SHEIK AL AMOUDI DISCUSSES BUSINESS AND POLITICAL CLIMATE

UNCLAS SECTION 01 OF 02 ADDIS ABABA 002737

SIPDIS

SIPDIS

USAID/W FOR A/AID
DCHA/AA WGARVELINK, LROGERS
AFR/AA LPIERSON, KALMQUIST
AFR/EA KNELSON

E.O. 12958: N/A
TAGS: ETRD ENRG EAGR EINV PGOV PINR BIOS ET
SUBJECT: SHEIK AL AMOUDI DISCUSSES BUSINESS AND POLITICAL CLIMATE

SUMMARY: In a meeting September 4 with Ambassador Yamamoto, Sheik
Mohammed Hussein Ali Al-Amoudi, chairman of MIDROC Ethiopia and the
80th wealthiest person in the world, offered his insights on the
business climate in Ethiopia, his current and future investments and
his thoughts on how to work with the Government of Ethiopia (GOE).
Among Al-Amoudi's planned investments are a railway linking
Ethiopia, Djibouti and Southern Somalia, and, if Washington agrees,
upgrading the port of Berbera in Somaliland. END SUMMARY

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SHEIK AL-AMOUDI'S INVESTMENTS
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1. Sheik Mohammed Hussein Ali Al-Amoudi is Ethiopia's most prominent
business leader. Born in Ethiopia to an Ethiopian mother and Yemeni
father, he moved to Saudi Arabia in 1963. His holdings are vast and
multinational, ranging from the two largest refineries in northern
Europe to Sheraton Hotels in Addis Ababa, Uganda and Djibouti.
According to Forbes Magazine in 2007, he is the 80th wealthiest
person, worth USD 8 billion. MIDROC Ethiopia, his Ethiopian holding
company counts at least 11 sub companies and includes a gold mine,
air charter business, agricultural enterprises and various
manufacturing and construction companies.


2. Saying that he needs to work with the major players to become a
player in the petroleum sector, he discussed his joint ventures. In
Nigeria, he is working with Exxon and Esso, while in Angola he has
partnered with ELF and Total. Other investments he named are a
refinery in Morocco, offshore wells in Cote d'Ivoire producing 70
thousand barrels per day and extraction efforts in Botswana.

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POTENTIAL TRANSPORTATION INVESTMENTS
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3. In addition to his oil and gas investments, the Sheik detailed
his interest in two transportation projects: a railway linking
Djibouti, Ethiopia and Southern Sudan and developing the Port of
Berbera in Somaliland. The current rail link between Djibouti and
Ethiopia is in poor repair. Al-Amoudi stated that the current
governments of Djibouti and Ethiopia suffer from a "gap" that is
preventing progress on the rail project. Despite the gap, Al-Amoudi
informed the Embassy a group of Kuwaiti investors is performing a
feasibility study on a Djibouti-Ethiopia-Southern Sudan railway. He
stated that the project will need international investment from
entities like the World Bank and IMF as well as additional GOE and
Government of Djibouti cooperation before it can be implemented.
Ambassador Yamamoto commented that the rail link would be a benefit
for economic development in Ethiopia.


4. Al-Amoudi also stated his interest in developing the Port of
Berbera in Somaliland. He said that he would not move on that
project without a green light from the USG - arguing that political
sensitivities with the U.S. are more important than this business
deal. He mentioned that Somali officials are sometimes difficult to
predict, and said that he would be working in Somaliland for
"political" purposes rather than business ends.

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INVESTING IN ETHIOPIA
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6. The Sheik stated that his Ethiopian businesses are lead more by
his heart than by his head. He has opened a garments factory in
Tigray which he expects to soon produce 90,000 blue jeans annually
and is planning a cold storage and packing facility at Bole Airport
and a catering facility to serve airlines.

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ON A QUEST FOR IMAGE TRANSFORMATION
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7. Al-Amoudi spoke of the challenges he has faced in establishing
his businesses in post-Communist Ethiopia. He said that while the
reaction of the public to the introduction of American products was
positive, it took longer (five or six years) for the GOE to change
its attitude from one of socialism to one of capitalism-led growth.
While he noted the need for further change of economic policies, he
dodged the question of what policies are most needed or have the
greatest chance of being implemented in the near term.


8. Al-Amoudi mentioned several times that in order for conditions in
Ethiopia to change, the young people have to change. He shared that
his activities to celebrate the Ethiopian Millennium (NOTE: Due to

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different calendars, Ethiopia celebrates the year 2000 on September

11. END NOTE) are focused on young people and on image
transformation. To that end, he has recruited American musicians
the Black Eyed Peas, Janet Jackson, Beyonce Knowles and 50 Cent for
concerts between September and January. He is also in negotiation
with HBO to provide live coverage of the events. He stated that his
contributions for the Millennium are not business-based, but rather
part of his efforts to change Ethiopia's image on the world stage.

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ADVICE ON THE GOE
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9. The Sheik urged the Ambassador not to give up on efforts because
of a perceived lack of attention from the GOE. He stated that the
GOE is listening and considering input even if there is no immediate
response. He further cautioned that Ethiopians have a tremendous
sense of pride, and that any advice from outsiders needs to keep
this in mind.


9. COMMENT: The opportunity to hear first-hand from Ethiopia's most
influential business leader offers insight into potential economic
development in the country. Al-Amoudi is known to be a supporter of
the current regime and is thought to face fewer barriers in his
business activities than other investors. Additionally, his advice
on keeping the Ethiopian sense of pride in mind echoes the
sentiments of other sources and Post's tactics in engaging the GoE,
and amplifies the need to keep the Ethiopian psyche in mind when
conducting negotiations on sensitive issues. Post would appreciate
Washington's views on MIDROC's potential refurbishment of the
Berbera port to convey to the Sheik. END COMMENT

YAMAMOTO