Madagascar Deals Blow failure another blow to the economy paralyzed by the crisis

Madagascar's government hopes the referendum last week on a new constitution would ease political and economic isolation of the nation. In contrast, a coup attempt on the day of the vote plunged the economy into deeper chaos.

"It's a step backwards," Lydie Boka, director of risk analysis group based in Lille Stratego., Said by telephone on 19 November. "If the EU or the U.S. to return there must be a return to political stability."

The EU and the U.S. halted humanitarian aid to Madagascar after President Rajoelina Andry, a former DJ and mayor of Antananarivo, the capital, took over from his predecessor Marc Ravalomanana, with the help of the military in March last year and later reneged on power-sharing agreements. On November 17, 1920 senior officers turned against him, demanding that the power of the hand of the army.

The withdrawal of aid, which accounts for two thirds of the budget of the Indian Ocean island nation, led the economy to contract by 3.7 percent in 2009 and 2 percent this year, the International Monetary Fund, which Madagascar makes the only African economy to shrink this year.

The rebel officers lay on a military base near the international airport north of Antananarivo for three days before he was assaulted by troops loyal to the government on 20 November. There were no casualties, Defense Minister General Lucien Rakotoarimasy said.

'Persistent' tensions

The attempted coup "shows the persistence of economic stress, social and security", the chief EU foreign policy, Catherine Ashton, said in a statement on 19 November.

Authorities arrested 16 officials, including General and Colonel Noel Rakotonandrasana Carlos Andrianasoavina, who announced the coup on 17 November, Colonel Richard Ravalomanana, the security chief in the central region, including the capital, said by telephone.

"In other African countries, even if they are transparent, predictable," said Robert Strauss, director of the American Chamber of Commerce in Madagascar, in an interview from Antananarivo. "Here, it is unclear what the rules are, or applied."

Madagascar's mineral and oil wealth has attracted companies such as Rio Tinto Plc, Total SA and Toronto-based Sherritt International Corp., which has a 40 percent stake in the proposed $ 4,650,000,000 nickel Ambatovy.

Nickel Gains

Nickel gained 3.5 percent to $ 21,550 per tonne on the London Metal Exchange on the day of the attempted coup in the concern of the mine will start production in the first half of next year as planned . The metal rose 1.4 percent over the next day and was little changed at 19 November.

Last week's survey had no impact on the development plan for the mine Ambatovy, Koji Furui, a spokesman for Tokyo-based Sumitomo Corp., which owns 27.5 percent of the project, said by telephone on 19 November.

Other projects are in limbo.

An oil exploration licensing round to be held last month has been delayed indefinitely. Only be considered when the government revises its code of oil, which has been postponed from Rajoelina took power, Joeli Valerien Lalaharisaina, general manager of the Office of National Mines and Strategic Industries, said on 21 October.

The U.S., which accounted for about 278 million U.S. dollars of textile exports from Madagascar in 2008, dropped the country from the African Growth and Opportunity Act, which gives African countries preferential access to U.S. markets.

Textile Factory

The garment factory K3, which exported to the U.S., you may have to close if the owners can not find buyers in Europe for producing shirts and trousers, Sanjay Chandran, general manager of the plant, said by phone. That would mean the loss of 450 jobs.

"If I get orders from somewhere else we will survive, otherwise we have to close," said Chandran, a 36-year-old Indian who has been in Antananarivo, for 10 years.

The EU in June scrapping an aid package of 588 million euros ($ 804-million) due to Rajoelina refused to accept a compromise with his political opponents.

To cope with the economic crisis, the government in September cut its budget by 40 percent, reducing investment, keeping the salaries of officers and soldiers.

"The instability is not helping the economy, especially as we can not create some conditions such as giving tax incentives to investors," said Trade Minister Freddie Mahazoasy in an interview on 19 November. "Every dollar we get is used to support services for the people."

Opponents say the new constitution intended to extend the rule of Rajoelina. The EU, U.S. and the African Union, which suspended Madagascar, do not recognize the leadership of Rajoelina.

The lack of transparency

Charter lowers the minimum age for presidential candidates to 35 from 40, and forces all candidates to be resident in Madagascar for six months before the vote, setting Rajoelina to run and to disqualify Ravalomanana. Elections are scheduled for next year.

The "Yes" led with 73.87 percent of the vote, based on the results of 17,003 of the 18,173 polling stations, the Independent National Electoral Commission said yesterday.

"The coup attempt was not certain that will help restore a climate-friendly investment with the private sector and the image of Madagascar in the international arena has been tarnished," said Adolfo Brizzi, manager of World Bank country in Madagascar, in an e-mail response to questions.