Plateau

Have we reached a plateau on the crisis in Madagascar? I am starting to think so. For the past week I have been going through news articles, twitter and most of the resources online and there is basically no news since COMESA stated that they would support military intervention:

06/12

06/13

06/16

06/17

See? That’s really all there is to the news for this past little while, it is like there is a silence. Is it the calm before the storm? You might think that with all of the announcements that have been occurring over the last little while with the imminent return of Marc Ravalomanana. But it would seem that the Ravalomanana movement are contradicting themselves by announcing the immanent return of Ravalomanana, while at the same time at a press conference just yesterday, announcing that they intend to return to the negociations table. But how can they possibly return to the negotiations table when the HAT has left the table because they in no way want to negociate if it involves amnesty and/or the return of Marc Ravalomanana. It does not seem to be possible, and it is getting hard to tell who is telling the truth anymore and if Ravalomanana will ever return to Madagascar.

But… that of course doesn’t stop the HAT and the military from being paranoid and on high alert though. As soon as COMESA announces that they are not against the use of military force to restore order to Madagascar, the military in Madagascar have been on high alert. A private jet lands in Arivonimamo and the military pounce on it, in the event that it contains Ravalomanana or their so called ‘mercenaries’. They have also just started this new ‘group’ called ‘Vigi Mada’ which will systematically verify information on international tourists.

So while the news stories start to slow down and negotiations grind to a halt, the impending and serious Malagasy recession is coming hard and fast. With no resolution to the crisis, there is a great deal of uncertainty for anyone who would even entertain the thought of investing in anything Malagasy. Here is a BMI graph that can also be found here:

meadfa5_20090612As you can see, the chart is trending down and you would be mad at this point (as an investor) to put any money into Madagascar unless you were sure that you would have some sort of long term gain that would not be trounced by another change in government. And because no one would want to invest, there is likely a direct impact on businesses in Madagascar not only from people being unsure about anything from Madagascar, but also directly from the various strikes that have been occurring across the country. At this point in time I bet it is very hard, if not impossible, to stay in business in Madagascar if you aren’t a foreign company.

But businesses are just the tip of the iceberg, all of Madagascar is now suffering since Rajoelina has taken power. Because of his illigitimacy the 70% of funding that Madagascar relies upon to operate has basically ceased:

According to wikipedia here are Madagascars sources of economic growth.

Madagascar’s sources of growth are tourism; textile and light manufacturing exports (notably through the EPZs); agricultural products; and mining. Madagascar is the world’s leading producer of vanilla and accounts for about half the world’s export market. Tourism targets the niche eco-tourism market, capitalizing on Madagascar’s unique biodiversity, unspoiled natural habitats, national parks and lemur species. Exports from the EPZs, located around Antananarivo and Antsirabe, comprise the majority of garment manufacture, targeting the US market under AGOA and the European markets under the Everything But Arms (EBA) agreement. Agricultural exports consist of low-volume high-value products like vanilla, litchies and essential oils. A small but growing part of the economy is based on mining of ilmenite, with investments emerging in recent years, particularly near Tulear and Fort Dauphin.[31] Mining corporation Rio Tinto Group expects to begin operations near Fort Dauphin in 2008, following several years of infrastructure preparation. The mining project is highly controversial, with Friends of the Earth and other environmental organizations filing reports to detail their concerns about effects on the local environment and communities.[32]

Autoclave enters Madagascar, 2008, as part of new mining operation

Several major projects are underway in the mining and oil and gas sectors that, if successful, will give a significant boost to the Malagasy economy.

In the mining sector, these include the development of coal at Sakoa and nickel near Tamatave. In oil, Madagascar Oil is developing the massive onshore heavy oil field at Tsimiroro and ultra heavy oil field at Bemolanga.

So I guess that the HAT didn’t have any idea the type of impact defying the international community would have on Madagascar. It is quite clear that the impact is huge and it is starting to have a big impact on the way that Madagascar is run  and worse is having an enormous impact on the cost of living and quality of life for Malagasy with the impact of the droughts and cyclones adding insult to injury. For someone who had rose to popularity on the backs of the poor, claiming that he is going to fight for them… it is funny that he refuses to do what is best for the country (and the poor) and just agree with the international communities demands for a free and fair election.

Actually, all the HAT seems to want to do is destroy any progress made by Marc Ravalomanana and just focus purely on keeping him out of Madagascar or punishing him if he comes back. If this is all the HAT wants to do for the country there can only be a bad ending to this crisis, that is, if it doesn’t drag on for a while first. I can imagine at some point problems will start between the HAT and the military (perhaps wages or something of that nature since they are having problems paying people already) that we will see things begin to break down. Even if they don’t this crisis that is just waiting for an excuse to blow up, as clearly Madagascar cannot continue to operate the way it is currently, the money will just dry up. Here is an interesting article on the current stalemate. Here is another with donors pressing for a resumption of talks.

It may turn out as predicted on IRIN in March that people will return to the streets as the economic downturn increases and may loose control all together of the military turns their back on him.

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