Cablegate: Economist Hosts Business Government Roundtable: The Got

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DE RUEHTU #1168/01 3251403
ZNR UUUUU ZZH(CCY ADX00FE8E6C TOQ0164)
P 201403Z NOV 08 ZDS
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 5750
RUCNMGH/MAGHREB COLLECTIVE
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
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UNCLAS TUNIS 001168

C O R R E C T E D C O P Y//SUBJECT LINE//

SENSITIVE
SIPDIS
STATE FOR NEA/MAG (NARDI AND HAYES)
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD)
USDOC FOR ITA/MAC/ONE (NATHAN MASON), CLDP (TEJTEL AND
MCMANUS)
CASABLANCA FOR FCS (ORTIZ)
CAIRO FOR FINANCIAL ATTACHE (SEVERENS)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: ECON EFIN ETRD TS
SUBJECT: ECONOMIST HOSTS BUSINESS GOVERNMENT ROUNDTABLE: THE GOT
LISTENS BUT DOES IT HEAR?

REF: TUNIS 1101

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Summary
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1. (U) The Economist Intelligence Unit recently hosted its
first business roundtable in Tunisia with strong government
and company participation. Prime Minister Mohamed Ghannouchi
gave remarks on the GOT's current economic development plan
and responded to questions from business leaders and
diplomats. The Prime Minister was one of five ministers who
participated in the event. Highlights and observations from
the event included advice from African Development Bank
President Donald Kaberuka, urging the GOT to stay the course
on economic reform, and confirmation that the financial
crisis is likely to have a negative effect on key sectors of
Tunisia's economy, including exports and tourism. End
Summary.

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A Case of the Shoulds
---------------------

2. (U) GOT officials received a long list of "shoulds" during
the Economist Intelligence Unit-organized business roundtable
held on October 24. African Development Bank (ADB) President
Donald Kaberuka summarized the suggestions best when he
called on the GOT to capitalize on this crisis-generated
opportunity to redefine the role of the central government in
the economy. He highlighted three areas where the GOT should
focus:

- deepening the banking sector in order to increase small and
medium sized business access to credit and financing;
- continuing to reduce bureaucratic red tape for new business
and project development; and
- strengthening regional integration.

3. (U) Kaberuka reaffirmed the ADB's support, by means of
loans and guarantees, for Tunisia's continued economic
growth. He highlighted how Africa, usually one of the areas
worst off during economic downturns, has so far been less
affected during this crisis. However, Kaberuka said that
those African countries dependent on foreign aid might feel
the pinch should recession affect donor countries. He
concluded that Tunisia could turn the crisis to its advantage
if the GOT takes appropriate actions.

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The Impact of the Crisis on Tunisia
-----------------------------------

4. (SBU) Roundtable speakers said Tunisia's exports, foreign
direct investments and tourism will be negatively affected by
prolonged economic downturns in the country's key trading
partners. (The assessments largely confirmed earlier Embassy
reports. See reftel.) Presenters, such as Ala'a Al Youssif,
the senior economist and panelist from the Gulf Finance House
(GFH), reaffirmed the need for the GOT to focus on mobilizing
Tunisian household savings, increase efforts to attract
foreign investors and position itself as a financial hub for
the African continent. (NOTE: The Gulf Finance House is a
Sharia Investment Bank based out of Bahrain with plans to
open a three billion dollar financial harbor in Tunis by
2009.)

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The GOT is in the House...
--------------------------

5. (SBU) Prime Minister Mohamed Ghannouchi capitalized on the
elite audience of business executives and diplomats to
reiterate previous comments regarding Tunisia's
competitiveness, continued positive economic growth and
above-African-average standard of living and education
levels. He emphasized the GOT's consistent approach to
economic development and long history of investment in
education and modernization. He admitted the need to more

closely align higher education with the needs of the private
sector while reminding the audience of the GOT's focus on
attracting value-added industries given the lack of
availability of natural resources. In addition, he sought to
assuage concerns about the recent fluctuations in the
Tunisian stock market by confirming the low foreign portfolio
investment figures. Ghannouchi responded to Kaberuka's
suggestions by describing the following objectives:

- Achieve one percent decline in unemployment annually;
- Capitalize on Tunisia's market reputation of stability to
attract foreign investment;
- Resolve salary and wage concerns through free and
constructive dialogue to maintain stability; and
- Continue EuroMed integration efforts.

6. (U) Moreover, Ghannouchi confirmed that the GOT has no
intention of nationalizing any companies, and explained that
only a handful continue to have government stakes. Among
them are Groupe Chimique, the chemical company, the Phosphate
Company of Gafsa, and a cement plant that is used to regulate
the price of cement in the market. Lastly, Prime Minister
Ghannouchi reiterated Tunisia's willingness to accept mega
FDI projects and the willingness on the part of the GOT to
"work" with interested parties.

--------------------------
... And so is the Elephant
--------------------------

7. (SBU) One topic absent from the roundtable was corruption.
Transparency International recently released corruption
rankings, in which Tunisia fell from 61 to 62. One point may
seem unremarkable; however, it marks the seventh straight
year of increasing perceptions of corruption. One Tunisian
business owner, Nazeh Ben Ammar, asked the Minister of
Industry during a panel discussion about irregularities in
the customs process, and later commented to EconOff that the
answer provided was less than adequate.

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Other Business Issues
---------------------

8. (U) Coca-Cola used its sponsorship and participation on a
discussion panel to directly comment on the fairness of a tax
imposed on carbonated beverages. Mr. Brahim Laroui,
President of Coca-Cola in Tunisia, was not surprised when
Employment Minister Slim Tlatli responded that the GOT was
not considering changing the beverage tax. The Gulf Finance
House, the event's other co-sponsor, encouraged greater
efforts to reform the financial sector, which would benefit
their plans to create a finance hub in Tunis.

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Comment
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9. (SBU) Overall, participants saw the event as broadly
positive, with business representatives welcoming the
government's strong presence. Participants were pleased with
the opportunity to question GOT officials, exchange views and
network, free of charge. Not surprisingly, the ministers
hewed closely to the government's official line. They, too,
appreciated the opportunity to interact directly with a key
constituency. The Economist Intelligence Unit commented that
they normally charge for this type of event. In this case,
funding was provided by Coca-Cola and GFH (septel). The EIU
chose to make attendance by invitation in order to attract
the "right" people, i.e., decision makers and business
leaders. Taking advantage of the opportunity, participants
delivered some clear and useful messages to the GOT. In
return, GOT leaders had an opportunity to court the business
community. Ideally, the forum will encourage further reform
by government (and new investment by business). But while
GOT officials listened, only time will tell whether they
heard. End Comment.

Please visit Embassy Tunis' Classified Website at:

http://www.state.sgov.gov/p/nea/tunis/index.c fm
Godec

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