US embassy cable - 04DJIBOUTI958

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 000958 
 
SIPDIS 
 
STATE FOR AF AND AF/E 
STATE ALSO PASS USAID 
 
E.O. 12958: DECL: 06/29/2014 
TAGS: PREL, ETRD, EAID, ECON, EAGR, PGOV, DJ 
SUBJECT: DJIBOUTI AND COMESA 
 
 
Classified By: AMBASSADOR MARGUERITA D. RAGSDALE. 
REASONS 1.4 (B) AND (D). 
 
 
1. (C)  In separate meetings with Saleban Omar Oudine, 
Minister of Commerce and Industry, and Ismail Hussein Tani, 
President Guelleh's Cabinet Director, Ambassador discussed 
the Common Market of Eastern and Southern Africa (COMESA) and 
Djibouti's expectations as new vice-chair of the organization 
and as host of the 2005 COMESA conference (at which time 
Djibouti becomes chair).  Both officials had accompanied 
President Guelleh to the May 31-June 8 COMESA conference in 
Kampala. 
 
2. (C) For Oudine, the year 2005 and Djibouti's forthcoming 
chairmanship is important because they open new economic 
opportunities for Djibouti.  The year 2005 coincides with the 
launch and inauguration of the country's new port at Doraleh, 
currently under construction.  Djibouti would use the annual 
conference, he said, as a platform from which to present the 
port to all COMESA participant countries and to encourage its 
use by land-locked countries such as Uganda, Malawi and 
Rwanda. Uganda, for example, might profit from Djibouti's 
services, since 20 percent of its imports and exports are 
currently stolen annually at the port facility it uses in 
Kenya.  Flights could shuttle cargo directly between Djibouti 
and Kampala, the Minister added. Rwanda might also benefit 
economically, Oudine said.  He noted that while Rwanda had 
been deeply interested in the presidency of COMESA for 2005, 
Djibouti had done some backroom politicking to persuade 
Rwanda to look instead toward 2006 as the year to seek the 
presidency. Djibouti needed the year 2005 to boost its 
economic hopes for Doraleh, the Minister said. 
 
3. (C) Oudine and Tani told Ambassador that unlike most 
COMESA countries, Djibouti has no resources to sell and can 
only look toward services as the best source for income 
generation. Besides encouraging transshipment of goods, it 
could take advantage of COMESA by encouraging the 
establishment of small industries that would operate with raw 
materials from COMESA countries.  According to Tani, the 
Government of Djibouti intends to promote its liberal 
economic regime, and the port of Doraleh, to convince COMESA 
countries that Djibouti is a natural and logical gateway to 
their markets.  They will be advised that purchasing goods 
through Djibouti rather than through Dubai will save both 
time and money. 
 
4. (C) Oudine remarked that at the last COMESA conference, 
customs uniformity was a key issue.  He said Djibouti sees 
advantages in uniformity and it and other members hope 
uniformity can be reached by December 2004.  However, most 
countries opted for a delay because studies on the impact of 
this new system were not yet complete. It was believed that 
customs uniformity would be advantageous for a country like 
Kenya but would be very difficult to implement in countries 
such as Somalia and Sudan. If uniformity, Oudine said, 
disadvantages a country in terms of revenue generated, 
perhaps the U.S. Agency for International Development might 
make funds available to compensate those countries for 
revenues lost.  Besides economic integration, Tani remarked 
to Ambassador that Djibouti and other COMESA members are 
determined to have COMESA play an important role in other 
areas such as conflict resolution and political stability, 
for the long-term benefit of member states. 
 
5. (C) Oudine and Tani admitted that hosting the COMESA 
conference's eighteen member states in 2005 will be a huge 
logistical challenge for Djibouti.  A special committee is 
being created now to handle preparations for next year's 
conference.  The Government of Djibouti is exploring ideas 
for housing guests, especially heads of state.  It hopes that 
some of the villas included in the new Haramous housing 
development project, led by the Saudi investment company Maya 
Trading, will be ready by then.  (Note:  Embassy understands 
from Maya Trading that houses envisioned for the Haramous 
project are intended to be sold to private individual 
investors.  End note)  Also, some of the local hotels, Tani 
said, are expected to dedicate rooms for COMESA to use in 
order to boost hotel capacity.  Dubai Ports International is 
also planning to build a hotel by reclaiming the sea near the 
Palais du Peuple opposite the port. Yet Tani does not expect 
the hotel to be completed by 2005.  Finding a conference room 
that is large enough should not be a problem, Oudine said, 
but other costs in producing such a conference will be 
involved so the Government of Djibouti will officially 
request assistance from the U.S. and international 
organizations in the lead-up to the conference. Ambassador 
responded that such requests would need to be clearly 
outlined and made with sufficient lead time. 
 
6. (C) Tani broached the idea that Djibouti may, repeat may, 
press to postpone the COMESA conference until November, 2005 
instead of June, 2005, but not for logistical reasons. 
Djibouti's presidential elections scheduled for 2005, the hot 
summer period from June through September, and Ramadan's 
occurrence in October may mandate a later time frame. He 
emphasized that no formal request for change of timing had 
yet been put forward. 
 
7. (C) Comment:  Upon his return from the Kampala summit, 
President Guelleh stated publicly that the choice of Djibouti 
as vice-chair and host for the 2005 COMESA summit is an 
"international affirmation of Djibouti, which does not cease 
to play a more and more supreme role in international 
affairs."  That said, it is clear that Djibouti also sees its 
newly-claimed affirmation as a tremendous economic 
opportunity, of which it hastens to take advantage.  If 2005 
is to be Djibouti's "economic year," COMESA is as good a 
platform as any for this ambitious and optimistic country to 
push the envelope just a bit more.  End comment. 
RAGSDALE