US embassy cable - 04DJIBOUTI767

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 000767 
 
SIPDIS 
 
FOR OBO/REPM/AQD; ALSO FOR AF/EX AND AF/E 
 
E.O. 12958: DECL: 06/02/2014 
TAGS: ABLD, AMGT, PREL, PGOV, DJ 
SUBJECT: DJIBOUTI NEC SITE ACQUISITION 
 
REF: DJIBOUTI 0741 (AND PREVIOUS) 
 
Classified By: AMBASSADOR MARGUERITA D. RAGSDALE 
FOR REASON 1.4 (B) AND (D). 
 
1. (U) At the invitation of the Djiboutian Ministry of 
Foreign Affairs, Ambassador, Management Officer and General 
Services Officer met on June 1 with representatives of MFA, 
Mohamed Ali Hassan, Director of Bilateral Relations, and 
Secretary General Badri Ali Bogoreh.  The purpose of this 
 
SIPDIS 
meeting was for MFA to hand over to the Embassy Decree number 
2004-0098/PR/MEFPCP dated May 29, 2004, signed by President 
Guelleh. 
 
2. (SBU) The Decree grants the USG 40,321 square meters of 
land in Djibouti's Haramous district for construction of a 
new embassy.  MFA representatives also wanted to finalize 
payment terms and conditions of the land purchase.  Both 
parties agreed the land would be acquired at the Embassy's 
offer price of $1.8 million.  This would exclude the small 
plot of land approximately 7,000 sq. meters, adjoining the 
proposed site. 
 
3. (U) Ambassador raised the concern that Mohamed Ali Yamani 
of Maya Trading Real Estate Development Co. (Maya) could 
subsequently interfere in the transaction by claiming land 
ownership based on the urban development contract signed by 
Maya and the Government of Djibouti dated February 4, 2004, 
and a previous Presidential Decree (2004-0026) ratifying the 
transaction.  The contract provides Maya with a temporary 
land grant ("concession provisoire") of 840,000 sq. meters 
for which payment is due in five annual installments starting 
in 2006.  The contract's seventh article obliges Maya to 
begin development during the first half of 2004.  While it is 
the Government of Djibouti's position that Maya holds a 
temporary grant only, Yamani may seek clarification with the 
Government of Djibouti regarding land title covered in the 
urban development contract.  The MFA representatives 
underscored that the Djiboutian Government remains 
titleholder of the proposed NEC site and chooses to sell the 
property to the USG. 
 
4. (U) The present Decree is an official decision by 
President Guelleh and reflects a commitment taken at Cabinet 
level.  The decision will be followed up, reportedly this 
week, with a diplomatic note.  For the Government of 
Djibouti, this note and Decree 2004-0098/PR/MEFPCP, should be 
interpreted as having full force.  For the MFA, any further 
dealings related to Yamani's claim would only cloud the 
transaction.  Ambassador affirmed our preference to work 
solely with MFA representatives to close the property deal. 
In response to Hassan's inquiry as to when payment could be 
made, Ambassador said she believed payment could be processed 
within 30 days of the closing and requested that the MFA 
specify in its diplomatic note preferred payment method and 
terms.  The Management Officer stressed the need to move as 
soon as possible to finalize this transaction since 
construction of the NEC is likely to commence within the next 
two years. 
 
5. (U) Later the same day, Ambassador, Management Officer and 
General Services Officer met with the Embassy's legal 
counsel, Alain Martinet, to understand where the USG stands 
legally if it proceeds with purchase from the Government of 
Djibouti.  Martinet first remarked that the present Decree 
does not identify which lot of Maya's temporary grant will be 
sold to the USG.  He also noted that before Yamani's urban 
development contract was signed, OBO/REPM/AQD's visit in 
December 2003 marked the Government's promise to sell the 
Haramous property to the USG.  It is now incumbent upon the 
Government to consult with Yamani to clarify the status of 
the urban development contract.  Martinet advised the USG not 
to approach Yamani directly on these issues in order to leave 
the matter for resolution between the Government of Djibouti 
and Maya. 
 
6. (U) With the assistance of Ibrahim Hamadou, Director of 
Land Records and Revenues at the Ministry of Finance, 
Martinet will confirm the legal titleholder of the proposed 
NEC site.  This is recorded, he said, in Djibouti's land 
registry ("Livre foncier").  Hamadou could also check the 
exact location of the land plot referenced in the present 
Decree.  Finally, Martinet would verify ownership of the 
adjoining lot to the proposed NEC site.  To protect the USG's 
interests, Martinet advised that the Government of Djibouti 
should issue another Decree stating the primacy of the 
current Decree over both the previous Decree involving Maya 
and the urban development contract.  Without an accord 
between the Djiboutian Government and Maya, he said, it would 
be possible for Yamani to seek damages from Djibouti, 
including return of the land plot.  Such a dispute would be 
resolved by international arbitration and the Paris court 
system, according to their contract.  However, should the 
matter go to court, enforcing the ruling in Djibouti will be 
problematic.  Martinet could not be specific as to the 
consequences for the USG, but indicated it would be 
disruptive (legally/public relations?).  It is now important 
for the USG to finalize the transaction with MFA and obtain a 
permanent land grant ("concession definitive"), Martinet 
said.  He continued that immediately following the 
transaction, the Embassy should also install a provisional 
perimeter fence around the plot to indicated ownership and to 
ensure that others do not build on it. 
 
7. (U) Embassy will pass copy of promised diplomatic note 
referenced in para 4 as soon as MFA provides. 
 
8. (C) Comment:  While the Government of Djibouti insists its 
May 31 Presidential Decree overrides any pre-existing 
contract, we are not certain if Yamani, or binding law, will 
hold the same view.  This will be an especially pertinent 
point if Martinet determines that Yamani is legal 
titleholder, after an examination of records.  If Yamani 
challenges and heads to arbitration, it will be a matter 
between Yamani and the Government, but could possibly delay 
our ratification of purchase and eventual construction.  He 
may also choose to bring the USG into a legal deliberation. 
We do not believe the Government of Djibouti plans to 
coordinate with Yamani. 
 
9. (C) Comment continued:  The nature of Yamani's contract 
also raises issues as the Government of Djibouti and Martinet 
told us that the contract sets a June 30 deadline for Yamani 
to begin preparation of the Haramous tract or the contract is 
null and void.  We will need to proceed carefully and should 
await the MFA's diplomatic note before deciding next step. 
RAGSDALE