March 30, 2009 / 8:51 AM / 10 years ago

UPDATE 6-Southern Africa summit seen suspending Madagascar

* Madagascar faces SADC suspension

* New govt to review contracts with foreign investors

* Swazi king says Madagascar takeover violates SADC treaties

* SADC reviews Zimbabwean economic recovery plan

(Updates with Rajoelina quotes on contracts, SADC)

By Gordon Bell and Serena Chaudhry

MBABANE, March 30 (Reuters) - Southern African leaders were expected to suspend Madagascar from the SADC regional bloc on Monday after its president was forced out of office this month.

Heads of state at a summit in Swaziland were also reviewing an $8.5 billion economic recovery plan for Zimbabwe and agreed to urge Western states to end sanctions on the country.

Madagascar’s former President Marc Ravalomanana, who quit under pressure from the military after it backed his young rival Andry Rajoelina, briefed SADC leaders on the political crisis.

Delegates at a foreign ministers’ meeting on Sunday, which was to make proposals for the summit, suggested Madagascar could be suspended from the SADC and called for early elections.

The SADC stance would further isolate Rajoelina, a 34-year-old former disc jockey who took power in a move that was condemned as a coup by the international community.

“This unconstitutional takeover of power by the de facto regime in Madagascar violates the basic principles, protocols and treaties of SADC and is therefore not acceptable,” Swazi King Mswati III said as he opening the summit.

The African Union suspended the Indian Ocean island on March 20 and told the new administration to hold an election within six months as provided for by the constitution.

Rajoelina, who has set a 24-month transition, remains defiant. On Monday, he said auditors hired by his government were reviewing all contracts with foreign investors because the country was receiving too little revenue.

“When you look at the rate of fees fixed, and those that must be paid, there is a large gap,” he told reporters. “This concerns all the contracts, especially in the mining sector.”

The political crisis has scared off tourists and worried investors in the booming mining and oil exploration sectors. They include Total (TOTF.PA), Rio Tinto (RIO.L) and Sherritt International (S.TO), though their operations were not affected by the unrest because they are located in rural areas.

RAJOELINA REJECTS SUMMIT

More than 135 people have been killed since the start of the year and at least 34 people were hurt on Saturday when thousands of Ravalomanana supporters held a sixth day of demonstrations.

Rajoelina rejected any decision made at the Mbabane summit.

“I can’t decide alone, but it is not in the interests of Madagascar to be a (SADC) member,” he said. “The prospect of an SADC intervention is unacceptable. Other states cannot interfere with the decision of (Madagascar’s) High Constitutional Court.”

Also under discussion at the Swaziland meeting on Monday was building support for Zimbabwe’s recovery from an economic crisis that includes the world’s worst hyperinflation, unemployment at around 90 percent and severe shortages of basic goods.

Zimbabwean Industry and Trade Minister Welshman Ncube said his country told the summit it needed $8.5 billion under an economic recovery plan over the next two to three years, with $1 billion for budget support and a $1 billion credit line.

Zimbabwean Finance Minister Tendai Biti told reporters at the summit he was confident that Western countries would help but it could be difficult to move quickly.

“This government is only 5 weeks old so you can’t expect us to sprint like Usain Bolt when we are still in diapers and we are still learning to crawl,” he said, referring to the Olympic champion who holds the world 100 metres world record.

South African Foreign Minister Nkosazana Dlamini-Zuma said SADC nations were expected to report on Zimbabwe in two weeks on how they can support Zimbabwe. (Additional reporting by Alain Iloniaina in Antananarivo, writing by Michael Georgy and Daniel Wallis; editing Tim Pearce)

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