Does European Union block Cahora Bassa transfer?

President Armando Guebuza has demanded that the agreement on transferring majority ownership of the Cahora Bassa dam on the Zambezi river from Portugal to Mozambique be concluded rapidly. Speaking in Bissau on 17 July to Mozambican reporters covering the summit of the Community of Portuguese Speaking Countries (CPLP), President Guebuza made very clear his disappointment at the Portuguese government's failure to abide by deadlines set last year.

During President Guebuza's first official visit to Portugal, a memorandum of understanding as signed, on 2 November 2005, under which the Portuguese government was to transfer a majority shareholding in HCB, the Cahora Bassa operating company, to the Mozambican state.

The current shareholding structure is that the Portuguese state owns 82 per cent of HCB, and Mozambique the remaining 18 per cent. Implementing the November memorandum would reverse this situation - Mozambique would have 85 per cent of the shares, and Portugal 15 per cent. For this transfer, Mozambique would pay $950 million.

At the time, it was assumed that the final documents on the transfer of ownership would be signed in December: but in fact, eight months has passed, nothing has happened, and the Portuguese government has passed the buck to the European Union.

The Portuguese excuse is that the issue is being studied by the EU's statistics body, Eurostat, to examine the impact the agreement might have on Portugal's national accounts, and whether it would breach the EU's rules on budget deficits.

President Guebuza was not impressed with such excuses. "I negotiated with Portugal, and not with the European Union", he told a reporter from the independent newssheet "Mediafax".
"We always worked in good faith", he said. "We hope that Portugal can honour its position in the shortest possible time. Deadlines were set during the negotiations and these deadlines are not being met".

Cahora Bassa was of fundamental importance to Mozambique, he told the reporters, but “everything depends on Portugal. We will continue working with the good faith that led to the signing of the memorandum of understanding and we believe that conditions exist for signing the final agreement".

From President Guebuza's terse statements it is clear that, during last year's negotiations, the Portuguese side did not inform their Mozambican partners that the deal would require a stamp of approval from Eurostat.

President Guebuza flew on from Bissau to Brussels, for an official visit to the EU headquarters. He will meet with the president of the European Commission, Jose Manuel Durao Barroso, and doubtless the Cahora Bassa issue will figure prominently in their discussions. Durao Barroso is a former Portuguese prime minister, and thus is fully aware of the history of the Cahora Bassa negotiations.

As for the CPLP summit, President Guebuza stated that, at the diplomatic and political level, this Lusophone Commonwealth has advanced, but it is showing limitations in terms of economic performance, which he blamed both on the geographical distances between the member countries, scattered over four continents, and also on the lack of resources of some of them. He also said that this summit was an opportunity for the member countries to express their solidarity with Guinea-Bissau and its people to help it overcome the difficulties it is facing to meet the Millennium Development Goals.

Host President Joao Bernardo "Nino" Vieira stressed the need to create strong and dynamic partnerships with the international, regional and sub-regional organizations with which the CPLP has good relations. Vieira said that despite the political will and efforts of his government, Guinea-Bissau's deep economic crisis and poor institutional capacity have placed serious difficulties in the way of implementing strategies for meeting the Millennium Development Goals.

Five of the eight heads of state of the member countries took part in the summit: the three absent were Luis Inacio Lula da Silva of Brazil, Xanana Gusmao of East Timor, and Fradique de Menezes of Sao Tome and Principe (even though he is the outgoing chairperson of the CPLP).

One oddity is that the summit was also attended by Teodoro Obiang, President of Equatorial Guinea. This country is trying to join the CPLP, even though its official language is Spanish, not Portuguese, and the Obiang regime has an unenviable record of corruption and human rights abuses.