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Top U.S. Admiral Sheds Light on Mozambique Ship Purchase of Privinvest Ships

Mozambique boasts a coastline slightly shorter than that of the Eastern seaboard of the U.S. The waters extending as far as 200 miles from its shores are home to massive gas deposits and rich fishing grounds.

To assert greater control over and reap more value from this area, the Mozambique government commissioned an integrated coastal security package and a fleet of tuna fishing boats from global shipbuilder Privinvest in 2013. Privinvest delivered tuna trawling vessels, advanced patrol boats and fast-moving interceptors along with electronic monitoring capacity. The package of equipment and systems also included maintenance facilities in two Mozambique ports.

Mozambique borrowed $2 billion to purchase these vessels and systems but defaulted on the debt. The scandal has become known as the “hidden debt scandal” even though some observers have pointed to the fact that the terms of the deal were in plain sight. Still, legal actions stretching from Mozambique and London to New York have focused on the financing arrangements, obscuring the underlying logic of an emerging coastal nation attempting to pursue its needs and interests.

Admiral Gary Roughead concluded a distinguished 38-year career in the U.S. Navy in 2011 after serving as the Chief of Naval Operations and commander of the Pacific Fleet. He brought with him this expertise when he recently assessed the Mozambique transactions. His 24-page report concludes that the assets Mozambique bought and received were well suited to its need to secure its coastline and build a fishing fleet.

“Mozambique is right to develop the maritime capabilities, supporting infrastructure, and human capital necessary to secure and benefit from the riches of its EEZ (Exclusive Economic Zone),” Admiral Roughead wrote. “The components of its approach are reasonable and appropriate – assure a secure EEZ, create a viable offshore fishing industry, and develop the maritime infrastructure and associated human capital to sustain a vibrant maritime sector and economy.”

Unfortunately, Roughead’s report adds that the Mozambique government did not follow-through with actions that would have deployed the assets it purchased.

“In the end, the package of maritime capability and introductory training, maintenance and spare part support constituted an impressive opportunity from which the Republic of Mozambique could have benefited greatly,” he wrote. “The opportunity was not realized because of a lack of effective organization and a viable human capital strategy within the Republic of Mozambique. That is unfortunate.”

Roughead was a senior naval officer with a global perspective. As such, he is perplexed that the Mozambicans did not “nest” the ships and technology with its own military, but rather assigned them to three state-owned companies, each of which is currently moribund.

That said, it might not be fair to hold the lack of far-sightedness against a country that only gained its independence in 1976. Nations without their own military-industrial complexes are dependent on foreign providers when meeting their security needs. Mozambique’s largest aircraft, an AN-24, was purchased from Ukraine, Roughead points out. Other assets might be gifted or supplied at reduced cost from global powers seeking influence, like China or India. The decision that Mozambique made in 2012 to independently source world-class ships at fair market value and without political strings could well be considered an assertion of sovereign self-interest. Diminishing this, as critics of the deal have done, infantilizes the otherwise laudable aspirations of an emerging country that wants to stand up for itself.

Beyond the missed opportunity to better secure its coasts, Mozambique is losing the opportunity to create prosperity from its abundant fishing grounds, now being plundered by China and Japan. The tuna fleet sits idly at dock while foreign lawyers feast on the minutia of a deal that promised great things but was left unfulfilled. In reading Admiral Roughead’s report, one can’t help but wonder if some value might still be salvaged from a well-intentioned purchase that went off the rails.