US embassy cable - 05DJIBOUTI1202

UNCLAS SECTION 01 OF 03 DJIBOUTI 001202 
 
SIPDIS 
 
STATE FOR AF, AF/E AND DRL; 
LONDON, PARIS FOR AFRICA WATCHER; 
 
E.O. 12958: N/A 
TAGS: ELAB, ENRG, ELTN, PHUM, PGOV, ECON, ETTC, SOCI, DJ 
SUBJECT: BUS UNIONS AND GOVERNMENT REACH 
FINAL SOLUTION TO RECENT STRIKES 
 
REF: DJIBOUTI 1068 
 
1. Summary: On October 22, 2005, bus and 
taxi unions called for a general strike 
following a rise in fuel costs.  The strike 
paralyzed the country and greatly affected 
public transportation users during the 
Ramadan.  The government initially responded 
with tough measures, which caused students 
and parents to join the strikers.  As the 
situation worsened, the government invited 
union members to the negotiation table.  The 
talks resulted in the resumption of public 
transportation and concrete advantages for 
buses and taxis drivers.  End Summary. 
 
2. On October 22nd, a general strike by bus 
and taxi drivers disrupted the public 
transportation of Djibouti.  It was a 100 
percent general strike, the first of its 
kind in Djibouti because buses and taxis 
have normally held separate strikes in the 
past.  In addition, buses going to the 
districts and trucks bringing livestock to 
the capital stopped their services.  The 
population was severely affected because 
they had to walk long distances while 
fasting for the holy month of Ramadan.  Some 
resorted to staying home, causing empty 
schools, markets and work places, giving 
Djibouti City the appearance of a ghost 
town.  Police and army trucks were mobilized 
to carry as many hikers as possible, 
especially school kids.  People living in 
Balbala, located on the outskirts of 
Djibouti City, had to walk greater 
distances. 
 
3. (U) The call for the strike followed a 
meeting between public transportation unions 
and the government, which came to a dead 
end.  In this meeting, union members 
indicated that the rise in fuel costs was 
the last straw after a series of other price 
increases in food staples and electricity. 
As the strike completely paralyzed the 
country, the government quickly organized 
another meeting with union members.  As a 
result, union leaders agreed that services 
should resume while the government was 
reviewing union requests. However, the 
drivers responded they did not trust the 
government would promote their interests if 
they stopped the strike. 
 
4. (U) The government made a public 
announcement asking the drivers to 
immediately stop the strike to avoid serious 
sanctions.  The buses and taxis drivers 
unanimously refused to obey the government 
injunctions.  The government responded by 
jailing some drivers and confiscating some 
vehicles.  High school and college students 
went to the streets in solidarity with the 
strikers and burned tires, aggravating the 
situation.  Some parents joined their kids 
and also demonstrated to show their 
discontent with the high cost of living. 
The police responded with tear gas and real 
bullets in one instance (See reftel). 
 
5. (U) The government quickly put together a 
crisis unit formed by members of the 
Ministries of Transportation, Interior and 
Finance in order to bring the union back to 
the table and engage in negotiations.  The 
meeting was televised and widely covered in 
the local media.  The union leaders 
complained about the high cost of fuel, 
insurance and other related charges.  They 
complained that annual fees and taxes 
prevented them from earning a decent income, 
including annual insurance cost of DF 
258,000 (US$ 1,458), licensing fee of DF 
56,000 (US$ 316), and road tax of DF 25,000 
(US$ 141).  In spite of the government's 
recent reduction in taxes, the situation is 
exacerbated when daily costs are added, such 
as fuel running between DF 8,500 (US$ 48) 
and DF 14,500 (US$ 82) and the frequent need 
for expensive parts for repairs caused by 
poor conditions of the roads.  They added 
that their vehicles needed new tires every 
three months also because of the bad roads. 
6. (U) Government representatives argued 
that the cost of fuel is determined by the 
international market but that they were 
doing their best to keep the price of fuel 
down.  Three kinds of taxes are levied by 
the government: the Internal Consumption Tax 
(known as TIC), surtax and special fees.  A 
finance law related to the state budget 
fixes the tax and surtax so the only part 
that can be adjusted is the special fees. 
For instance, in July 2005 a liter of diesel 
oil cost around 137 DF ($0.77) at gas 
stations instead of 145 DF ($0.82) if the 
pricing structure was applied, which means 
that special fees were reduced. 
Consequently, the government was able to 
decrease 8 DF ($0.05) per liter by adjusting 
the special fees part of the pricing 
structure.  The same efforts were carried 
out by the government in August, September 
and October during which the cost of the 
liter of diesel oil was maintained at 137 DF 
($0.77) during August (instead of 148 DF 
($0.84)) and at 137 DF ($0.77) in September 
(instead of 149 DF ($0.84)) and at 143DF 
($0.81) in October (instead of 155 DF 
($0.88)).  As a result of the adjustments, 
the Ministry of Finance claimed it suffered 
a loss of income equal to DF 535 Million 
(US$ 3.02 Million) between January and 
October 2005. 
 
7. (U) The government appeared eager to 
solve the crisis, which impacted the economy 
and the social life of the country.  After 
long negotiations, both parties agreed to 
meet again on November 16, after Ramadan. 
Bus and taxi drivers resumed temporarily 
their services after three days of striking. 
This strike clearly showed that public 
transportation constitutes an essential link 
in the economic and social life of the 
country.  The population was relieved 
because they were preparing for the holiday 
festivities, which required reliable public 
transportation. 
 
8. Cost of fuel at the pump is determined by 
several factors.  State taxes, storage fees, 
distribution charges, oil company margins, 
and profits of resellers are added to the 
initial price of fuel when it arrives at the 
port.  The cost of a liter of regular fuel 
increased from DF 163 (US$ 0.92) in January 
2003 to DF 231 (US$ 1.31) in October 2005, a 
hike of more than 41 percent.  The increase 
was more pronounced for diesel fuel, which 
jumped from DF 94 (US$ 0.53) in January 2003 
to DF 143 (US$ 0.81) in October 2005, more 
than a 52 percent rise. 
 
9. The government-owned newspaper "La 
Nation" said union members took the country 
and its population as hostages.  It added 
that the drivers did not act as negotiators 
but gave orders to government 
representatives during the talks.  On 
November 3, President Guelleh, in his speech 
of Eid El-Fitr, said that the hike in oil 
prices was an international issue and that 
the population should be patient.  He added 
that he called for oil producing countries 
to show some generosity towards poor 
countries.  He finished by saying that the 
law will punish those who try to harm the 
security or the stability of the country. 
 
10. The opposition paper "Le Renouveau" 
reported the death of a high school student 
on October 24, killed by the police during 
the demonstration started by the population 
in Belbela.  The paper also reported the 
arrest of more than twenty drivers by the 
police.  In addition, the paper accused 
President Guelleh of "fleeing" to Saudi 
Arabia when the population needed him the 
most and giving instead strict instructions 
to restore order. (Note: Guelleh went to 
Saudi Arabia for Imra, a minor pilgrimage 
during Ramadan. End Note.)  The opposition 
paper deplored that President Guelleh 
congratulated his police forces and did not 
express regret or excuse for the 
"assassination" of the student.  Finally, 
the Djiboutian League of Human Rights 
condemned the killing of the young man and 
requested the government to investigate and 
bring the perpetrator to justice. 
 
11. Talks resumed November 16 between the 
government and transportation unions at the 
office of the Ministry of Interior.  The 
Ministers of Transportation, Interior and 
Finance met with union representatives. 
The government favorably answered the two 
main requests of the unions, namely a 
decrease in fuel cost and insurance.  The 
government promised to decrease the cost of 
the fuel and insurance. With the approval of 
insurance companies, the rate of insurance 
coverage was decreased by 11.72 percent for 
public carriers, effective January 2006.  On 
November 22, 2005, the cost of diesel fuel, 
mainly used by buses was decreased to DF 137 
($0.77) per liter but the regular fuel 
stayed at the same price of DF 231 ($1.30). 
Other advantages included promises of 
participation from union members to the 
administration board of insurances and 
promises of integration of union members 
into the committee in charge of the creation 
of the project to reorganize the public 
transportation sector.