F a S T Update Madagascar Semi-Annual Risk Assessment December 2004 to May 2005

Early warning program F A S T Update

Madagascar

Semi-annual Risk Assessment

December 2004 to May 2005 T

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Madagascar | December 2004 to May 2005 | Page 2

Contents

Relative Government and Non-Government Conflictive Actions 3

International Cooperation and Conflict 5

Appendix: Description of indicators used 7

The FAST International Early Warning Program 8

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Contact FAST International: Country Expert: Phone: +27 12 346 9545 Richard Marcus Fax: +27 12 460 0997 mailto:[email protected] www.swisspeace.org/fast

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Madagascar | December 2004 to May 2005 | Page 3

Relative Government and Non-Government Conflictive Actions

Average number of reported events per month: 109 Indicator description: see appendix

Risk Assessment: • In the first half of 2005 the economy continued to be characterized by the contradictions between the economic success of the liberalisation program touted by the government and the growing unease in the population at falling living standards. The rise in prices of staple goods has given new impetus to civic groups that have become disenchanted with Ravalomanana and have given new fodder to the political opposition. As a result, non- government conflict has outpaced government conflict. According to the International Monetary Fund, 2004 closed with a robust 5.7 percent real Gross Domestic Product growth rate, led by construction, export processing zones, and tourism, a sign that this may be fairly durable growth. New international markets continued to flourish, international support for President Marc Ravalomanana has continued to soar, and there have, arguably, never been more opportunities for new growth in Madagascar. However, at the same time inflation was at 27 percent. Hidden in this figure is a much more pernicious problem. Outside of the relatively small new business sector, rice and oil are far and away the two goods most impacting on the population, yet 47% of the inflation rate can be attributed solely to increases in the price of the food staple, rice and another 26 percent of the inflation rate can be attributed to increases in oil prices. All other goods in the Consumer Price Index showed only a modest 7.3 percent inflation rate. • There is little opposition from within government to Ravalomanana’s path of liberal reform. His party, Tiako-i- Madagasikara (TIM) controls 103 of the parliament’s 160 seats and another 22 seats are held by a supportive alliance. Furthermore, most of the officers of the TIM party were in President Ravalomanana’s umbrella company, Tiko. What does exist is conflict between the government and the judiciary. On February 14, 2005 the union of judges went on strike; the government reacted by cutting their salary (an action upheld by the High Court). Ravalomanana accused the judges of being corrupt. Other conflictual government actions revolve around local leaders (in Mahajanga and Toamasina) for improprietously controlling rice sales. Yet most of the current conflict comes from civic groups and opposition outside of the government. It is expressed as opposition to the government due to inflation, opposition to Ravalomanana in particular for the conflation of his personal corporate activities and his activities as president, and efforts by an increasingly radical opposition to unseat Ravalomanana. • Rice prices in Madagascar dipped briefly in January as government contracts for rice imports finally benefited local markets. March saw a further drop with the new harvest. This was, however, ephemeral and by May rice prices in some parts of the country were as high as 1320 ariary (0.60 €) per kilo (nearly equal to Madagascar’s per capita Gross National Income of 237 €/year.) Poor rainfall in February, further aggravating the situation, prompted the UN World Food Program to predict in May that the south of the country will face rice shortfalls. Near record low global rice production in early 2005 somewhat limits Madagascar’s options. • Petroleum prices in Madagascar also climbed, reaching as high as 2000 ariary (0.91 €) per liter by June 2005. This affects the cost of the transporting goods and travel to market for the rural poor. The cost of diesel has proven a challenge as most of the country’s electricity comes from diesel burning power plants. The national water and

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electricity utility, JIRAMA, signed a management contract with the German engineering corporation Lahmeyer International in January 2005. When Lahmeyer took over a month later they discovered JIRAMA was virtually bankrupt. There was no money with which to buy more petroleum and no credit with which to acquire it. By May 2005 every city in the country began rationing electricity, with some smaller towns shutting it off altogether for days at a time. The capital, Anatananarivo, started cycling blackouts every afternoon and evening. In June 2005 JIRAMA raised electricity prices by 30 percent. • Student strikes, popular for decades in Madagascar, shut down the Toamasina campus February and the Fianarantsoa campus in March. In March university students in Toliara locked the administration in the university until their demand to meet with the Minister of Education was met. In April students in Antananarivo went on strike to protest Decree n°2005/098, cutting student benefits. While only a minority of students participated, it turned violent when the military arrived to break it up. Seventeen people were arrested and 3 injured. In contrast to the low student turnout in April, on January 17 the opposition sponsored convention of the Union Nationale des Étudiants et Scolaires (UNES) had high attendance. For their part, the SECES (the powerful national teacher’s union) called for a new constitution, and in March an (unsuccessful) general strike. • Conflicts between other civic groups and the government also grew. The terse relationship between the print media and the government took a turn for the worse in February 2005 as the Club des Journalistes Doyes (CJD) condemned the imprisonment of the director of La Gazette de la Grande Ile. Ravalomanana has been accused of allowing press freedom to subsidiaries of the Malagasy Broadcasting Corporation (which he owns and is run by his daughter) but acting with a heavy arm against other outlets. • Ravalomanana has long relied upon the new business elite for support. Tiko has close correspondents in the three largest banks (the BOA, the BFV Société Générale, and BNI-Crédit Lyonnais), in the air transport sector (Asecna), and the rice sector through Ravalomanana’s other company Magro. Tiko, originally a milk products company, continued to diversify in early 2005 with the creation of a large construction company (Compagnie de Construction Malagasy); it will work closely with the president’s engineering company, Asa Lalana Malagasy (Alma), created in 2003, and the hotel’s group acquired by Tiko. There have been other benefits to Ravalomanana’s holdings, such as a zero tax rating for Tiko and a unique exemption from rice import tariffs for Magro. • There are three primary opposition coalitions in Madagascar: the La réunion de la solidarité parlementaire pour l’unité nationale (SPDUN), the Rassemblement des Forces Nationales (RFN), and the Comité pur la Réconciliation Nationale (CRN). They all seek to oust Marc Ravalomanana, but their accusations and demands differ. The SPDUN is most concerned with what it sees as poor governance and poor management of the economy. The CRN, the most radical of the organizations and led by former President Zafy Albert, accuses Ravalomanana of dictatorial behavior and degrading social life. It calls for annulling the 2002 legislative elections and creating a transitional government and a national reconciliation. The RFN also seeks a transitional government and national reconciliation but not through taking to the streets, as called for by the CRN. These three groups came together for a national conference from 2 to 4 June. Long in planning, their hope was to create a united force against Ravalomanana. At the time of writing, however, it appears to have done more to create cleavages in the opposition. The CRN advocated the creation of a “parallel government” and a “coup project” which sent the RFN out of the conference. (Note: A parallel government strategy was the one adopted by Zafy Albert in 1991, leading to the ouster of President Didier Ratsiraka). Solofonantenaina Razoarimihaja, TIM national president, criticized the conference. The moderate opposition, led by onetime and would-be Prime Minister Norbert Ratsirahonana (AVI party) publicly denounced the conference, the idea of a transitional government, the national reconciliation movement, or any efforts towards violence. Other moderate party leaders, including Manandafy Rakotonirina (MFM) and Moxe Ramandimbilahatra (TEZA) followed suit. • In February 2005 the IMF and the World Bank instructed the government to pay military salaries out to the Ministry of Finance rather than the Ministry of Defense. There were significant irregularities. The action has served to erode military support for Ravalomanana. • President Ravalomanana’s honeymoon is decidedly over. Opposition appears to be rooted in different factions of society and is manifest in different ways from the political to the quasi-tribalist (see “Madagascar Fourth Quarter, 2004”). His base of support in rural areas should be questioned deeply. However, as of mid-2005 there are no credible challengers on the horizon for the 2007 presidential elections. It is quite unlikely that in the near future there could be a nationwide conflict such as Madagascar faced in 2002. However, Ravalomanana does face a threat arising from his own policies. The cost of rice and petroleum and the resultant electricity cuts have brought out significant resentment, even in Ravalomanana’s Antananarivo base.

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International Cooperation and Conflict

Average number of reported events per month: 109 Indicator description: see appendix

Risk Assessment: • The trend in international cooperation since President Marc Ravalomanana secured office in mid-2002, indicates steady international support for his regime. Spikes in cooperation tend to represent the massive aid inflows, while dips tend only to represent periods of positive negotiation. There are spikes in conflictive international events. However, their importance is relatively muted and rarely an indication of exogenous disquietude. In late 2004 conflictive international events primarily represented international criticism of actions by Madagascar’s radical opposition. This did continue in 2005 with the French ambassador criticizing the National Conference of the opposition. But, in the first half of 2005, international conflict predominantly represents the voices of Malagasy opposition challenging the policies of the World Bank, the International Monetary Fund, and other international actors. • The World Bank has six criteria for measuring program effectiveness in poor countries: voice and accountability, political instability and violence, government effectiveness, regulatory burden, rule of law, and control of corruption. President Ravalomanana has been hailed by the World Bank, the International Monetary Fund, the United States, France, Germany, and others as making remarkable strides in all six categories. Advances against corruption have been singled out not only by the Bretton Woods Institutions, but by the leading non-government organization on the topic, Transparency International. In November 2004 Madagascar qualified for debt relief under the World Bank’s Highly Indebted Poor Countries Initiative (HIPC). In June 2005 the G8 group of wealthy countries announced that Madagascar would be one of 18 countries receiving nearly universal debt relief. Madagascar will see $836 million (net present value) in debt relief over time. • The United States criteria for aid focuses on good governance, investment in people and promotion of economic freedom. On this basis in November 2004 Madagascar became one of 15 poor countries to qualify for the U.S.’s new Millennium Challenge Account (MCA) funding. In April, Madagascar became the first country to win an MCA award, $110 million (90 million €). • Smaller funding opportunities have further demonstrated international support for Ravalomanana’s course. In May the Agence Francaise pour le Developpement gave 18 million € to the Malagasy government for the rehabilitation of the Antsiranana harbor and the UK Foreign Office gave 30 million ariary (16,600 €) for elections observers and computers. In January the French government gave 135,783€ worth of equipment to the Malagasy military, and the German Development Organization (GTZ) gave 40 million ariary (18,176€) to fishing interests in Nosy-Be. All of this is on top of significant funding in 2003 and 2004 from these countries, the World Bank, the IMF, and others. • Praise continues to be heaped on Ravalomanana’s handling of the Malagasy economy. A May 2005 IMF review has an overall complimentary tone, closing with the statement that the “staff recommends the completion of the sixth review under the PRGF-supported program. This would be the first time that Madagascar completes a PRGF arrangement with all disbursements scheduled thereunder having taken place.” The following month Anne

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Krueger, First Deputy Managing Director of the IMF, visited Madagascar and roundly complemented the government’s reforms. Similar compliments came from World Bank officials in February, April and May. The strongest words of criticism for the government came from the World Bank demands in May that the government give more responsibility to the private sector for development activities. • In February Ravalomanana met with US President George Bush where he received a warm welcome and then met with filmmaker Steven Spielberg to discuss the new major animated film entitled “Madagascar.” There is a much expectation in Madagascar that the film will lead to increased interest and investment in the tourism sector, a significant part of Ravalomanana’s development plan. • In 2003 and 2004 the Malagasy government, and particularly President Ravalomanana, came into significant conflict with the oil company Galana. For his part, the president believed the oil company to be acting improprietously. And, indeed, on December 14, 2004 the Malagasy courts sentenced the Galana Oil Company to pay 1000 billion fmg (91 million €) in customs fees and fines. For their part Galana, and the other three Malagasy oil companies, accused the government of strong armed tactics and undermining their respective positions through liberalization policies. In May 2005 Ravalomanana struck back by entering into discussions with the director general of the US oil company Exxon for oil research off Madagascar’s west coast. • While Ravalomanana’s liberalization program has been roundly praised outside of Madagascar it has been criticized within Madagascar. In May, Pierre Tsiranana, leader of the PDFM and son of Madagascar’s first president, Philibert Tsiranana, criticized the French government for giving Ravalomanana the internationally acclaimed Louise Michel prize. Also in May, the teacher’s union, the SECES, directly criticized World Bank actions in Madagascar, accusing it of encouraging the government to take an intransigent position in response to civic protests. And, indeed, the World Bank did become involved by criticizing the judges’ union (SMM) strike in Madagascar. The opposition newspaper, La Gazette de la Grande Ile, accused the local representative of the World Bank of being Ravalomanana’s main advisor. This amid heightened tensions between the government and the newspaper over the director’s arrest. • While Ravalomanana’s support at home is facing challenges, support from overseas remains strong, as shown by the significant economic pledges in the second and third quarters of 2004, the solid follow-up and complimentary actions of 2005, the debt relief by the G8, and the qualification for the US Millennium Challenge Account in 2005. International support is unlikely to waver in the near future. Since he came to office, the question for most donors has not been whether to support Ravalomanana, but how much support is necessary to ensure his success. It is as yet unclear if the increased levels of support he has garnered are enough to ensure his political future, but his position heading towards the 2007 elections appears to be strong.

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Appendix : Description of indicators used | Page 7

Variable Name Description / Definition IDEA categories: a count of all coded events with WEIS cue categories ranging from 1 to 22 (all All Events WEIS cue categories) plus an additional 11 IDEA event cue categories (Event type: ‘other’). Relative Non- Proportion of all Non-government actions to All Events (with non-governmental, or civil sector government Actions actors). Relative Proportion of all Government Actions to All Events (with political, or government sector actors). Government Actions Proportion of all actions belonging to all cooperative categories yield, comment consult, approve, Cooperative promise, grant, reward, agree, request, and propose to All Events. Proportion of all actions belonging to all conflictive categories reject, accuse, protest, deny, Conflictual demand, warn, threaten, demonstrate, reduce relationships, expel, seize, and force to All Events.

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