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06TUNIS2424 2006-09-22 10:44:00 CONFIDENTIAL Embassy Tunis
Cable title:  

MICROSOFT INKS AGREEMENT WITH GOT

Tags:   ECON TINT KIPR ECPS TS 
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					  C O N F I D E N T I A L SECTION 01 OF 02 TUNIS 002424 

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STATE FOR NEA/MAG (HARRIS) AND EB/CIP
STATE PASS USTR (BELL), USPTO (ADLIN AND ADAMS), USAID
(MCCLOUD)
USDOC FOR ITA/MAC/ONE (ROTH), ADVOCACY CTR (JAMES), AND
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CASABLANCA FOR FCS (ORTIZ)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: DECL: 09/22/2016
TAGS: ECON TINT KIPR ECPS TS
SUBJECT: MICROSOFT INKS AGREEMENT WITH GOT



1. (SBU) Summary: During the Microsoft Government Leaders
Forum in South Africa July 11-12, the GOT and the Microsoft
Corporation signed a partnership agreement that provides for
Microsoft investment in training, research, and development,
but also commits the GOT to using licensed Microsoft
software. According to Microsoft Tunisia Director General
Salwa Smaoui, the agreement is a win-win for both Microsoft
and the GOT. The negotiation process and the brokered deal
itself are illustrative of GOT priorities and the cost of
doing business in Tunisia. End Summary.



2. (SBU) The agreement between Microsoft and the GOT was
signed in July during the Microsoft Government Leaders Forum
in South Africa. Although signed in July, information about
the agreement has not been forthcoming from either the GOT or
Microsoft and, despite repeated requests, Microsoft has yet
to provide post with a copy of the final agreement. In a
September meeting with EconOffs, Microsoft Tunisia Director
General Salwa Smaoui provided an overview of the main points.
The final agreement outlines cooperation on GOT
e-governance, cyber security, intellectual property rights,
and capacity development for Tunisian information technology
programs. Microsoft will establish a Microsoft Innovation
Center in Tunisia for developing local software production
capacity by providing training and consulting services to
software developers. Expanding the Tunisian IT sector has
become a priority for the GOT as a way to absorb the growing
number of unemployed university graduates. According to
Smaoui, the GOT invests approximately one percent of GDP in
research and development in the IT sector. Microsoft has
also agreed to provide training to handicapped Tunisians to
enable them to seek employment in the IT sector by
telecommuting. (Note: President Ben Ali's wife Leila Ben Ali
runs a charity for handicapped Tunisians. End Note.)



3. (U) As part of the agreement, Microsoft will help the GOT
to upgrade and modernize its computers and networking
capabilities. In turn, the GOT agreed to purchase twelve
thousand licenses to update government computers with
official Microsoft software, rather than the pirated versions
that have been commonly used, according to one Microsoft
employee. Since 2001, the GOT adopted an open software
policy, using only free software programs. Additionally,
future GOT tenders for IT equipment will specify that the
equipment must be Microsoft compatible, which is currently
prohibited by the Tunisian open software policy.



4. (SBU) The agreement also touches on internet security.
Through a program on cyber criminality, Microsoft will train
government officials in the Ministries of Justice and
Interior on how to use computers and the internet to fight
crime. As part of this program, Microsoft will provide the
GOT with original source codes for its programs. When asked
by EconOff whether Microsoft had any concerns about releasing
its source codes, Smaoui replied that the source codes would
only be available to a small number of officials.
Nevertheless, the agreement contains language stating the
Microsoft and the GOT will work jointly on intellectual
property rights. This agreement also provides for a separate
agreement to be signed creating a security cooperation
program that will provide more general internet security
training to the public.



5. (C) According to Smaoui, the agreement is the culmination
of a five-year negotiation process. Smaoui was named
Microsoft's Director General for Tunisia about one year ago
and, although currently hesitant to fully disclose the final
details, provided frequent updates to Post on the progress of
the negotiations. She reported that at times the GOT's
suspicion of Microsoft because of its "American-ness" seemed
to outweigh its technical evaluation of the proposal. She
said that she had been asked several times by GOT ministers
why, as a Tunisian, she was "working for the Americans," and
often felt suspicion bordering on hostility during the
negotiations. Smaoui also noted that the GOT wanted a

TUNIS 00002424 002 OF 002


"tailor-made" agreement, rather than a prepackaged program
that would be "imposed" on Tunisia. This attitude towards
the negotiation process required Microsoft to focus just as
carefully on the presentation as the substance.



6. (C) In a call on DCM a few days before the South Africa
Forum, Smaoui worried that she was going to the Forum without
a signed agreement in hand and could not confirm that the
GOT's representative would even show up. She fretted that
she might have to confess to Bill Gates that she had no
reason to be at the Forum. In the event, Khedija Ghariani,
Secretary of State for Computers, Internet, and Free

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Software, attended and signed the agreement on behalf of the
GOT. Despite the drawn-out negotiations, Smaoui stated that
reaching an agreement was "vital" for Microsoft. The fact
that the government relied on open source software
drastically limited business in Tunisia and prevented
Microsoft from participating in GOT tenders. Additionally,
the agreement reinforces an objective both Microsoft and the
GOT share -- establishing a knowledge society. Smaoui stated
that even though Microsoft will be investing in Tunisia, the
sum of investment will be lower than the cost of GOT
purchases.



7. (C) Comment: Although the agreement has been hailed as a
triumph for intellectual property rights, the negotiations
and the brokered deal itself reveal a more complicated
reality. Microsoft was able to broker the final agreement by
appealing to GOT unemployment sensitivities as well as by
adapting to the realities of doing business in Tunisia. Even
as the goal of expanding employment opportunities for
handicapped Tunisians is worthy, the program's affiliation
with Leila Ben Ali's charity is indicative of the backroom
maneuvering sometimes required to finalize a deal.
Microsoft's reticence to fully disclose the details of the
agreement further highlights the GOT emphasis on secrecy over
transparency. In theory, increasing GOT law enforcement
capability through IT training is positive, but given
heavy-handed GOT interference in the internet, Post questions
whether this will expand GOT capacity to monitor its own
citizens. Ultimately, for Microsoft the benefits outweigh
the costs. End Comment.
BALLARD