VZCZCXRO8877
PP RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHBZ #0368/01 3651123
ZNR UUUUU ZZH
P R 311123Z DEC 09
FM AMEMBASSY BRAZZAVILLE
TO RUEHC/SECSTATE WASHDC PRIORITY 1664
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RHMFISS/AFRICOM
RUEHFR/AMEMBASSY PARIS 0525
RUEHBS/AMEMBASSY BRUSSELS 0072
RUEHBS/USEU BRUSSELS 0054
RUEHBJ/AMEMBASSY BEIJING 0029
RUEHRL/AMEMBASSY BERLIN 0024
RUEHRO/AMEMBASSY ROME 0069
RUEHBZ/AMEMBASSY BRAZZAVILLE 2084

UNCLAS SECTION 01 OF 03 BRAZZAVILLE 000368 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV EFIN PREL CF CH ELAB PINS
SUBJECT: (SBU) BRAZZAVILLE IN BRIEF:  DECEMBER 31, 2009: BUDGET, 
EITI, "POOL" SECURITY, LABOR TROUBLE, CHINA GRANT 
 
BRAZZAVILL 00000368  001.2 OF 003 
 
 
1.(U) Following is the last Brazzaville in Brief for 2009: 
Index/Topics 
---------------- 
--Congo Doubles Its Budget 
--Congo Unlikely to Comply with EITI Validation Deadline 
--Ex-Rebel Takes Government Job 
--Labor troubles Loom 
--China Offers $7.6 Million to Congolese Hospitals 
--Congolese Statue of Liberty Unveiled 
2.(SBU) Congo Doubles Its Budget 
----------------------------------------- 
The Congo legislature has adopted a calendar/fiscal year 2009 
budget projecting revenue  2,815 billion CFA (approximately 
$6.25 billion at an exchange rate of 450 CFA to the dollar), 
doubling last year's budget of 1,412 billion CFA ($3.1 billion). 
Fully 78% of the budget will be financed by oil revenue, based 
on an expected 124% increase in oil revenue in 2010 compared to 
¶2009. (Note:  The revenue projection is based on a relatively 
conservative price assumption of USD 60/barrel during the coming 
year and the fact that several new oil production streams will 
come online in 2010.)  The budget posits an overall growth rate 
of over 12 percent in 2010, with a slight augmentation of 
inflation as well. 
On the expenditure side, government spending is divided into 
three broad categories: 
Current Operating Charges: 
 793 billion CFA francs  (1.72 Billion USD) (28 pct ofrevenue) 
Investments: 
661 billion CFA francs (1.47 billion USD) (24 pct of revenue) 
Budgetary savings: 
1,361 billion CFA francs (3.02 billion USD) (48 pct of revenue) 
 
Line items: 
Within the Current Operating Charges category, the three largest 
line items (descending order by amount) are: 
Financial management, economic monitoring, and governance 
-       308 billion CFA francs, or 38 percent of total 
expenditure. 
Social sector (education, health, employment and culture) 
-       196 billion CFA francs, or 24 percent of government 
expenditure. 
National Defense 
-       137 billion CFA francs, or around 17 percent of 
expenditure. 
The second broad category, investment, is allocated 661 billion 
CFA.  This includes  large infrastructure projects, which fall 
under President Sassou's "Road to the Future" campaign to 
modernize and rebuild the country. 
With respect to the third category, savings, over half of the 
budget will be allocated to "savings" to be invested for later 
use, and thus does not fall within the rubric of government 
spending.  This category was described to the Ambassador by the 
Minister of Finance as a "future fund" against the day when 
petroleum revenues begin to decline. It represents fully 48 
percent of the Congo's expected total government revenue for 
2010; government expenditure for current operations and 
investment is just  52 percent of expected income. 
Comment:  Despite the enormous budget increases, one of the 
major problems plaguing the Congolese government has been its 
inability to spend money and to spend it wisely. One of the 
reforms being put in place under the HIPC initiative is 
procurement reform, designed to make the system more transparent 
and to reduce opportunities for corruption.  We are seeing signs 
that uncertainty and a learning curve on the new bureaucracy to 
review procurement and issue "no objection certificates" 
(designed by consultants engaged by the World Bank) is beginning 
to add additional hurdles to government spending, on top of 
procurement mechanisms already known to be slow, inefficient, 
and (formerly) corrupt, resulting in unfinished infrastructure 
projects and hospitals and health clinics without any medicines. 
End comment. 
3.(U) Labor troubles Loom 
-------------------------------- 
As the budget and the revenue and spending increases therein 
were debated over the past two months,  multiple trade unions 
have threatened to strike over salary and other issues.  We 
believe this increased labor activism is related to several 
factors:   1) the rapid growth of economic activity in the urban 
areas of the Congo (where most of the population lives); 2) as 
mentioned above, the vast amounts of money expected to be 
available to the government in 2010 from increased revenues, and 
3) the expected (now ongoing) review of the "truce" agreed 
between the government and the unions several years ago, to 
limit the wage bill during the quest for HIPC debt relief. 
 
BRAZZAVILL 00000368  002.2 OF 003 
 
 
A general strike was threatened and called off in early December 
by civil service unions (over a temporary transport subsidy for 
government employees that expires today, December 31).  The 
national railway union also threatened but did not call a strike 
not only over wages but also security issues along the rail line 
(see below). The latest union to threaten a strike is the union 
representing the workers of the national civil aviation agency 
(ANAC, by its French acronym), which is responsible for 
operating the airports in Congo in addition to its regulatory 
role.  The ANAC union leadership is upset that the Government 
signed a 25-year concession deal with a Lufthansa subsidiary to 
manage the airports at Brazzaville, Pointe-Noire and Ollombo. 
The union issued a statement this week calling for a one-week 
strike to begin on Monday, December 4, and expressed its 
annoyance at being invited to attend a ceremony announcing the 
concession to the private firms without having been informed or 
consulted about this action.   (Comment: Our expectation is that 
the government will hold the line on salary increases until 
spring, by which time it will have achieved debt relief and will 
be less constrained by the Fund/Bank requirements for fiscal 
discipline.  At that point, the door will be open at least 
slightly for government concessions to union demands.   End 
comment.) With respect to the ANAC strike threatened, we will 
advise its implications for our operations; if it is not called 
off over the weekend, arrivals and departures are likely to be 
disrupted next week, since ANAC controls all aspects of the 
operations of the two international airports. 
4.(SBU)Congo Unlikely to Comply with EITI Validation Deadline 
--------------------------------------------- -------------- 
---------------- 
An impeccable source involved in the preparations for the 
Extractive Industries Transparency Initiative (EITI) has told us 
that Congo is "unlikely to comply with the March 9, 2010 
deadline" for EITI validation. There are several factors causing 
this delay, including the requirement to undertake a 
communication campaign to educate the public about EITI, as well 
as to select a "validator" to come to Congo to conduct the 
review. The validator may arrive in January to begin 
consultations, but the information campaign has not yet been 
planned and, more importantly, the second report on EITI 
progress which is due December 31, 2009 (today) has not been 
submitted. 
Comment:  Congo's focus has been on the related matter of debt 
relief under HIPC, which seems likely to occur in January, 2010 
with "completion point."  The EITI process is closely related, 
in that the completion point conditionality included a large 
component of petroleum revenue transparency and reform.  It 
would be embarrassing for the IMF and the World Bank to 
recommend to their boards in January that Congo reach completion 
point based on the nascent reforms, only to fail with EITI 
validation two months later.  From the Congolese point of view, 
beginning the process was the important part, to demonstrate to 
the IMF and World Bank that the government has good intentions 
with regard to transparency, and we note that EITI participation 
is not a condition under the Bank/Fund HIPC effort.  End 
Comment. 
5.(SBU) Ex-Rebel Takes Government Job 
--------------------------------------------- ---- 
The head of Congo's "Ninja" rebels, Frederic Bintsamou (aka 
Pasteur Ntoumi) has finally arrived in Brazzaville to assume his 
role as senior official in the national peace building office. 
For over a decade,  Ntoumi had remained in the "Pool" region 
south of Brazzaville while various fitful negotiations to disarm 
and reintegrate the Ninjas took place; he was named nearly three 
years ago to his senior position and allocated an office and a 
residence, but refused to come to Brazzaville out of concern for 
his security, demanding a large force of loyalist guards 
accompany him, which the government refused.  In the past six 
months, there has been a resurgence in banditry and violence. 
Former Ninjas, some of whom were not under Ntoumi's control, had 
been stopping cars along the road between Pointe Noire and 
Brazzaville to demand bribes. On several occasions they stopped 
Brazzaville-Pointe Noire trains to steal cargo, extort money, 
and commit violence against passengers.  In the face of this 
increasing lawlessness, President Sassou appointed pool-origin 
former "Prime Minister" Isidore Mvouba to head a committee to 
resolve the situation of the Ninjas.  Persuading  Ntoumi to 
come, finally, to Brazzaville (with a smaller-than-demanded 
guard force) is the most high profile action thus far in the 
plan to quell violence in the Pool. (Comment:  It may be that 
Ntoumi no longer controls the armed groups and individuals who 
are these days contributing to the insecurity of the pool; 
indeed, he told a press conference this week that since he has 
come to Brazzaville, no one can accuse him of responsibility for 
 
BRAZZAVILL 00000368  003.2 OF 003 
 
 
the banditry in the Pool.  To finish the job of pacifying the 
Ninjas will require a large amount of money, for law enforcement 
and restoration of government in the region, to buy back 
weapons, and provide subsidies for the reintegration of the 
large number of youth who have taken up "ninja" banditry since 
the war.  End Comment.) 
6.(U) China Offers $7.6 Million for Congolese Hospitals 
--------------------------------------------- -------------- 
------- 
In its latest high profile infrastructure project, China and the 
Congo signed a $7.6 million deal to build hospitals in 
Brazzaville and Pointe Noire. According to press accounts, this 
is a grant, not/not a loan as part of the existing 
infrastructure credit, and has been linked by the Chinese 
government to the implementation of the announced aid grants 
from the recent China-Africa summit.  Nevertheless, we expect 
that the actual construction will be done by one of the many 
Chinese construction firms represented in Congo. 
7.(U) Congolese Statue of Liberty Unveiled 
--------------------------------------------- ------- 
President Sassou Nguesso presided over the unveiling of several 
new statues in central Brazzaville this week.  The statues, 
representing first president Fulbert Youlou, early Vice 
President Jacques Opangault, and "Liberty,"  were fabricated in 
South Korea at a cost of $1.5 million.  They had been veiled on 
their plinths in the center of major roundabouts downtown for 
several months.  The largest statue is "Liberty," a 2.5 meter 
female African figure with right arm raised, on the spot where 
the first Congolese workers unions organized their strikes 
during the "trois glorieuses" in August, 1963.  (Comment:  That 
particular labor unrest, ironically, led to a military coup and 
jail for Fulbert Youlou and the rest of his government, and set 
the stage for the emergence of a long period of Marxist 
repression in this country.  End comment) 
EASTHAM