MAURITANIA: Terrorist attack hits already-fragile economy

Tuesday, September 23, 2008

Alleged terrorist attacks on 14 September in Tourine in the northeast killed 11 soldiers and their civilian guide, confirmed Mauritania’s newly-installed defence ministry on 20 September. Analysts say the economy can ill-afford this additional blow in the face of donor sanction threats.

The European Union (EU), US government and World Bank have suspended, or threaten to cut, more than US$500 million in non-humanitarian aid in condemnation of the 6 August military takeover and continued detention of President Sidi Mohamed Ould Cheikh Abdallahi.

Economist Isselmou Ould Mohamed with the World Bank-funded non-profit Association for the Exchange of Economic Information told IRIN the attacks add to mounting pressure faced by Mauritania’s aid-dependent economy.

“Mauritania needs international dollars for its roads, hospitals, and public works.” Based on World Bank 2007 figures, 67 percent of Mauritania’s public spending is financed by international donors.

Arab countries give about 20 percent of this amount, the European Union slightly less, the World Bank about 10 percent, while France, the Islamic Development Bank, Japan and the United States are also significant bilateral donors.
Diplomatic dance

The attacks may convince international donors they cannot afford to pull out, says Mohamed. “This grisly confirmation may actually help the military junta in its negotiations in Brussels. It is in no one’s interest to isolate Mauritania. The desert north is a dangerous strategic zone that is a lawless, breeding ground for illicit trafficking and clandestine migration onward to Europe.”

On 18 September, EU diplomatic members in Nouakchott presented an invitation to coup leaders to attend yet-to-be scheduled EU talks in Belgium to discuss EU’s threat of aid sanctions.

The EU issued a statement on 21 September expressing its “condolences for Mauritania” following the deadly attacks in the northeast, and its intent to stand in “solidarity in the fight against terrorism.”

The Algeria-based extremist Islamist group, Al-Qaeda of the Islamic Maghreb, has claimed responsibility for the 14 September attack on the military convoy. The same group also claimed responsibility for an alleged 2005 attack in the northeast that reportedly claimed more than one dozen lives, as well as the December 2007 murders of four French tourists in Nouakchott.

But EU’s humanitarian aid commissioner Louis Michel has also threatened to cancel a €300 million (US$426 million) four-year fishing contract, and to suspend aid worth up to US$230 million over the next five years.

Economist Mohamed says these seemingly contradictory messages are simply the EU’s way of applying pressure, “The EU is setting a high bar [for the military junta with its political and constitutional demands]. But the two sides will work something out. They both need each other.”

Mohamed says coup leaders have not reacted to international threats to pull out development aid because they are just that, for the moment. “Coup leaders are used to threats. Until there is action, little will budge.”

‘Sanctions can wipe out one-third of Mauritania’

Mohamed says if donors move beyond threats to withholding aid, it will be catastrophic over the long term for Mauritania’s most vulnerable people. “One third of the population lives thanks to international assistance. These sanctions can wipe out one third of Mauritania.”

According to the World Bank, some 40 percent of Mauritania’s population lives near the US$1 a day poverty line. The food security monitoring group, the US-funded Famine Early Warning System Network, estimates Mauritania imports about 70 percent of its food, which has gone through a dizzying price increase over the past year.

Mohamed says even with Mauritania’s reliance on foreign investment to float its economy, its 2008 harvest, increases in global iron ore and oil prices, both of which Mauritania exports, and its fish supply, which can be sold to other countries even if the EU cancels its contract, will buffer the short-term shock of aid cuts.
But in the longer term, says Mohamed, budget tightening will be painful, “If there is an effective embargo, it will be catastrophic. The economy can make it for another year, but after that will be total chaos. There will be a domino effect… Arab donors [which have not threatened sanctions] are influenced by the actions of the EU and World Bank.”

The economist says aid cuts will eventually choke off the country’s already declining five percent growth rate, which was the forecast for 2008 before the military takeover and the ensuing swift condemnation from Mauritania’s major donors.

Battered, but still hopeful

Economist Mohamed says more than lost tourist dollars, which he estimates contributes less than one percent to the annual budget, is the psychological cost of ongoing instability, “We cannot discount the chilling economic impact of the insecurity and the potential tourist dollars lost, but we should also keep in mind the emotional impact all this has on the population.”

Sylvie Lanser, a hotel operator in one of Mauritania’s most-frequented tourist towns, Chinguetti, about 250 km to the north of the capital, says it has been a slow start to the tourist season, scheduled to begin at the end of October. “I am very worried because we have already lost one tourist season…We are prepared for another tough year because tour operators are not purchasing plane tickets [charter flights to north] in advance as they did in the past.”

But Lanser says there is some hope the newly-created Africa Rally car race, scheduled to take place December 2008, will bring some her relief- and hotel guests.