TUNISIA ECONOMIC HIGHLIGHTS

C O N F I D E N T I A L TUNIS 000012

SIPDIS

SIPDIS

STATE FOR EB AND NEA/MAG
STATE PASS USTR (BELL),USPTO (ADLIN),USAID (METZGER)
USDOC FOR ITA/MAC/ONE (ROTH),ADVOCACY CTR (JAMES),AND
CLDP (TEJTEL)
CASABLANCA FOR FCS (ORTIZ)

E.O. 12958: DECL: 01/04/2016
TAGS: ECON EINV EPET EINT ELAB TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS

REF: A. 05 TUNIS 2234

B. 05 TUNIS 2433

Classified By: Ambassador William J. Hudson; Reasons 1.4 (b),(d)

-- Coming Privatization of Tunisia's Internet Agency
-- Labor Concern over Tunisie Telecom's Partial-Privatization
-- Launch of Internet Services via Mobile Phones Postponed
-- Prequalification Begins for Tunisia's Second Petroleum
Refinery
-- Strengthening Customs Operations Against Counterfeit Goods

Coming Privatization of Tunisia's Internet Agency
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1. (SBU) Following criticism of Tunisia's freedom of
information and internet access during its November 2005
hosting of the World Summit on the Information Society, the
Chamber of Deputies is debating plans to privatize Tunisia's
master internet service provider (ISP) and sole international
internet gateway, the Agence Tunisienne d'Internet (ATI).
ATI leases internet access to 12 ISPs in Tunisia (five of
which are privately-owned),which in turn offer retail access
for customers. ATI also controls Tunisia's country code
Top-Level Domain (ccTLD),i.e., maintenance of internet
addresses bearing a ".tn" designation. The sell-off of the
GOT's stake in ATI would likely go to firms such as Tunisie
Telecom (the national fixed-line monopoly),which is also
currently undergoing partial-privatization of its ownership.
(Comment: No information regarding the GOT's future
regulatory oversight of ATI is yet available, but post
expects such ownership modifications to be mainly cosmetic
changes, with the GOT retaining full capability to control
access to the internet in Tunisia. End comment.)

Labor Concern over Tunisie Telecom's Partial-Privatization
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2. (C) The bid deadline for Tunisia Telecom's (TT)
partial-privatization (35 percent of its ownership and
Tunisia's largest privatization ever) is January 31. The
privatization is causing some murmurings at TT by employees
fearful of potential job cuts. (Note: Ref A reported on a
former-TT Board of Director member's view that as many as
1,000 of TT's 8,000 employees may be redundant. End note.)
In an effort to head off these labor concerns, TT CEO Ahmed
Mahjoub has attempted to reassure employees that the state
will continue to play a significant role in the stewardship
of the company, following privatization. Media reported
Mahjoub as explaining that TT's privatization will be
contingent upon locating a "strategic partner," presumably
one appreciative of Tunisia's history of socialist-inspired
macroeconomic control and heightened labor protections.
European interests, including France Telecom, are important
front-runners in this regard, though Gulf firms, such as
Etilisat and Saudi Telecom, are also keenly active in
expressing interest to partner with TT.

Launch of Internet Services via Mobile Phones Postponed
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3. (C) Tunisiana -- Tunisia's sole private-sector mobile
phone rival to state-owned Tunisie Telecom (TT) -- has
postponed the launch of internet services over mobile phones
until later in 2006. The launch of mobile phone internet
access had been anticipated mid-December 2005, but has been
deferred due to purported concerns over transmission quality.
(Comment: State-owned TT typically price-undercuts
Tunisiana's services shortly after Tunisiana releases new
offerings, according to Tunisiana officials, which could be a
reason for deferring the launch of internet access to allow
better release of new services. There is also the
possibility that the GOT is not yet fully ready to loosen its
control on the internet or figured how to staff its control
centers to handle the increased access to the internet via
mobile phones. End Comment.)

Prequalification Begins for Tunisia's Second Petroleum
Refinery
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4. (SBU) The GOT is seeking to prequalify bidders for the
construction of a second petroleum refinery in La Skhira,
next to the country's petroleum terminal by March 31, 2006.
(Detailed information in English about this international
tender can be found at:
www.raffinerie.nat.tn/www/en/cahier/asp.) The La Skhira
refinery will be Tunisia's second refinery with an expected
capacity of 120,000 barrels per day. The GOT will award
rights to build, own, and operate the refinery for a 30-year
period, and will offer financial incentives to the awardee.
Tunisia consumed an average of 79,000 barrels of petroleum
per day in 2004, of which an average 61,000 barrels per day
were imported. Tunisia's sole existing refinery in Bizerte
refines approximately 30,000 barrels per day. (For
additional background on Tunisia's oil/energy developments,
see Reftel B.)

Strengthening Customs Operations Against Counterfeit Goods
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5. (SBU) Following the successful prosecution against nine
small-scale sellers of counterfeit Louis Vuitton products in
Tunisia in December, the GOT has signed a cooperation
agreement between its Customs Department and its French
counterpart (to be financed under a 20 million Euro EU
assistance program). Separately, Tunisia's Ministry of
Commerce and Customs are also ramping up efforts to tackle
illegal imports with upgraded electronic scanning equipment
and increased human resources. A Customs official reported
that Customs is now recruiting an additional 200 officers and
will open a new school for customs administration in 2006.

Comment
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6. (SBU) Tunisia's privatization efforts continue at a
positive pace, albeit reflecting the GOT's chronic desire to
retain ultimate control over strategic industries, including
banking and telecoms, and to moderate social impacts on the
government's chief economic preoccupation: unemployment.
Given the GOT's strategic focus on employment issues, recent
assurances by Tunisie Telecom's CEO are probably much more
than empty promises -- at least for the near term.
Nonetheless, globalization and market forces (which Tunisia
has only gradually adapted to) will continue to impose
pressures to liberalize its economy, to increase access to
information via the internet, and to streamline bureaucracies
such as Customs, which have long been the bane of foreign
investors here.
HUDSON