Identifier
Created
Classification
Origin
05CAIRO5935
2005-08-02 13:14:00
CONFIDENTIAL
Embassy Cairo
Cable title:  

NEA SENIOR ADVISOR MALLORY MEETING WITH EGYPTIAN

Tags:  EAID ECON EFIN EINV EG 
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C O N F I D E N T I A L CAIRO 005935 

SIPDIS

STATE FOR NEA/ELA, NEA/RA, AND EB/IDF
TREASURY FOR MILLS/NUGENT/PETERS

E.O. 12958: DECL: 08/02/2015
TAGS: EAID ECON EFIN EINV EG
SUBJECT: NEA SENIOR ADVISOR MALLORY MEETING WITH EGYPTIAN
MINISTER OF INVESTMENT

REF: CAIRO 5083

Classified by A/DCM Michael Corbin for reasons 1.4 (b) and
(d).

C O N F I D E N T I A L CAIRO 005935

SIPDIS

STATE FOR NEA/ELA, NEA/RA, AND EB/IDF
TREASURY FOR MILLS/NUGENT/PETERS

E.O. 12958: DECL: 08/02/2015
TAGS: EAID ECON EFIN EINV EG
SUBJECT: NEA SENIOR ADVISOR MALLORY MEETING WITH EGYPTIAN
MINISTER OF INVESTMENT

REF: CAIRO 5083

Classified by A/DCM Michael Corbin for reasons 1.4 (b) and
(d).


1. (SBU) NEA Senior Advisor King Mallory and private sector
consultant Ahmed Dabbous met on July 28 with Egyptian
Minister of Investment Mahmoud Mohieldin. Mohieldin was
accompanied by Mohamed Atallah, Vice Chairman of the General
Authority for Free Zones and Investment (GAFI),and the Hani
Sarie-Eldin, Chairman of the Capital Markets Authority. The
discussion focused on the draft MOU to create the Fund for
the Future (reftel),which will be signed at the Forum for
the Future meeting in Bahrain in November.


2. (C) Mohieldin had only a few suggestions for changes to
the draft MOU, including the following:

A) An accelerated time table for making contributions to
the Fund:
- 60% by 6/06 (vice 20% in draft);
- 80% by 6/07 (vice 60% in draft);
- 100% by 6/08 (same as draft).

Another alternative would be to make contributions in two
tranches rather than three, but Mohieldin did not give
suggested percentages or a timetable for this alternative.
Mallory and Dabbous explained that the U.S. contribution
would be coming from MEPI funds, and Congress would authorize
contributions and appropriate them annually, based on the
success of the Fund in meeting its objectives. Therefore, it
might not be possible to accelerate the U.S. contribution as
the GOE had suggested.

B) Greater participation for partner countries (i.e, Egypt
and Morocco) in the investment process. Mohieldin questioned
how involved the GOE could become in management of the Fund,
suggesting that the GOE would like a greater say in
decisionmaking than what was envisioned in the draft MOU.
Mallory and Dabbous explained that the partner countries
would be able to suggest private individuals to be named to
the Board of Directors by POTUS. The Board would then name
the Fund's management team, and would be directly involved in
decision making regarding funding proposals/projects. This
clarification seemed to address Mohieldin's concerns.

C) The GOE would like to make its contribution to the Fund
in local currency, not in USDs. The main concern seemed to
be the greater exchange risk involved in making contributions
to the Fund in USDs. Mallory and Dabbous explained that
partner countries could make contributions to the Fund in
their local currencies, and that the Fund would bear the
exchange risk involved in any investments. The Fund's
management team would, however, have discretion to change
monies in the Fund account into various currencies, in order
to minimize the exchange risk.

D) The GOE wanted to direct the Fund toward medium sized
enterprises, rather than small and medium sized enterprises.
Small enterprises are serviced by a number of other financing
programs, so the GOE would like to focus on medium size
projects. Mallory and Dabbous explained that funding small
enterprises could not be eliminated from the Fund's
objectives entirely, as Morocco (or any future partner
countries) might want to use the Fund to finance small
enterprises. If Egypt independently chose to finance mainly
medium sized projects, that would be its prerogative. The
GOE would be able to direct financing toward medium sized
enterprises through its representatives on the Board of
Directors. This also seemed to address Mohieldin's concerns.



3. (C) Mallory and Dabbous stated that they would redraft
the MOU, taking into consideration the suggestions received
from the GOE and the GOM. The redraft would then be
circulated again for any additional comments. Mohieldin said
his staff would prepare a memo for Prime Minister Nazif with
the details of the Fund. Nazif has already agreed in
principle to Egypt's participation in the Fund.


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.

JONES