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Sao Tome E Principe

Sekondi Accra

President Fradique de Menezes is due to leave office after the presidential elections in July 2011 and it appears that changes in government are on the political horizon. A major personality on the national scene is prime minister Patrice Trovoada and his immediate predecessor as prime minister, Joaquim Rafael Branco who lost out in the July and August 2010 legislative elections, with his Movimento de Libertacao de Sao Tome e Principe/Partido Social Democrata securing only 21 seats to the 26 of the Accao Democratica Independente.

The 2010 elections did not give any party a majority in the National Assembly, so the next year is likely to see a repeat of the political instability that has plagued Sao Tome since its return to multiparty politics in 1991. Trovoada's coalition, like many before it, is unstable and depends on the continued cooperation of the seven MP's from Leonel Mario d'Alva's Partido de Convergencia Democratica-Grupa de Reflexao to maintain control of the 55-seat National Assembly.

International political analysts have criticised the government for its lack of transparency and poor management in the nascent petroleum industry. In April 2010, Sao Tome was delisted from the candidate members of the Extractive Industries Transparency Initiative because the government had failed to take appreciable measures to report earnings received.

However, the government in conjunction with Nigeria has created the Joint Development Zone (JDZ) to auction oil licenses to the best bidders. In the second licensing round, the Environmental Remedial Holding Corporation (ERHC) was awarded oil licenses exercising option rights in all 5 blocks. ERHC is a Texas-based company controlled by Nigerian businessman Emeka Offor, who had close links with Nigeria's former military leader. These contacts, the Nigerian press states, were used a decade ago to achieve favourable contracts with the past governments of Nigeria and Sao Tome for all future oil explorations in the zone. Block 3 went to Anadarko, an independent oil company based in the US and with large-scale experience in Algeria. A questionable license was however awarded on Block 5, where a 75 percent operatorship and ownership went to a consortium of International Commerce and Communications (ICC) and Oil Exploration Consortium (OEC) - two relatively unknown corporations. Block 6 went to Filtim Huzod, a miniscule Nigerian oil company with no appreciable experience in the sector which is working with China's Sinopec. Nigeria is the major power behind the JDZ business arrangement and this has caused some friction in that the Sao Tome government has complained that it is having trouble getting its interests taken into account. Nevertheless, the two governments have decided to set up a joint military commission to ensure the security of oil platforms in the JDZ.

Despite the fact that prospecting for petroleum has not fundamentally altered Sao Tome's economy, the International Monetary Fund (IMF) forcasts strong economic growth in 2011 of 5.5% due to foreign investment and international aid. However, there is potential for trouble because the government joined the dobra to the Euro at the beginning of 2010 and has not exercised greater care in restricting spending. Inflation is likely to remain high in 2010 and 2011, at 12.3% and 7.4% respectively. Although the government has benefited from debt relief, donor countries are still worried that external debt levels of about $100 million dollars are too large a burden for a country with a weak export base.

The government plans to spend more on infrastructure and tourist attraction with the hope of strengthening development. A $570 million dollar deepwater port at Fernao Dias should help transform the economy. Construction on the port was supposed to begin in 2009, but France's Terminal Link has repeatly run into problems raising funs for the endeavor.

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The Sao Tomean Embassy to the United States is located at 1211 Connecticut Avenue, NW, Suite 300, Washington, DC 20036 (tel. 202-775-2075); Email: embstpusa@verizon.net.
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