VZCZCXYZ0002
PP RUEHWEB
DE RUEHEG #2312 3511408
ZNY CCCCC ZZH
P 171408Z DEC 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 4471
INFO RUEHTV/AMEMBASSY TEL AVIV PRIORITY 1983
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
C O N F I D E N T I A L CAIRO 002312
SIPDIS
DEPT FOR NEA/ELA
E.O. 12958: DECL: 12/15/2014
TAGS: ECON ETRD EFIN EINV PGOV PREL EG IS
SUBJECT: ISRAELIS NOT UPBEAT ON PROSPECTS FOR BILATERAL
TRADE WITH EGYPT
Classified By: ECPO Minister-Counselor Donald A. Blome for Reasons 1.4 (b) and (d).
1.(C) KEY POINTS -- Both Israel and Egypt are working to expand QIZ exports to the U.S. -- The Israelis appear unsure of
the GOE commitment to bilateral trade under the QIZ -- The political friction between Israel and Egypt has spilled over
to the commercial relationship, and businessmen from both countries now face difficulties traveling to visit their
counterparts.
2.(C) On December 15, Econcouns and Econoff met with Israeli DCM Israel Nitzan and incoming Economic-Commercial
Counselor Rania Gibran to discuss the Qualifying Industrial Zones (QIZ) program and Israeli-Egyptian trade. They told us
that they are very interested in expanding the QIZ program and are working with the GOE to do so. Gibran told us that in
her view, despite their rhetoric to the contrary, the Egyptians do not appear to be genuinely looking to diversify their
exports from the QIZ beyond textiles and ready-made garments. (Note: These two categories make up nearly 100% of Egypt's
exports under QIZ. End note.)
3.(C) Gibran said that the GOI was interested in working with both the GOE and the USG on conducting surveys to
understand the potential for diversifying QIZ exports as well as ways to increase exports from those companies already
certified to export under QIZ but who have ceased exporting or have never exported under the program.
4.(C) Nitzan was not optimistic about the prospect of expanding Egyptian-Israeli commercial ties in the current
political climate and told us that the Egyptian-Israeli commercial relationship was worse than it has been in some time.
According to Nitzan, the GOE's negative public stance towards Israel was spilling over into the private sector, and
Nitzan said that Egyptian businessmen who in the past had visited Israel frequently were now hesitant to do so. Rather
than economics, "politics has become the most dominant element in the consideration of Egyptian businessmen," according
to Nitzan. Gibran added that previously successful bilateral programs in agricultural and health care cooperation had
all but stopped.
5.(C) Nitzan said that the deterioration in the non-governmental side of the bilateral relationship was typified by the
recent press attacks on the journalist Hala Mustafa for having met with the Israeli Ambassador in Cairo. He also cited a
public request by the Egyptian parliament for the Minister of Manpower to provide information on the number of Israelis
working in Egypt as evidence of the political and public backlash against those who are perceived as "normalizers."
(Note: Nitzan told us that the number the Minister provided to Parliament was half of the actual number. End note.)
6.(C) Nitzan complained that the GOE is actively preventing visits to Egypt by Israelis by delaying and denying visas.
He said that this applied both to official GOI travel as well as Israeli businessmen. He suggested that the new and
lengthy delays in approving visas for Israelis are causing problems and he is confident that the Egyptian Embassy in Tel
Aviv is acting on "instructions from above."
7.(C) COMMENT: Despite bilateral tensions, the GOI is looking to capitalize on the expansion of QIZ exports from Egypt
as way to expand bilateral trade. The Israelis appear to be trying to figure out the level of Egyptian commitment to the
QIZ and are getting mixed signals from the GOE. The evidence does suggest that over the past year Egyptian businessmen
have curtailed travel to and business with Israel out of fear of public backlash. In our view, though not necessarily
interested in trumpeting close relations with Israel, the GOE is interested in expanding QIZ production and exports,
which directly correlates to more trade with Israel. Scobey