US embassy cable - 05NDJAMENA1707

C O N F I D E N T I A L  NDJAMENA 001707 
 
SIPDIS 
 
 
LONDON AND PARIS FOR AFRICA WATCHERS, TREASURY FOR OTA, 
ENERGY FOR GPERSON AND CGAY 
 
E.O. 12958: DECL: 12/05/2010 
TAGS: CD, ECON, EFIN, ENRG, EPET, PGOV, Oil Revenue Management 
SUBJECT: CHAD READY TO ACCEPT WORLD BANK TEAM, PUSHING 
AHEAD WITH REVISIONS TO OIL LAWS 
 
REF: NDJAMENA 1690 AND PREVIOUS 
 
Classified By: Ambassador Marc M. Wall for reasons 1.4 (b) and (d) 
 
1.  (C)  SUMMARY: The GOC is willing to welcome a World 
Bank/IMF team to explore the Bank's proposed compromise, but 
is skeptical about the World Bank's ability to assist the 
government's budget process.  Following internal 
disagreements among ruling-party deputies in the National 
Assembly, two committees have been established to reconcile 
concerns by the deputies and push the law forward in the 
National Assembly on December 20.  The status of our Treasury 
Advisor is still unresolved, with resistance to the Advisor's 
position apparently coming from President Deby himself. 
President Deby's interview on November 28 and our discussions 
with other senior Chadian officials in N'Djamena reveal the 
extent of their impatience with the World Bank and their 
determination to spend oil revenues on security.  The French 
here are worried that President Deby may be tempted by the 
option of confronting the World Bank and pursuing a more 
nationalistic approach. 
 
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GOC READY TO TALK TO THE WORLD BANK ... 
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2.  (SBU)  On December 2, Ambassador and E/C officer met with 
Minister of Finance Abbas Tolli to discuss the Government's 
on-going discussions with the World Bank concerning the GOC's 
proposed revisions to the Revenue Management Laws.  Tolli 
stated that the GOC has informally agreed to accept a World 
Bank/IMF mission in the next week or two, and would consider 
the World Bank's offer for short-term bridge financing and 
heavy technical assistance for its public finance system. 
Tolli also agreed with the Ambassador's assertion that a 
rupture in the relationship between the World Bank and the 
Government would be counter-productive, and any suspension of 
IFI assistance would be difficult for the country.  He noted 
that his recent trip from Washington indicated that he hoped 
the World Bank/IMF team would identify "points of blockage" 
that both sides could overcome. 
 
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... BUT HAS CONCERNS 
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3.  (SBU)  However, the Minister stated that the Government 
was still convinced that eliminating the Fund for Future 
Generations and expanding the range of priority sectors to 
include security and territorial administration were 
essential to maintain stability in the country.  Tolli 
reiterated the GOC's views that the need for increased 
security measures in Darfur, as well as a suspension of 
Chadian-Sudanese trade due to the conflict, had a severe 
impact.  At the same time, the recent attacks of November 13 
demonstrated that insecurity would continue to hamper efforts 
for progress in Chad. 
 
4.  (SBU)  Additionally, the Minister noted his skepticism of 
the World Bank's efforts.  He pointed out that past World 
Bank initiatives in Chad, such as the first Public Finance 
Reform Initiative (GEEP), have been complete failures, in his 
opinion.  Tolli stated that the World Bank had done little in 
the past year when the Government complained of flaws in the 
revenue management plan, and is only beginning to consider 
the GOC's concerns after the Government made the proposed 
revisions.  According to the Minister, the Government would 
continue to maintain its reservations about the World Bank's 
ability to assist the country until real, tangible results 
are seen. 
 
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PROPOSED LEGISLATION STILL BEING WORKED OUT 
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5.  (SBU)  Tolli also noted that the GOC was still trying to 
hammer out details on the proposed legislation in the 
National Assembly.  Following internal disagreements among 
ruling party delegates, the Government agreed to create two 
committees (one to examine the budgetary impact of the 
legislation, and one to examine the political impact of the 
 
 
legislation) to resolve any differences.  Tolli said that the 
Ministry of Finance would also be called upon to provide its 
input into the legislation.  The Commission would submit 
their findings to the floor of the National Assembly on 
December 20, where it would be debated and voted on some time 
in January. 
 
6.  (SBU)  With respect to the 2006 budget, the Minister told 
the Ambassador that the Government could not move forward on 
approving the budget until there is a decision on the 
proposed revisions to the revenue management law.  Tolli 
stated that given the impact the revisions have on the 
preparations the various budgets and the amount of revenue to 
be programmed, the Ministry could not feasibly finalize a 
program. 
 
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TREASURY ADVISOR POSITION STILL UNCERTAIN 
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7.  (SBU)  The Ambassador raised the issue of the status of 
Treasury Advisor Linda Gregory, and stated that the Embassy 
would like to see an immediate placement of the Advisor to 
the College.  Tolli said he agreed that the proposed 
revisions should not delay the work of the Treasury Advisor, 
and stated that he would discuss the matter with his 
counterpart in the Ministry of Plan. 
 
8.  (C) On December 3, Embassy learned from Director of Plan 
in the Ministry of Plan Felix Mbamba that the move by the GOC 
to prevent the Treasury Advisor from beginning work at the 
College was coming not from the Ministry of Plan, but from 
President Deby himself.  The Director stated the President 
was holding up approval because he is seeking greater access 
to financial resources to fund the upcoming Presidential 
elections. 
 
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PRESIDENT DEBY PLAYS THE SOVEREIGNTY CARD 
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9.  (U)  In an interview with Radio France Internationale 
broadcast November 28, President Deby argued that Chad has 
the sovereign right to change the oil revenue law.  While 
claiming Chad would respect the independent oversight board 
and extend the law to cover production from new fields, he 
also stressed that the funds set aside for future generations 
(around 20 billion FCFA or close to USD 40 million) had to be 
used to help feed the current generation.  If it is necessary 
to buy arms to assure the security of the country, he would 
do so, Deby said baldly.  Moreover, he argued, Chad has no 
intention of serving as a model for other countries in the 
way it manages its oil revenues. 
 
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OTHER VIEWS ON THE OIL REVENUE LAW 
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10.  (SBU)  In a meeting with the Ambassador November 30, 
Foreign Minister Ahmad Alam-mi railed against the World Bank 
and what he claimed was its refusals to respond to Chad's 
appeals to revise the oil law.  He maintained the World Bank 
had even incited NGO's to attack Chad's plans.  He insisted 
that Chad, like any sovereign country, should be able to 
spend revenues from its own resources to defend itself.  He 
argued that Chad had not been able to anticipate the added 
expenses it is incurring from the security incidents on its 
border with Sudan. 
 
11.  (C)  French Ambassador Jean-Pierre Bercot told the 
Ambassador December 1 that President Deby had asked French 
President Chirac to intervene on Chad's behalf with the World 
Bank in their meeting in Paris on November 25.  He said that 
France had advised Deby to avoid a confrontation.  Bercot 
argued that many in Africa and the Middle East would applaud 
if Chad backs off on its commitments.  If Deby is pushed too 
hard, Bercot speculated, Deby may opt for nationalizing 
management of its oil resources. 
 
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COMMENT 
 
 
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12.  (SBU)  Finance Minister Tolli's willingness to accept 
the World Bank mission and his conciliatory tone are 
positive signs.  The question remains whether his views on 
reaching a compromise with the World Bank are shared by his 
boss.  We are still extremely concerned by the GOC's 
continued unwillingness to accept the Treasury Advisor, and 
we will continue to press the issue.  Prospects for a rapid 
resolution are none too encouraging.  President Deby's own 
remarks and those of his cabinet officials suggest a 
readiness to move unilaterally regardless of the fallout. 
WALL 
 
 
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