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    The Daily Star Middle East | Bechir Saade
    Beirut


    BEIRUT: As Mauritania prepared to produce 75,000 barrels of crude oil a day from its offshore Chinguetti field as of early next year, a military coup displaced pro-U.S. President Maaouya Ould Taya. An Arab country that has maintained close diplomatic ties with Israel since 1999, and one of the few countries in the world where slavery is still practiced, Mauritania is no ordinary political entity.

    But for the world economy and its influential players, what matters is that Mauritania reportedly sits on one billion barrels of oil and 30 billion cubic meters of natural gas.

    The toppled ruler stands accused of brutally suppressing dissenting voices, especially moderate Islamists whom he notably linked to an attack of an army base in in June. Critics say Taya used the threat of Islamic militancy to suppress any opposition, while preparing to share the future oil proceeds exclusively with the ruling oligarchy of the country.

    Many argue that the coup of August 3 was timed in order to prevent Taya and his circle from cashing in on the forthcoming oil revenues.

    As it starts pumping oil next year, Mauritania stands to become Africa's fourth-largest producer.

    Australian-listed company Baraka Petroleum, which recently acquired Brimax Petroleum International and Baraka Mauritanian Ventures, will provide the country with oil and gas exploration assets.

    It remains to be seen whether the new regime will use the oil proceeds to generate economic growth and employment in the country.

    The coup also follows a move by Washington to enlist Taya's participation in its Trans-Sahara Counter-Terrorism Initiative, a five-year, $500 million program that kicked off in June across nine West and North African countries - including Algeria, Chad, Mali, Mauritania, Niger, Senegal, Nigeria, Morocco, and Tunisia.

    American units have already begun training 3,000 troops from Mauritania and other Saharan armies to improve border security in a region considered to be a potential breeding ground for Islamic militants.

    It's unclear how international lending organizations will deal with the new government.

    Although the IMF cancelled its last program in September 2004, it seems willing to reach a new agreement with the Mauritanian government to curb fiscal overspending, which was prevalent in 2003 and 2004. Now that oil revenues are within reach, the IMF is bent on monitoring budgetary practices so as to help the government reap the benefits of this newfound strategic resource.

    The International Finance Corporation has recently signed an agreement to provide the Central Bank with a loan of $10 million. The loan is meant to help broaden the reach of the bank's operations at a time when the Central Bank prepares itself to confront an excess of liquidity resulting from oil revenues.

    OPEC has signed a $6.6 million loan agreement with the government to fund a water project in the capital Nouakchott, which would help the city meet its domestic and industrial water needs until 2030.

    Meanwhile, the UN has been warning of a critical food shortage. Access to food staples is reported to be increasingly difficult for nomadic communities, as scarcity has seriously affected the health of their cattle, camels, sheep and goats, which are their only source of food and income.

    The state-owned mining company SNIM will produce more value-added products rather than just export iron ore to be processed elsewhere. It is expected to benefit from rising international iron ore prices due in large part to strong demand from China. The mining sector accounts for 40 percent of the country's total exports.

    According to World Bank data, Mauritania's external debt rose from $2.3 billion at the end of 2002 to $2.4 billion by the end of 2003, despite debt relief from the IMF-World Bank's Heavily Indebted Poor Countries Initiative. However, nominal figures show that debt servicing has fallen on a yearly basis, reflecting the impact of debt relief.

    If the new government is to capitalize on the upcoming oil windfall, it must quickly win the confidence of international organizations like the IMF as well as foreign investors.



    vital statistics



    GDP: $1.5 billion

    Population: 3,086,859

    Unemployment: 20 percent

    FDI: (net) $12 million



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