August 12, 2008 / 1:10 PM / 10 years ago

Mauritania investors unfazed by coup, aid cuts hurt

NOUAKCHOTT, Aug 12 (Reuters) - Oil, gold and iron ore producers have shrugged off last week’s military coup in Mauritania but workers and shoppers fear cuts to international development aid could plunge them deeper into poverty.

President Sidi Mohamed Ould Cheikh Abdallahi was ousted by a group of military commanders, whose self-styled “High State Council” has said it will appoint a government until elections are held in the desert state, Africa’s newest oil producer.

Oil output remains small but foreign firms are increasingly looking for new sources of crude as well as gas, gold and iron ore — already one of the country’s biggest industries.

“It (the coup) has had no effect on operations whatsoever,” a spokesman for London-listed Tullow Oil said.

Tulllow owns interests in eight offshore blocks while Spanish energy major Repsol, which is exploring for gas, was equally untroubled.

Gold miner Red Back Mining, which operates the 110,000 oz/year Tasiast gold mine, Murchison United, which has several uranium prospecting licences, and iron ore miner Sphere Investments all issued stock market statements saying business was continuing as usual.

Mauritanians on the street were more worried at the freezing of some international aid that flooded in after democratic polls last year. Washington cut all non-humanitarian aid last week, and on Monday former colonial power France followed suit.

AID DROUGHT?

The European Union, a big donor, has warned it may cut aid.

“We are tired of coups d’etat all the time,” said Wahabba Brahim, a young shopper at a market in the capital Nouakchott.

“It will be really bad if the Europeans stop aid, without European aid we are lost,” she said.

The EU pays Mauritania more than 70 million euros ($104.2 million) a year for its fleets to fish the rich Atlantic waters, and the European Commission has allocated 156 million euros of aid for 2008-2013.

It suspended aid in 2005 when a putsch, also instigated by Abdel Aziz, overthrew long-time ruler Maaouya Ould Sid’Ahmed Taya. That kicked off an election process that saw Abdallahi become Mauritania’s first freely elected leader last year.

“I believe the coup will stop aid from the United States, the EU and the African Union. They will stop aid to the Mauritanian people because a coup d’etat is unjust,” said Ibrahim Ould Cheybani, a trader in Nouakchott market.

The African Union suspended aid to Mauritania at the weekend, although its role is more political than financial.

However, some believed the military junta could kickstart an economy they said had stagnated under Abdallahi’s 15-month rule.

“It will be good for the economy, because the old president stopped parliament from taking economic decisions,” said Mohamed Limine Ould Tar, another market trader.

Mauritania started producing crude oil under the last military junta back in in February 2006, although the project was the fruit of years of exploration and preparation.

But despite the sang-froid of miners and oil companies already working in Mauritania, independent economic analyst Mohamed Ould Hamidou feared the coup may put off new money.

“There are lots of resources in Mauritania ... but the country is suffering from poor economic conditions and poor infrastructure,” he said. “Political instability will not improve the view of foreign investors.”

For resources investment factbox click here (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com) (Additional reporting by Vincent Fertey; Editing by Alistair Thomson and Michael Roddy)

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