear gas and 
clubs to disburse anti-coup demonstrators. 
 
-During and after the August 2008 coup d'etat the military 
arrested a number of political figures and journalists 
without charge or hearings.  Arbitrary arrests and detention 
were noted in 2008 and 2009. 
 
-The government inconsistently and ineffectively enforces 
labor laws, including child labor laws. 
 
-Mauritania does not have a national policy or program of 
action for the elimination of the worst forms of child labor. 
Children continue to work in the informal sector, primarily 
in agriculture in rural areas and driving donkey carts in the 
urban areas.  Young boys known as "talibes" commonly beg in 
the streets as part of a "work-study" arrangement with 
religious teachers called marabouts. 
 
-Although slavery is illegal, slavery-related practices, 
including voluntary servitude continue to occur. 
 
-Discrimination against women and female genital mutilation 
(FGM) occur in Mauritania. 
 
-Trafficking in persons and the political marginalization of 
the largely southern-based African ethnic groups are 
problems. 
 
 
 
¶V. INTERNATIONAL TERRORISM/U.S. NATIONAL SECURITY 
 
 
¶A. Major Strengths Identified 
 
-Mauritania is a part of the Trans-Sahara Counter-Terrorism 
Partnership, a U.S.-led regional counter-terrorism program. 
 
-President Aziz used the fight against terrorism in 
Mauritania as a major campaign pledge.  Despite political 
difficulties between the U.S. and Mauritania following the 
2008 coup d'etat, cooperation on counter-terrorism issues 
remains strong and the Mauritanians have devoted substantial 
resources in building their counter-terrorism capabilities. 
 
-Mauritanian authorities continue to be committed to 
arresting suspected terrorists.  They are currently holding a 
number of suspected terrorists who are awaiting trial. 
Several have been tried and are serving prison sentences. 
 
-The government has made several seizures of drugs being 
trafficked through Mauritania. 
 
 
¶B. Major Issues/Problems Identified 
 
 
- On August 8, 2009 there was a suicide bombing near the 
French Embassy in Nouakchott, in which two French guards and 
one Mauritanian citizen were injured. 
 
- On June 23, 2009, a private American citizen was shot and 
killed in Nouakchott in an apparent kidnapping attempt by 
individuals sympathetic to, or directly tasked by Al Qaeda in 
the Islamic Maghreb (AQIM). 
 
-There have been four other terrorist attacks in Mauritanian 
since December of 2007 carried out by groups affiliated with 
AQIM. 
 
-The justice system is ill-equipped to handle security cases. 
 
HANKINS