See also:
» 04.06.2010 - EU to keep freezing Madagascar aid
» 23.03.2010 - Madagascar sanctions "having impact"
» 25.11.2009 - UN makes $6 million for Madagascar’s cyclone forecasts
» 01.04.2009 - Madagascar's leader plays April fool with SADC leadership
» 17.06.2008 - Madagascar gets US$ 20M to protect nature
» 22.07.2005 - Indian Ocean nations intensify cooperation
» 17.12.2004 - Britain closes Lesotho, Madagascar, Swaziland embassies
» 24.05.2004 - Madagascar in bid to join SADC

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Economy - Development | Politics

Madagascar sanctions deadline nears

Malagasy President Andry Rajoelina

© Présidence malgache
afrol News, 15 March
- By tomorrow, Madagascar coup President Andry Rajoelina has to implement a power-sharing deal to avoid the imposition of full African Union sanctions on 17 March. Also the US and Europe have threatened to move from the current suspension of aid to concrete sanctions.

Malagasy leader Rajoelina has participated in several international mediation processes that aimed at ending the Great Island's unconstitutional rule since his 2008 coup. African Union (AU) mediators have insisted on a power-sharing deal that would include the participation of former presidents Marc Ravalomanana and Didier Ratsiraka, leading towards democratic elections.

But Mr Rajoelina has not wanted to implement the agreed power-sharing process. Instead, he plans to organise elections that already have been termed unconstitutional by mediators and will be boycotted by the opposition.

The AU has made it clear it will not accept any more stunts by Mr Rajoelina aiming at consolidating his grip on power. In February, he was given a 16 March deadline "to comply with the agreements," including power-sharing. If not, the AU "will impose targeted sanctions on the de facto authorities that are reasons for the continuation of unconstitutional order" on 17 March.

The international community looks at the AU mediation process as its leading star for relations with Madagascar. If the AU concludes sanctions are necessary, other countries will support this by also imposing sanctions.

The Malagasy economy will suffer even more strongly from such sanctions. Already, the suspension of Madagascar's AU membership, all development aid programmes and favourable trade conditions have had a severe effect on the economy.

Most hurting has been the freezing of development aid by Madagascar's many donors. The IMF estimates that foreign aid had previously accounted for up to 50 percent of the country's budget. Further, the suspension of Madagascar's trade benefits under the US African Growth and Opportunity Act (AGOA) in December 2009 has threatened exports to the US at an estimated value of US$ 324.3 million in 2008. Madagascar's entire textile industry threatens to collapse.

Signs of economic collapse are plentiful. World Bank figures released on 1 February showed that last year economic growth in Madagascar collapsed to just 0.6 percent compared with 7 percent in 2008. With a population growing by 2.7 percent annually, per capital economic growth thus was negative last year. Malagasy Economy Minister Richard Fienena has confirmed the 0.6 percent growth rate, blaming it on donors.

The political uncertainty has resulted in the loss of an estimated 228,000 jobs in Madagascar, with the conc

Toppled President Marc Ravalomanana

© IISD/afrol News
ern that this will increase to over 300,000 with the suspension of AGOA benefits. Foreign investments have dropped strongly and trade is declining. Madagascar's textile industry, employing around 50,000 workers, was built upon the favourable trade terms provided by AGOA. Also the tourism industry is reported to collapse.

There has been a 60-70 percent fall in private sector production. Further, the trade gap over exports has almost quadrupled in two years to nearly US$ 2 billion – far more than the Malagasy economy can sustain.

Still, Economy Minister Fienena is optimistic about 2010, saying "the worst of the crisis is over." He forecasts a 2.6 percent growth for this year - still below population growth and far less than the 7.5 percent predicted by the World Bank before the coup. Mr Fienena holds that Madagascar's private sector, now liberated from "monopoly on economic activity" of ex-President Ravalomanana, would drive the country's economy into new growth. Most analysts however forecast growth to be between 0 and 1 percent this year. Even negative growth cannot be excluded.

Investors, the opposition and a growing number of Malagasy therefore pin their hopes to a political compromise that could finally stop sanctions and release donor aid funds.

Recovery could be fast if AU mediators are convinced there is real progress towards constitutional rule. Donors are keen to return. Even AGOA could quickly be restored. The US act says countries must at least be making "continual progress" toward establishing the rule of law and political pluralism, the protection of human rights and workers rights and efforts to fight corruption to be eligible. It was the failure to make "continual progress" that caused President Barack Obama to suspend Madagascar in December.

Ex-President Ravalomanana, in a statement sent afrol News, today urges the de-facto authorities of Madagascar "to get the agreed democratic process back on track and in so doing achieve a comprehensive solution to the crisis in our country." Mr Rajoelina should "avoid further sanctions on our people and give them the chance to decide who should lead them," the deposed leader added.

But there are no signs of Mr Rajoelina being willing to give into AU demands by tomorrow. AU sanctions therefore seem unavoidable, soon to followed up by economic sanctions from Madagascar's main trade partners in Europe and the US.

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