WORLD ECONOMIC FORUM: SPECIAL REPRESENTATIVE FOR

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 005195

SIPDIS

E.O. 12958: DECL: 06/07/2015
TAGS: ECON EINV ETRD PREL JO
SUBJECT: WORLD ECONOMIC FORUM: SPECIAL REPRESENTATIVE FOR
COMMERCIAL AND BUSINESS AFFAIRS HEARS MESSAGES OF REFORM


Classified By: A/DCM Haynes Mahoney for Reasons 1.4 (B) and (D).


1. (C) SUMMARY: Special Representative for Commercial and
Business Affairs J. Frank Mermoud and his Senior Advisor Bill
Behrens held meetings on the margins of the World Economic
Forum at the Dead Sea (May 20-22) with numerous businessmen
and Government of Jordan (GOJ) leaders who repeated positive
messages about changes occurring in the Middle East. Mr.
Mermoud advocated the importance of the Business Dialogue and
public-private partnerships for the Broader Middle East and
North Africa (BMENA) initiatives on women, I/CT, and
Education. GOJ officials offered a message of reform,
increasing economic liberalization and more privatization of
government assets, including in the telecom, energy, and
transportation sectors. But strains on the GOJ budget due to
oil subsidies and tensions between the new reform government
and parliament were evident. In official meetings and at a
private dinner, Mermoud offered encouragement for GOJ reform
efforts. The visit reinforced the importance that the USG
attaches to supporting domestic reform movements in the
countries of the BMENA. END SUMMARY.

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Business Community Discusses BMENA
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2. (C) Muslim Lakani spoke of the sweeping changes occurring
across the Muslim world and advocated the need and importance
of the BMENA Business Dialogue. He is convinced that Shafik
Gabr, Chairman of the ABC, and others with strong
governmental ties will not fully embrace the reform agenda of
the Business Dialogue. Lakani also mentioned the need for
reforms of the Madrassas and revitalization of the
Organization of Islamic Countries (OIC) and the importance of
laying out for countries in the Middle East a road map for
investment.


3. (C) Other businessmen discussed more industry specific
reforms and the need for open competition. The
representative of Boeing, Lee Monson, Senior Vice President
of Boeing for Middle East and Africa sales highlighted plans
for Boeing sales to Egypt and Kenya. The representative of
Jordanian Bromine, Mr. Ahmad Khalifeh, discussed his hopes
from a successful resolution of the investment dispute that
has prevented the expansion of the largest U.S. investment in
Jordan (to be reported septel). He also highlighted the
company,s commitment to fostering local content and
transparency in hiring and corporate governance. In his
estimation, too many business decisions in the Middle East
are made in a non-transparent manner and this harms a
country's foreign investment potential.


4. (C) Chairman of Consolidated Contractors Company (CCC)
Mr. Samer Khoury, discussed the need to attract more American
investors to the region and highlighted privatization in
Jordan and Saudi Arabia that should be of interest to
American investors. Mermoud cautioned that American
investors, and small and medium enterprises (SMEs) in
particular, are hesitant to make investments in some
countries in the Gulf because of restrictions on foreign
businesses. Bill Behrens cited the practice in many GCC
countries of requiring local ownership and local staff (i.e.
qatarization, kuwaitization, emiratization, etc.) as overly
restrictive for SMEs. Nabil Sarraf, Chairman of Palestine
Real Estate Investment Corporation, highlighted projects his
company is involved with that aim at jump-starting the Gazan
economy after disengagement. For example, the development of
a reliable electricity supply station and the completion of a
five-star, 25,000 sq. ft. Movenpick hotel on the beach in
Gaza. However, Sarraf questioned what the plans are for
donor support after disengagement. His assessment is that
Gaza disengagement will be the model for a future Israeli
withdrawal from the West Bank.


5. (C) Shafik Gabr, Chairman of the Arab Business Council,
questioned what the future of the business dialogue was for
the Forum for the Future. He described the BMENA initiative
as "not well cooked" because it lacked a secretariat and
effective business dialogue. Gabr agreed that there was a
lack of entrepreneurship in the region, and that BMENA
initiatives to foster trade and investment could help
encourage growth. Mermoud emphasized in his response that
the business dialogue is critical to the success of the Forum
for the Future and that the business community needed to
become more involved in the planning of reform deliverables
for future events.


6. (C) Nabil Habayeb, President and CEO of the Middle East
and Africa for GE and William Wakileh, National Executive for
Iraq and the Levant, spoke of their disappointment with the
BMENA Investment Task Force. Although Mr. Habayeb was
invited by the Arab Business Council, no further information
was provided after he arrived in-country and he subsequently
missed the meeting. Mermoud apologized and noted that the
ABC lacked capacity but promised that he would follow-up
directly with Chairman Gabr and asked for GE,s continued
commitment to the BMENA business dialogue.

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Public-Private Partnerships
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7. (C) Tae Yoo of Cisco Systems was attending the conference
to discuss the need for public-private partnership programs
and announce the launch of the Palestinian Education
Initiative (PEI). She thanked Mermoud for the strong support
of the State Department and U.S. Agency for International
Development, including for financial backing for the pilot
project developed in Jordan. The initiative seeks to create
an interactive computer-based math program for students. The
drive of the initiative is to cooperate with governments on a
global level to develop e-learning for students that at the
same time helps improve computer literacy. However, Yoo
highlighted a number of issues that Cisco could not answer
regarding expanding the initiative to the PA: What happens
if/when Hamas wins the elections? How can we work with
donors in advance of implementation? What are the
consequences of starting a project before the elections?

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GOJ Ministers Emphasize Privatization and Reform
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8. (C) Nadia Al-Said, the Minister of I/CT, focused her
presentation on the changes that have made the Jordanian
telcom sector more independent. The new five-person
independent regulatory commission is based on the US FCC
model. Based on her strong message of reform Mermoud
encouraged her to become an active voice of support for
reform at the international conference to be held in the
upcoming year, and to start thinking about what the
deliverables for I/TC reform in the BMENA region should be.


9. (C) Newly appointed Minister of Industry and Trade Sharif
Zu'bi also highlighted the approach the GOJ focused on
privatization in all sectors of the economy including energy,
water, ports, border crossings, and telecom. However, Zu'bi
pointed out that "everyone is the world is doing this, so we
have to do it more quickly." Mermoud asked about the
vitality of the QIZs (Qualifying Industrial Zones) with
Israel, and Zu'bi admitted to concern about the future of
QIZs. His staff was focusing on upgrading the value added of
items produced in the zones and looking for niche markets in
which Israel and Jordan can find a competitive advantage.
Zu'bi also highlighted the fact that in his estimation the
Egyptian QIZs were administratively easier because they did
not require an item-by-item product review. Finally, Zu'bi
noted that the next day he planned to meet with Israeli
Minister of Trade Ehud Olmert and tell him that it was, "time
that he open the West Bank to Jordanian goods." Zu'bi
estimated that there was a $3 billion market in the West Bank
and the Jordanian products would be quite competitive.


10. (C) Jordanian Minister of Energy, Mr. Azmi Khreisat
explained the importance of the US-Jordan Free Trade
Agreement as a pillar of the economic reforms happening in
Jordan. He detailed plans for privatization of energy
distribution systems and the new approach towards
privatization of Jordan's mineral resources. In particular,
Khreisat noted that there is a plan to disband the natural
resources board within 1-2 months and to revise the law on
use of natural resources, which dates from 1968. However, on
the issue of ending subsidies for petrol, the Minister
claimed that "now is not the right time" because there is a
new government that is having difficulties with the budget.
(COMMENT: Khreisat was referring to the immediate period of
the WEF, up until the new government wins parliament,s vote
of confidence. END COMMENT.) Khreisat said that the GOJ
needs a plan that will eliminate most subsidies from the Gulf
states by 2008 while finding a way to target remaining
subsidies to aid the poorer consumers. Khreisat also
mentioned negotiations with the former Israeli Minister of
Infrastructure where they agreed that it was not the ideal
time for pushing forward with plans for a cross-border power
grid. However, Khreisat envisions a future where Israel,
Jordan, Syria, and Lebanon will be joined in a power grid
network.

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Dinner Party: Major Reforms the Theme
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11. (C) Nasser Judeh, former Minister of Information and
Communications Technology, and Princess Sumaya hosted a
dinner party for Special Representative Mermoud during the
week of the WEF. Several senior policy makers and business
leaders were present including Sharif Zu,bi, Minister of
Industry and Trade; Nadia Al-Said, Minister of I/CT; Alaa
Batayneh, then SecGen of the Transportation Ministry (now
Customs Director General) and his wife, Princess Rahma;
Samer Majali of Royal Jordanian Airlines; April Foley,
Vice-Chair of the U.S. Export-Import Bank; and Randi Ayoubi,
CEO of Rubicon. The conversation revolved around major
reforms planned or underway and Mermoud repeated the message
of support for economic liberalization in Jordan and in the
region and the opportunities this presents to Jordanian and
US firms.


12. (U) This cable has been cleared by Special
Representative for Commercial and Business Affairs Mermoud.
HALE