AMBASSADOR RICCIARDONE'S SEPTEMBER 8 MEETING WITH

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 007041

SIPDIS

STATE FOR NEA/ELA, NEA/RA, EB/IDF AND EB/TPP
STATE PLEASE PASS TO USTR NSAUMS
NSC FOR POUNDS/ABRAMS

E.O. 12958: DECL: 09/11/2015
TAGS: EFIN ETRD PGOV PREL EG
SUBJECT: AMBASSADOR RICCIARDONE'S SEPTEMBER 8 MEETING WITH
EGYPTIAN MINISTER OF FINANCE

Classified by Ambassador Francis Ricciardone for reasons 1.4
(b) and (d).

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Summary
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1. (C) Ambassador Ricciardone had an introductory meeting on
September 8 with Egyptian Minister of Finance Youssef Boutros
Ghali (YBG). YBG asked how the GOE could "package" the
elections for U.S. audiences. YBG explained that he had not
yet signed the Loan Guarantee Commitment Agreement (LGCA)
because he had not had time to review the document in detail.
He praised his colleagues in the Nazif Cabinet, noting that
the Minister of Foreign Trade and Industry had recently
returned from Washington where he set the stage for expansion
of Egypt's Qualifying Industrial Zones (QIZ),and noted the
GOE interest in opening FTA negotiations. The Ambassador
responded that we remain interested in opening FTA
negotiations, possibly early in the new year, provided Egypt
continues its course of economic and political reforms -
which would be essential to making the case for an FTA in
Congress. The Ambassador also raised the delays in payment
from the Egyptian General Petroleum Corporation (EGPC) to the
U.S. firm Apache Oil. YBG promised to look into Apache's
concerns. End summary.

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Elections
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2. (C) Ambassador Ricciardone, accompanied by the DCM, had
an introductory meeting with Egyptian Minister of Finance YBG
on September 8. YBG began the discussion by asking the
Ambassador how to "package" the previous day's elections for
U.S. audiences. The Ambassador replied that there was no
need to "package" the elections, but rather to open them up.
The USG had pressed for international election observers
specifically so that the international community could see
for itself that the elections were a positive step in Egypt's
democratic reform process. Washington was awaiting the
results of the election and would respond with its assessment
at the appropriate moment.

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Loan Guarantees
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3. (SBU) Turning to loan guarantees, YBG said that he still
had to review the LGCA in detail before signing it, and
explained that he was also waiting for a legal opinion on the
sovereign bond issuance from the State Council (Note: His
staff has since assured us that YBG would sign on September
11). The opinion was expected by September 11. Once the
LGCA was signed, he said the Ministry of Finance (MOF) would
move quickly on the next steps for issuance of the guaranteed
bond. YBG noted that he would be in Washington later this
month for the IMF meetings and asked with which USG officials
he should meet. Amb. Ricciardone replied that he should
request meetings with Deputy Secretary Zoellick, USTR
Portman, NSC Abrams and USAID Administrator Natsios.

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FTA
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4. (C) YBG noted that he used to be the sole voice for
reform in the GOE, but that several reform-minded ministers
had joined him now in the Cabinet. The Nazif administration
had approached economic reform with greater commitment than
had past administrations. This had succeeded not only in
turning around the economy, but in convincing skeptics within
the GOE that reform could work. YBG praised his colleague,
Rachid Rachid, Minister of Foreign Trade and Industry, who
had just returned from a visit to Washington, where he had
set the stage for expansion of Egypt's QIZs. Amb.
Ricciardone agreed that QIZ expansion was moving forward, as
the Israelis and Egyptians together had requested, and that
the QIZs enjoyed Congressional support. YBG cited GOE
interest in moving on to commence FTA negotiations. The U.S.
Administration was moving cautiously on trade issues right
now the Ambassador responded, but we might hope to open
negotiations as early as 2006 if economic and political
reform in Egypt continued apace. He reminded YBG that FTA
negotiations require congressional notification and that
Congress would look at Egypt's record in both political and
economic reform.

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Late payments to Apache
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5. (C) The Ambassador raised the issue of encouraging
foreign direct investment, particularly U.S. investment, in
Egypt. He pointed out that potential investors were most
encouraged when they heard positive reports from investors
already operating in the market. In that light, it would be
beneficial for the GOE to pay Apache Corporation, the largest
U.S. investor in Egypt. Apache was not receiving timely
payments from EGPC of what it is owed; back payment now
amounted to $124 million. YBG replied that he believed EGPC
did not have a competent cash flow management system. He
noted that MOF had requested an audit of EGPC and promised
that he would look into Apache's concerns. Continuing on the
topic of foreign investment, YBG noted that MOF was working
to streamline customs procedures. USAID was supporting this
effort, but was not providing the support as quickly as MOF
would like. He asked if "shortcuts" could be found to speed
up the assistance. Amb. Ricciardone undertook to inform
USAID and to look into the matter.


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RICCIARDONE