US embassy cable - 05DJIBOUTI194

UNCLAS SECTION 01 OF 02 DJIBOUTI 000194 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, DJ, AGOA, USTR 
SUBJECT: DJIBOUTI'S INPUT FOR 2005 PRESIDENT'S REPORT 
ON AGOA 
 
REF: STATE 24616 
 
1.Summary.  Djibouti continues to make improvements in 
some problem areas. Djibouti-Telecom and the Ethio- 
Djiboutian Railway Company are preparing for 
privatization.  The Chamber of Commerce has become more 
dynamic in advancing the competitiveness of local 
businesses.  The Chamber of Accounts and Fiscal 
Discipline made its first public report by noting a lack 
of transparency in government and public services. 
Djibouti took a further step by signing an international 
convention against Female Genital Mutilation.  A long- 
term strategy for reducing poverty is ready to be 
submitted to a donor's round-table.  The oil terminal for 
the Doraleh Port project is in its completion phase and a 
new free zone was created in 2004.  End of Summary. 
 
--------------------------------------------- --------- 
Market Economy/Economic Reform/Elimination of barriers to 
U.S. Trade 
--------------------------------------------- ---------- 
2. Djibouti continues to have a market-based, liberal 
economic regime with minimum interference from the 
Government.  There are no price controls except on wheat. 
Djibouti offers attractive incentives to foreign 
investors and does not impose barriers to U.S. trade. 
 
3.  Djibouti's economy is becoming healthier thanks to an 
increase in foreign aid and investment.  In 2004, the 
government initiated the Djibouti Free Zone (DFZ), which 
is operated by Jebel Ali Free Zone International (JAFZI). 
DFZ covers 17 hectares and offers plots of land, 
warehouse facilities and office units for lease.  The oil 
terminal, which is part of the project of Doraleh Port, 
is expected to become operational by June 2005.  The 
construction of Doraleh Port's container terminal and 
Free Zone will start soon after the completion of the oil 
terminal. 
 
4. Djibouti-Telecom is still contracted to foreign 
management in order to improve the financial and 
technical viability of the company.  Under the terms of 
the contract, the Government is planning to announce the 
privatization of Djibouti-Telecom.  Djibouti and 
Ethiopia, co-owners of the Railway Company, have pre- 
selected six international companies in the tender for 
privatizing the railway.  In 2004, Djibouti's fishing 
port was contracted to Djibouti Maritime Management 
Investment (DMMI), owned at 60% by foreign investors. 
DMMI is currently selling fish in the local market but is 
targeting Gulf and other countries. 
 
--------------------------------------------- - 
POLITICAL PLURALISM/RULE OF LAW/ANTI-CORRUPTION 
--------------------------------------------- -- 
5. Since 2002, eight political parties exist in Djibouti. 
During 2003 legislative elections, these parties were 
grouped in two coalitions: the ruling coalition and the 
opposition coalition.  The opposition coalition has 
decided to boycott the upcoming presidential elections, 
accusing the ruling coalition of preparing for fraudulent 
elections.  The Embassy will closely monitor the 
presidential elections due in April 2005. 
 
6. The judiciary system in Djibouti is inherited from the 
French and is complex.  In addition, government 
interference is common. 
 
7. The State General Inspection (IGE), a governmental 
agency created in 2001, only became operational in 
November 2004.  IGE is designed to complement the work of 
the Chamber of Accounts and Fiscal Discipline (CAFD), 
which focuses on financial audits of the public sector. 
IGE will ensure that human and material resources in the 
public sector are properly utilized.  IGE remains 
accountable only to the President or the Prime Minister, 
who have the authority to request special investigations 
if deemed necessary.  The CAFD published its first 
General Report in November 2004.  The report documented 
all the anomalies discovered during the audit of the 
national budget for the years 1999, 2000, 2001 and 2002. 
In addition, the CAFD report revealed a lack of 
transparency in public firms and government projects. 
 
----------------- 
POVERTY REDUCTION 
----------------- 
8. The increasing poverty rate is a direct consequence of 
the high unemployment rate.  The poverty rate exceeds 
forty percent while unemployment is at a staggering 
seventy percent among the youth 30 years of age or less. 
In order to fight poverty, the government has finalized a 
long-term poverty reduction strategy ending in 2015.  It 
essentially promotes economic growth, human resources 
development, social safety nets, and good governance. 
The Government is planning to present the strategy in a 
donors' round-table meeting by the end of 2005. 
 
------------------------------ 
LABOR/CHILD LABOR/HUMAN RIGHTS 
------------------------------ 
9.  The Government of Djibouti did not make concrete 
improvement in its relations with labor unions.  The 
government continues to interfere in labor unions' 
activities by creating shadow unions and by intimidating 
union leaders. Unions are very critical of a new proposed 
Labor Code currently under review by Parliament for 
ratification.  Unions view this new Labor Code as 
limiting the rights of employees at the benefit of 
employers.  In addition, the new Labor Code reportedly 
makes it very difficult for employees to form unions. 
The Embassy continues to pressure Djibouti authorities to 
change their attitude towards unions. 
 
10. Child labor does exist in Djibouti but not in its 
worst form.  In urban areas, children are very active in 
the informal economic activities: they work as shoe 
cleaners, car washers, or domestic servants. In rural 
areas, children help their parents in agricultural or 
livestock areas.  The country has adequate laws against 
the worst form of child labor. These laws are found in 
THE CONSTITUTION, IN THE INTERNATIONAL CONVENTIONS 
RATIFIED BY DJIBOUTI SUCH AS ILO CONVENTION 182, THE UN 
CONVENTION ON THE RIGHTS OF CHILDREN, AND IN THE PENAL 
CODE. 
 
11. THE GOVERNMENT'S HUMAN RIGHTS RECORD REMAINED POOR 
DURING 2004, ALTHOUGH SOME IMPROVEMENTS WERE NOTED IN A 
FEW AREAS.  MOST ABUSES, INCLUDING POLICE VIOLENCE, 
TORTURE OF DETAINEES, RAPE OF FEMALE DETAINEES, 
INTIMIDATION OF POLITICAL OPPONENTS HAS DECREASED.  IN 
EARLY FEBRUARY 2005,  DJIBOUTI HOSTED A SEMINAR ON FEMALE 
GENITAL MUTILATION (FGM) WHERE IMPORTANT INTERNATIONAL 
GUESTS WERE INVITED.  AT THE TERMINATION OF THE SEMINAR, 
DJIBOUTI RATIFIED THE MAPUTO PROTOCOL OUTLAWING FGM. 
 
RAGSDALE