Identifier
Created
Classification
Origin
05CAIRO4359
2005-06-09 17:57:00
CONFIDENTIAL
Embassy Cairo
Cable title:  

EGYPT: SCENESETTER FOR SECRETARY RICE'S VISIT

Tags:  PREL OVIP EG 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 CAIRO 004359 

SIPDIS

E.O. 12958: DECL: 06/09/2030
TAGS: PREL OVIP EG
SUBJECT: EGYPT: SCENESETTER FOR SECRETARY RICE'S VISIT

REF: A. CAIRO 4336

B. CAIRO 4309

C. CAIRO 4263

D. CAIRO 4125

Classified by Charge Gordon Gray for reasons 1.4 (b) and (d).

------------
Introduction
------------

C O N F I D E N T I A L SECTION 01 OF 03 CAIRO 004359

SIPDIS

E.O. 12958: DECL: 06/09/2030
TAGS: PREL OVIP EG
SUBJECT: EGYPT: SCENESETTER FOR SECRETARY RICE'S VISIT

REF: A. CAIRO 4336

B. CAIRO 4309

C. CAIRO 4263

D. CAIRO 4125

Classified by Charge Gordon Gray for reasons 1.4 (b) and (d).

--------------
Introduction
--------------


1. (C) Madame Secretary, Embassy Cairo warmly welcomes your
visit to Egypt and looks forward to the opportunity to
advance U.S. interests. Political reform, Egypt's desire for
a free trade agreement (FTA),Gaza disengagement, Iraq, and
Sudan are likely to be the issues on the top of the agenda of
your GOE interlocutors (President Mubarak, Intelligence Chief
Soliman, and Foreign Minister Aboul Gheit). On each issue,
you will want to stress the need for Egypt to play an ongoing
leadership role. Some of the reform advocates you will meet
for lunch will likely argue that the regime has no intention
of pursuing anything but "cosmetic" political reform, while
others, closer to the establishment or "working within the
system," would disagree and counsel patience. You can also
expect a high level of media interest in Cairo. End
introduction.

--------------
Political and Economic Reform
--------------


2. (C) Adapting to change is not Egypt's strong suit.
Tradition and entrenched bureaucracy have guided society
along the Nile for thousands of years and President Mubarak
has used "stability" as the watchword of his 24-year reign.
As Egypt witnesses the world changing around it, and sees its
own leadership credentials questioned by a quickened pace of
change in the Middle East, Egyptian society is slowly
acknowledging the need for a more open economic and political
system. Mubarak must also recognize that stability is only
sustainable over the long term through more democratic modes
of political administration.


3. (C) Forced by both internal necessity and external
pressure to give the public a broader political "space," the
Egyptian regime has in recent years made evolutionary
adjustments. Economic reforms, which had been a well-worn
topic for some years, got a boost when Ahmed Nazif, the
reform-minded former Minister of Communications and
Information Technology, was named prime minister in July

2004. Nazif's government, with young, business-oriented
ministers, has in less than a year implemented sweeping

reforms, including substantial reductions in customs tariffs
and income and corporate taxes, as well as privatization of
public companies. The Central Bank of Egypt has stabilized
the exchange rate; for the first time in years hard currency
is readily available and the black market for dollars has
virtually disappeared. Inflation has dropped from 12 to 9
percent since last July. The Ministry of Finance recently
submitted a draft budget to Parliament for the next fiscal
year that is significantly more transparent than in previous
years, a refreshing indication of improved governance that we
have been encouraging for some time. Egypt is also now
exporting products under the Qualifying Industrial Zone (QIZ)
agreement with Israel, signed in December 2004.


4. (C) Several long-standing bilateral trade issues have
been resolved, indicating the Nazif administration's
seriousness in preparing for an FTA. Deputy USTR Allgeier
visited Cairo June 7-9 for a conference of African trade
ministers; discussions of an FTA dominated his bilateral
meeting with GOE Trade Minister Rachid and the related press
events. One of the few economic issues President Mubarak
consistently raises with U.S. visitors is his interest in an
FTA.


5. (C) Nazif has also begun reforming Egypt's stifling
bureaucracy and burdensome public subsidies. These signs of
economic maturity are encouraging, yet must be sustained,
invigorated, and accompanied by progress on political reform
to make the difference in Egypt's pursuit of greater
prosperity -- and to lay the foundation for serious
discussion of a free trade agreement.


6. (C) Political change comes more slowly. While the
regime's rhetoric is filled with promise (including in
presidential son and ruling party policy chief Gamal
Mubarak's May 29 speech to the American Chamber of Commerce
in Egypt, reported ref C),concrete steps have been sporadic.
Of these, the most significant is easily President Mubarak's
initiative to amend the constitution to allow for competitive
presidential elections. This step, most observers agree, was
historic in that it broke the presumed military grip on the
presidency. While the amendment is unlikely to yield
dramatic change this year, it has the potential to transform
the political landscape over the next five years, depending
on the transparency of the next legislative elections and the
composition of the parliament they yield.


7. (C) In the near term, decades of government control over
political activity and periodic reliance on emergency law
measures have left their mark on a society now ill prepared
to produce alternative leadership. As people consider future
alternatives, emerging protest movements are finding limited
space in which to voice dissenting views. That space appears
to be widening. The regime is facing the right direction on
political reform and is looking cautiously into the future,
but it now needs to take practical steps forward.


8. (C) Practical steps we are encouraging Egypt to take
include revoking the emergency law (which the GOE justifies
by citing security concerns and Islamic extremist
activities),the establishment of two independent electoral
commissions (one each for presidential and parliamentary
elections),and international election monitors during
presidential and parliamentary balloting (Egypt wants no
"intervention" or "supervision," yet may in the end offer the
"compromise" of "observers"). We want to see increased
domestic election monitoring and more open media
participation as well. We are also encouraging Egypt's
tentative steps toward decentralization of government
functions.


9. (C) We are using both the Middle East Partnership
Initiative (MEPI) and our substantial USAID assistance
program to provide tangible help to those seeking to boost
democracy in Egypt, including grants supporting efforts to
make this year's elections fairer and more free. U.S.
assistance in the political realm is very controversial,
sometimes leading to pointed criticism of both the U.S. for
"interference in domestic affairs" and recipient
organizations for allowing "foreign funding" to distort their
views, but we are pressing ahead.

--------------
The Palestinian Question
--------------


10. (C) For most Egyptians, the plight of the Palestinians
is an emotional issue. Sensitive to public sympathies, the
GOE walks a fine line as it engages both Palestinian and
Israeli leaders diplomatically. President Mubarak's hosting
of Prime Minister Sharon and President Abu Mazen in Egypt on
February 8 was representative of the GOE's strong tradition
of engagement with both sides. Coordination efforts by
Egyptian General Intelligence Service Chief Omar Soliman are
frequent and effective. Foreign Minister Aboul Gheit will
visit Israel June 19, but Mubarak clearly gives primary
responsibility for this portfolio to Soliman.


11. (C) In his June 6 discussion with U.S. Security
Coordinator LTG Ward (ref A),Soliman articulated his
oft-stated view that only the USG has the clout to ensure
progress in Palestinian-Israeli reconciliation. He argued
for increased dialogue between the security services, for
example, noting that positive encouragement from the U.S. was
needed to facilitate a higher degree of cooperation. Soliman
also expressed concern about Gaza disengagement, noting that
Israel had not clarified the scope or timetable of its plans;
he stressed that a total and carefully coordinated
disengagement was needed. He cited no progress on the
deployment of Egyptian border guards to the Rafah area, an
issue pending Israeli approval.

--------------
Iraq
--------------


12. (C) President Mubarak reflected Egyptians' skepticism
regarding Operation Iraqi Freedom from the outset, yet
quietly facilitated the movement of U.S. military assets
through the region and thereby enabled our coalition effort.
In the long months of political maneuvering that followed the
liberation of Iraq, Egypt has played a positive if sometimes
measured role in helping integrate the new Iraqi leadership
into the international community. The GOE also trained a
number of police and military officers (at facilities in
Egypt),although those programs were one-time contributions
that lost steam partially due to weak Egyptian engagement
with Baghdad. We have pressed Egypt to fully upgrade its
diplomatic relations with Iraq and Egypt has sent an
Ambassador to Baghdad.


13. (C) Egypt's international efforts to help Iraq include
hosting a large ministerial in November 2004 (in Sharm El
Sheikh). More recently, Steering Group members (U.S., EU,
Iraq, Japan, UN, Egypt, and Russia) met in Cairo June 2 to
coordinate planning for the June 22 Ministerial meeting on
Iraq in Brussels. Aside from issues of participation (i.e.,
Syria's exclusion and the eventual -- yet awkward for Egypt
-- inclusion of Russia),the June 2 meeting helped set the
stage for meaningful discussions in Brussels regarding Iraq's
political, economic, and security needs (see ref B). The
group addressed a seven-point agenda that included an Iraqi
strategy document to be presented in Brussels on development
priorities, conference logistics, a draft conference
communique, a public relations strategy, and a conference
follow-up mechanism.

14. (C) Viewing internal Iraqi politics with some concern,
Cairo shares our view about the need for more robust Sunni
participation in governance and in the constitution drafting
process. Soliman has often expressed worries about Iran's
influence and sees a larger Sunni role in Baghdad as an
effective counterbalance.

--------------
Sudan
--------------


15. (C) Egypt has a keen interest in a stable Sudan -- a
neighbor which straddles the Nile and has traditionally
strong ties to Egypt. While Egypt's political tactics tend
to give Khartoum the benefit of the doubt more than we have
done, the GOE has made a strong effort to help ensure
stability there. Egypt continues to be helpful to
implementation of the Comprehensive Peace Agreement and plans
to host negotiations June 12-18 between the leadership of the
National Democratic Alliance (NDA) and senior Sudanese
government officials.


16. (C) Furthermore, Egypt is backing up its political
efforts with presence on the ground. In Darfur, Egypt has
medical teams looking after the needs of the local population
and military monitors participating in the African Union (AU)
mission; Egypt has also dispatched over a dozen C-130 flights
of humanitarian goods to Darfur and continues to work towards
a peaceful settlement. Egypt is also poised to send a
significant number of troops to southern Sudan, including
engineers to work on infrastructure projects, under a UN
umbrella. Both Egypt and the Arab League are actively
looking at ways to bolster the economy of the south. SPLM
leader John Garang's recent trip to Cairo continues a long
series of engagement with both sides of the north-south
conflict in Sudan.

-------------- --------------
Dealing with Foreign Minister Aboul Gheit's Style
-------------- --------------


17. (C) A cordial yet very protocol-conscious Aboul Gheit
does not shy away from direct and sometimes impertinent
comments during his meetings. Issues Aboul Gheit may raise
that you should watch out for include the lack of a nominee
to replace Ambassador Welch in Cairo. His staff was upset
over the inclusion of Russia in the June 2 Iraq PrepCom in
Cairo (ref D) and may still be smarting about what the
Ministry believed was an invitation to Russia that should
have been better coordinated with the GOE. The Minister has
also been known to raise individual visa cases with senior
USG officials which in fact turn out to be no issue at all
(in one case complaining about our failure to issue a visa to
a friend who had yet to apply).


18. (C) Finally, an equally protocol-conscious Laila Aboul
Gheit, the Minister's wife, felt slighted during First Lady
Laura Bush's May 23-24 visit when, because of the failure of
her staff to coordinate with U.S. and Egyptian security
officials (despite repeated U.S. admonitions to do so),she
was prevented from following the First Lady's motorcade into
the Alexandria airport by a U.S. security agent. She reacted
to the incident very strongly, and Aboul Gheit may feel
compelled to note this perceived slight in your presence.


Visit Embassy Cairo's Classified Website:
http://www.state.sgov.gov/p/nea/cairo

You can also access this site through the
State Department's Classified SIPRNET website.

GRAY