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 -------------- SHEIK AL-AMOUDI'S INVESTMENTS -------------- ¶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. -------------- POTENTIAL TRANSPORTATION INVESTMENTS -------------- ¶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. -------------- INVESTING IN ETHIOPIA -------------- ¶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. -------------- ON A QUEST FOR IMAGE TRANSFORMATION -------------- ¶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 ADDIS ABAB 00002737 002 OF 002 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. -------------- ADVICE ON THE GOE -------------- ¶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