SCENESETTER FOR THE VICE PRESIDENT'S VISIT TO EGYPT

C O N F I D E N T I A L SECTION 01 OF 03 CAIRO 009263

SIPDIS

E.O. 12958: DECL: 12/12/2015
TAGS: PREL PGOV ECON ETRD KPAL PHUM EAID KDEM IS IZ SY EG
SUBJECT: SCENESETTER FOR THE VICE PRESIDENT'S VISIT TO EGYPT

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

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Summary
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1. (C) Embassy Cairo warmly welcomes your visit to Egypt,
which comes at a critical time not only in our relations, but
also in Egyptian history: the slow sunset of a quarter
century of benevolent but authoritarian rule. At 77,
beginning his fifth Presidential term, Hosni Mubarak is the
indispensable man in the Middle East, but one so deeply
rooted in the past that he communicates mainly apprehension
about the future. He leads most where it matter most to us,
mainly on foreign policy: he remains in front of his public
in advancing Egyptian-U.S. and Egyptian-Israeli cooperation.
On Iraq, Mubarak personally pressed the recent Arab League,s
reconciliation conference toward the positive goal of drawing
Sunnis into the political process -- and may be the only Arab
leader of note to have received both the Iraqi PM and
President. Mubarak has repeatedly pressed Bashar Asad to
cooperate with the Mehlis investigation, to stop foreign
fighters from entering Iraq and to stop inciting the
Palestinians against the PA. He will want to hear from you
about our next steps on Syria, Iraq, and Iran, and we can
exploit his anxiety on Iran to press for Egyptian help in the
IAEA. He will read you very closely to measure the fall-out
from Egypt,s flawed parliamentary elections and Ayman
Nour,s anticipated conviction and their impact on the future
of our relations. He is tepid about a Free Trade Agreement,
welcoming it as a mark of U.S. confidence in Egypt. He
accepts the political context of the FTA but resents what he
sees as artificial U.S. "linkage" to specific political steps
in Egypt. End summary.

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Syria
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2. (C) Mubarak is exasperated with the Asad regime,s
self-destructive behavior but also anxious about the USG,s
next steps. He has repeatedly pressed Bashar to cooperate
with the Mehlis investigation and to stop foreign fighters
from entering Iraq. But he believes that Asad's downfall just
now, absent some plausible transition to a more capable
strongman, will create further "instability." On December 7,
he rebuffed Syrian Foreign Minister al Shara'a,s pleas for
an Arab summit, but he is disinclined to isolate Damascus.
Mubarak will likely press you to give Asad more time to solve
his internal problems, or otherwise to let Syria sort itself
out. You may wish to thank Mubarak for his constructive
role, note that we have consistently listened to his advice
on Syria, and challenge him on what steps Asad has taken to
stop foreign fighters from entering Iraq, support Abu Mazen,
cooperate with the UN, U.S., or otherwise to support
Egyptian/Arab interests. The resistance of Palestinian
groups based in Damascus towards PA Prime Minister Abbas,
leadership is an especially sore point for Mubarak. Mubarak
would agree that Bashar is his own worst enemy, fatally
flawed, and probably doomed as a leader. You may want to
query him on what he sees as the range of post-Bashar
scenarios and how Egypt would propose to influence them.

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Iraq
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3. (C) Despite Mubarak's bitterness over the U.S. invasion of
Iraq, in recent months Egypt has strongly supported the
political process in Iraq. Foreign Minister Aboul Gheit has
publicly lent Egypt's weight behind keeping U.S. forces in
Iraq for the time being. Mubarak himself gave opening
remarks at the Arab League,s Reconciliation Conference on
Iraq and hosted Talibani and Ja'afari for a working lunch.
Previously, Mubarak had received Shiite Islamist National
Security Advisor Rubaie, who was also received by numerous
ministers. The Sheikh al-Azhar gave Rubaie a written
condemnation of (fellow Sunni) Zarqawi. Egypt has offered to
accept an Iraqi Ambassador, if the Iraqis get around to
naming one. But Mubarak distrusts Iraq,s Shi,a, fears
Iranian influence in Baghdad, and fundamentally disagrees
with us over democracy in Iraq. Like most Egyptians, he
believes a "tough but fair" strong leader is what Iraqis
"need". He may inquire about U.S. plans for withdrawal,
supporting only the most deliberate process. We value our
military and intelligence cooperation with Egypt on Iraq,
which goes beyond overflights and Suez passage, and we should
look for new areas of collaboration. For example, Egypt's
state-influenced media could do much more to present an
accurate picture of Iraq and U.S. actions there.

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Peace Process
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4. (C) Peace between Israel and an independent Palestine is
Mubarak,s first and life-long foreign policy goal. His
leadership in the negotiations is marked by increasingly warm
relations between Israeli and Egyptian officials at all
levels and Egypt,s deepening engagement in the governance of
the Palestinian Authority. Mubarak's spokesman publicly
praised Secretary Rice,s November 15 Agreement on Gaza as a
"breakthrough." Egypt is also pressing the Palestinian
factions to continue their cease fire (scheduled to expire in
January); training and equipping the Palestinian security
forces; deploying border guards along its border with Gaza to
control the smuggling; and coordinating intimately with
Israel and the PA on Rafah border operations. Mubarak will
urge greater and speedier assistance for Gaza and a lighter
hand from Israel. He recognizes the realities of the Israeli
political calendar but is eager to move beyond Gaza. He is
upbeat on Sharon,s prospects, considers Sharon a friend, and
hopes that he wins.

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Iran
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5. (C) Egyptian help on Iran/IAEA could be a take-away from
your visit. A key player in the Non-aligned, OIC, and Arab
blocks, Egypt hides behind alleged block "consensus" to
thwart U.S. interests in international organizations across
the board. In the IAEA, Mubarak's foreign ministry has
emphasized NPT universality (Israel) over compliance (Iran).
The MFA opposes referring Iran to the Security Council and
prefers to leave the matter with the IAEA, under the
direction of Egyptian Nobelist, Mohammed El Baradei. Mubarak
himself is bored with details of multilateral diplomacy and
may not be fully aware of Egypt,s votes and agitation in
Vienna. You can exploit his suspicion of Iran, in
particular, to zero in on the IAEA. He should grasp that
Egypt,s own security interests are best served by
aggressively thwarting Iran,s nuclear aspirations.

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2005 Elections
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6. (C) Egypt,s recent parliamentary elections, held from
November 8 - December 7, deteriorated steadily in each of
three rounds. The first round, in Cairo and environs, was
relatively free and fair but resulted in Independents from
the banned Muslim Brotherhood winning nearly twenty percent
of the seats. In the second round, the ruling NDP tried to
arrest this trend with aggressive vote-buying and by
deploying party thugs to intimidate voters. But the
Brotherhood again scored significant gains. Finally, in the
third round, the security services, which had been largely
neutral in previous rounds, closed polling places in crucial
districts to limit the Brothers, turnout. This led to
demonstrations, violence, eight deaths, and fewer (but still
substantial) MB gains. There were also widely reported cases
of gross ballot box manipulation by the NDP in each of the
three rounds. In the final tally, the NDP candidates or
affiliates controlled nearly 360 (out of 444) seats, more
than the two-thirds required to pass constitutional
amendments. Still, the Brotherhood has built a significant
platform from which to attack the Mubarak regime, and, should
it choose to do so, Mubarak's cooperation with the United
States.


7. (C) Mubarak would like to blame the United States,
support for democracy for the Muslim Brothers, success, and
to seek your buy-in to his portrayal of a stark choice
between a slow-to-reform authoritarian regime versus a
fanatic Islamist regime. He will also seek to measure the
fall-out in our relations from the flawed elections and his
regime's other anti-democratic steps, like the persecution of
political opponents. The single most important result of
your visit could be to nudge Mubarak back towards bolder,
genuine leadership of the domestic reform agenda, as he
pledged in his own presidential campaign.

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Ayman Nour
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8. (C) Political opposition leader Ayman Nour may be
convicted and sentenced on forgery charges on/about December
24, conveniently after your visit. Nour placed second in the
September Presidential election, with eight percent of the
vote, but his real offense was attacking the Mubarak family
and Gamal,s aspirations to succeed his father. Mubarak,s
camp insists that Nour is guilty of the crime, was accorded
due process, and "can always appeal." Whatever the merits of
the case, the anticipated conviction shows persecution of
democratic reformers, not leadership of reform. We have
warned close advisers, including son Gamal, that in
convicting Nour, Egypt risks creating a potential Mandela.
We've beaten up every one short of Mubarak on this. If he
raises the Nour case, or you choose to do so, we suggest you
urge him to find a way out of a trap of his own creation.

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The Economy
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9. (C) Though bored with economic policy, and lukewarm to a
prospective Free Trade Agreement with the United States,
Mubarak recognizes the importance of free market economic
reform in creating jobs. Hence he hopes you will bring some
good news on FTA. Reformers in Mubarak,s cabinet regard the
FTA as a badly needed lever for further economic reform.
Their record since July 04 is impressive: tariffs and taxes
have been reduced and simplified, the currency is now freely
convertible, the exchange rate has stabilized, inflation has
declined, the banking sector has consolidated, and new
economic legislation, including a competition law, has been
passed. Egypt also signed a Qualifying Industrial Zones
agreement with Israel, which has expanded and deepened
Egyptian-Israeli trade and political relations. To prepare
for FTA negotiations with the United States, the GOE has
resolved numerous U.S. business complaints and improved the
general business climate. But the challenges are also
daunting. Foreign direct investment allegedly is improving
but is still far below required levels. Unemployment levels
remain high. 600,000 new job seekers enter the labor force
each year. Mubarak is more convinced of the need for
economic reform than political, but he will still need to be
pushed. Direct U.S. financial assistance is already tied to
strict benchmarks on financial reform, where results have
been best and rewards most promising.


RICCIARDONE