US embassy cable - 05DJIBOUTI1217

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 001217 
 
SIPDIS 
 
STATE FOR AF, AF/E, AF/EPS AND EB 
NSC FOR COURVILLE 
STATE PASS USAID 
NAIROBI FOR REDSO 
 
E.O. 12958: DECL: 12/12/2015 
TAGS: PREL, PGOV, EAID, ECON, ETRD, SCUL, ENRG, DJ 
SUBJECT: PRESIDENT'S CABINET DIRECTOR ON LIVESTOCK EXPORT 
TO GULF, GEOTHERMAL ENERGY AND OTHER PROJECTS 
 
 
Classified By: AMBASSADOR MARGUERITA D. RAGSDALE.  REASONS 1.5 (B) AND 
(D). 
 
1. (C) LIVESTOCK EXPORT PROJECT:  In her meeting December 7 
with Ismail Tani, Director of President Guelleh's Cabinet, 
Ambassador talked about the commercial possibilities inherent 
in the U.S.- sponsored livestock holding and Gulf export 
project now underway in Djibouti.  She told Tani that she 
understood the Djiboutian government wanted to bring in a 
private partner to complete this project.  She asked for 
information on the partner and the steps being planned by 
Djibouti to formalize its relationship with him. Tani made 
the following points in response: 
 
-- The livestock export project is a top priority for 
President Guelleh. 
 
-- Djibouti will miss a "fourth Hajj" opportunity to export 
livestock to Gulf countries because USAID's implementing 
partner lacked adequate funding to complete the project. 
 
-- As far back as the year 2000, Djibouti considered cutting 
a deal with Sheikh al-Amoudy of Ethiopia to facilitate this 
project but dropped that option in favor of USAID sponsorship 
with AU-IBAR. AU-IBAR having failed, Djibouti decided to seek 
its own foreign investors with the financial capacity to 
complete the project. 
 
-- A preliminary agreement with a new investor, who owns more 
than 50 abattoirs in Saudi Arabia, was made in October, 2005. 
 The investor intends to invest USD 10 million and complete 
the project within seven months.  The "partnership" with the 
investor would likely be in the form of a joint venture. 
(Comment: Tani was reticent about the investor. However, 
according to a November 27 presidential decree, the land on 
which the livestock facility sits was granted to Mohamed 
Kayed Mohamed Said, a businessman Post believes is of Yemeni 
origin with ties to both Jordan and Saudi Arabia. Post is 
seeking further information on the investor from Sanaa, 
Riyadh and Amman.  End comment) 
 
2. (C) Tani continued that the investor is "serious" and has 
the "financial capacity" to complete the project. The project 
would create a regional center supporting services for the 
Horn. USAID will be asked to use its remaining funds for the 
project on capacity building and training of staff to work in 
the livestock facilities.  (Comment:  Post is in discussion 
with REDSO about next steps for this project.  End comment) 
 
3.  (C) GEOTHERMAL ENERGY PRODUCTION:  Ambassador raised with 
Tani the interest of the U.S. company, Geothermal Development 
Associates (GDA), in geothermal energy production in 
Djibouti. She asked for an update on Djibouti's progress in 
tapping into geothermal heat as an energy source.  Tani made 
the following points in response: 
 
--Geothermal energy is a high priority for the Government of 
Djibouti, which has spent a considerable sum of money toward 
its eventual production.  None of the experiments achieved 
results because funding for them was misapplied.  Foreign 
companies contracted to look at geothermal production 
"cheated" the country by doing their research without the 
benefit of a feasibility study. 
 
--Djibouti is aware of GDA's interest in setting up a 
geothermal plant but does not agree with GDA's conditions. 
GDA wants the government of Djibouti to fund the plant, which 
GDA would then build and operate, an "unacceptable" prospect. 
 It is preferred that GDA find its own financial wherewithal 
to build and operate a plant, for which Djibouti Electricity 
Company would then become a customer.  GDA is advised to 
contact Djibouti's ambassador in Washington for elaboration. 
 
4. (U) DJIBOUTIAN HANDICRAFTS: Tani expressed appreciation 
for what he described as the Ambassador's "high visibility" 
in various areas of assistance to Djibouti.  "Contrary to 
some diplomats who are shut away in their offices," Tani 
commented, "the U.S. Ambassador is reaching out to 
Djiboutians and this is very much appreciated." 
 
5. (U) The Ambassador responded that her embassy wanted to 
assist as much as feasible in Djibouti's economic 
development.  She noted that she had just inaugurated the 
previous day a Djiboutian handicrafts exhibition the U.S. 
Embassy sponsored at the People's Palace.  The exhibition was 
designed to draw attention to Djibouti's handicrafts and to 
give many of the women's associations a venue in which to 
sell their wares.  Tani said he had seen the inauguration on 
television and expressed his high esteem for this effort.  He 
added that handicrafts take Djiboutians back to their roots. 
The Ambassador encouraged Tani to promote the international 
commercialization of his country's handicraft products. 
 
6. (U) SALT PRODUCTION AT LAKE ASSAL:  Tani raised the 
commercial possibilities of Djiboutian salt.  He described it 
as of "good quality" and suitable for cosmetics (spa) use, 
for industrial salt and for de-icing.  Ambassador noted that 
President Guelleh had discussed the possibility of using salt 
for cosmetic purposes during his meeting with NSC Director 
Courville last Spring, but that we were unaware of movement 
on this.  Tani also was unaware but indicated that a U.S. 
company had expressed interest in producing Djibouti's salt 
for de-icing and had recently visited Djibouti. (Comment: 
Tani could not recall the name of the U.S. company.  End 
comment)  He said a Spanish company has also expressed 
interest in salt from the Assal region. 
 
7. (U) COMMENT:  Post is tracking very closely with REDSO 
Djiboutian government decisions related to the livestock 
project.  These decisions could have considerable 
implications for U.S. development assistance here.  We also 
continue to advocate for U.S. company GDA, although several 
obstacles remain in the company's efforts to win a foothold 
for geothermal energy development in Djibouti.  Salt 
production has great potential, but movement is slow in a 
crowded world market.  As for the commercial prospects for 
Djiboutian handicrafts, we are working through Self-Help 
programming to develop within artisans the skills needed to 
produce products for a global market. The Palestinian 
ambassador here wants to pair a few artisans with Palestinian 
weavers and embroiderers to create styles that might appeal 
to western customers.  Post is willing to explore 
possibilities for such an exchange.  End comment. 
RAGSDALE