VZCZCXYZ0676
PP RUEHWEB
DE RUEHTU #0747/01 2800640
ZNR UUUUU ZZH
P 070640Z OCT 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 6860
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS TUNIS 000747
SENSITIVE
SIPDIS
STATE FOR EEB/IFD/OMA, EEB/EPPD, AND NEA/MAG
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD)
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (TABINE)
CASABLANCA FOR FCS (KITSON)
LONDON AND PARIS FOR NEA WATCHER
E.O. 12958: N/A
TAGS: ECON PREL EFIN EINV ETRD TS
SUBJECT: EIZENSTAT WORKING TO REVIVE INITIATIVE FOR MAGHREB
INTEGRATION
REF: TUNIS 562
SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.
-------
Summary
-------
1. (SBU) During an October 1 presentation to a group of elite
Tunisian business leaders, former Deputy Secretary of the
Treasury Stuart Eizenstat discussed Maghreb integration.
Eizenstat chalked up the failure of his Clinton-era
initiative to shifting priorities with the change of
administrations but said the fight against terrorism provided
new space in which to revive it. He suggested new trade
mechanisms to link the region with the U.S. market and said
the United States and Europe could play vital roles as
catalysts. In a parallel event on the same day, the Centre
de Jeunes Dirigeants (CJD), a young businessmen's
association, hosted a symposium on Maghreb integration which
brought together speakers from Tunisia, Morocco, Mauritania,
Libya, and Algeria. In both events, all participants agreed
economic cooperation will pull the train of Maghreb
integration, and politics will follow later. End summary.
-------------------------------
Ambassador Eizenstat in Tunisia
-------------------------------
2. (SBU) At the invitation of UTICA, Tunisia's Employers'
Union, former Deputy Secretary of the Treasury Stuart
Eizenstat spoke at a round table dinner on October 1 about
Maghreb integration. In attendance were a small group of
businesspeople and a representative from the Ministry of
Foreign Affairs Americas desk. During his talk, Eizenstat
said the Maghreb was the least integrated region in the world
and that growth rates were suffering as a result. He
outlined broad economic strategies for Maghreb countries,
such as investment in education and courting foreign direct
investment. He said the United States, and to some measure
Europe, could be catalysts toward this process - a process
that has not succeeded from within the Maghreb for over
thirty years.
--------------------------------------------- -----
U.S.-Linked Trade Mechanisms to Foster Integration
--------------------------------------------- -----
3. (SBU) Ambassador Eizenstat introduced the idea of Maghreb
Economic Integration Zones (EIZ), building on the model of
Qualified Industrial Zones (QIZ) in Jordan and Egypt, as a
way for Tunisia to send products to the U.S. duty-free.
According to Eizenstat, regional cumulation of origin would
allow Tunisia to provide inputs to Morocco and the final
product be shipped under the U.S.-Morocco Free Trade
Agreement (FTA). In addition, the U.S. could enact policy to
allow shipment under the FTA if any portion of the product
was from Morocco, regardless of the shipment origin.
Eizenstat said these strategies could be adopted by the USG
as means to integrate the region, much as the QIZ did with
Egypt, Israel, and Jordan. Some businesspeople perked up at
the idea, and saw it as a more comprehensive opportunity than
the privileges currently granted by the Generalized System of
Preferences.
---------------------
Barriers and Setbacks
---------------------
4. (SBU) Tariff barriers between Maghreb countries are
relatively low, and Eizenstat blamed non-tariff barriers for
lack of progress. Mondher Ben Ayed, former head of the
Tunisian-American Chamber of Commerce and a leader in the
Tunisian information technology (IT) sector, said Tunisians
were frustrated with the pace of integration. He said "we
want integration, but we can't wait," referencing rising
unemployment and Tunisia's challenge to create jobs. He
pointed fingers at Algeria, noting its recent legislation
requiring 51 percent Algerian ownership of a foreign
enterprise hindered investment. He said Tunisia had done its
part, building the right highways to link to Algeria and
Libya for example, but those countries had not built theirs.
The participants, including Eizenstat, discussed political
barriers, but came to a consensus that the private sector
bore the responsibility of integration and were the only
equipped actors to achieve results.
5. (SBU) When asked why his initiative failed in its first
iteration during the Clinton administration, Eizenstat said
the change of administration meant the initiative got folded
into efforts to extend a free trade zone through the larger
Middle East. When that policy failed, the Maghreb fell
through the cracks. One participant said the initiative was
doomed to fail because of its limited (5 million dollar)
budget. Eizenstat said this time terrorism had changed the
playing field, and said he is lobbying for a congressional
hearing on the Maghreb, and has reached out to the World Bank
and the International Monetary Fund to focus on the issue.
-----------------------------------
Voices from the Rest of the Maghreb
-----------------------------------
6. (SBU) Coincidentally, on the same day as the Eizenstat
visit the Centre for Jeunes Dirigeants, a young business
leaders organization with a large network throughout Tunisia,
organized a symposium on Maghreb integration. In attendance
were high-level voices from all Maghreb countries, including
a former Algerian Prime Minister. All speakers converged on
a few themes: the fact that economic integration had to take
place before political integration; the crucial role of youth
and cultural exchanges; the importance of infrastructure
development (roads, railroads and electricity); and an
appreciation for couscous.
7. (SBU) From the Tunisian side, the CJD seminar featured the
Vice-President of UTICA, Mohamed Sahraoui and from the
Ministry of Foreign Affairs Abdelhafidh Harguen, Secretary of
State for Maghreb Affairs. Both enthusiastically praised
President Ben Ali for his commitment to Maghreb Integration.
Sahraoui praised the Maghreb Entrepreneurs Association, a
private sector association created two years ago and now
headed by Libya, and announced the next meeting would take
place in Tunis in May 2010 (Note: the last meeting took
place in Algeria May 2009, but according to one Tunisian
participant, language barriers and a lack of agenda made the
event unsuccessful. End note.) Harguen, interestingly,
called for civil society and youth to play a role in
integration. He specifically cited the need to create a
knowledge economy, as the IT sector in particular was a
driver for growth.
8. (SBU) From the Moroccan participant, Jaouad El Hamni,
Special Consultant to the Moroccan Finance Ministry, the
discourse was much the same. He said economic integration
via the private sector is a real possibility, but that the
private sector was responsible to act. He mentioned the
Morocco-U.S. FTA and blamed the stagnation of the agreement
on the inability of the Moroccan private sector to take
advantage of opportunities. Ahmed Youra Haye, a Mauritanian
economics professor, focused on rule of law and competition,
feeling confident economics could trump politics.
9. (SBU) Brahim Hafedh, the Libyan head of the Maghrebian
Employers Union said cooperation already existed between
Libya and Tunisia, but that more youth integration needed to
take place. He described an ideal future for the Maghreb,
where the countries could negotiate as one bloc vis-a-vis the
EU or the United States. At one point in the discussion, an
audience member asked why Libya imposed a 500 dollar tax on
vehicles entering over land from Tunisia. Hafedh said he
disagreed with this, and was working within his organization
to reach decision-makers in the Libyan government who could
repeal the tax. Sid Ahmed Al Ghozali, former Prime Minister
of Algeria, said only the private sector can create wealth,
and agreed that politics should only be brought into the
picture when all other aspects of integration are in line.
-------
Comment
-------
10. (SBU) The two events covering Maghreb integration
encompassed different groups of private sector
representatives but all converged on one idea: economic
integration is possible in the Maghreb despite political
obstacles. The rhetoric of the discussion was familiar and
there was no debate on the merits of economic integration
itself. At the CJD event in particular (which was on the
record), there was little discussion of the impediments to
change or tangible, unifying projects taking place.
Eizenstat for his part did offer some new mechanisms (the EIZ
and QIZ options) and suggested integration could come forth
from more formalized private sector associations. In many
ways, talking to Tunisians about Maghreb integration is like
preaching to the choir - most private sector representatives
feel Tunisia has done its part, and now it is time for the
other Maghreb countries to resolve their differences and get
on board. End comment.
GRAY