SCENESETTER FOR AMBASSADOR SCHULTE'S ALGERIA VISIT

C O N F I D E N T I A L ALGIERS 001680

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/20/2017
TAGS: PREL KNNP PTER ECON AG
SUBJECT: SCENESETTER FOR AMBASSADOR SCHULTE'S ALGERIA VISIT

Classified By: Ambassador Robert Ford; reasons 1.4 (b) and (d).


1. (U) Ambasssador Schulte, we are delighted you can visit
Algiers this month. Algeria is a committed partner of the
U.S. in the war on terrorism and the GoA has actively helped
shut down ratlines funneling foreign fighters to Iraq. We
also have big commercial interests in Algeria's energy
sector. Your visit is one of several we have hosted this
year, including trips here by Under Secretary of State Karen
Hughes, Deputy S/CT Coordinator Virginia Palmer, Senator Bill
Nelson and most recently, a July visit by Assistant to the
President for Homeland Security and Counterterrorism Frances

F. Townsend.


2. (U) Algeria is Africa's second-largest country
geographically and, with over 34 million inhabitants, the
second-largest Arab state in terms of population. Higher
hydrocarbon prices have helped the government accumulate huge
new reserves of foreign currency. While macroeconomic
indicators look healthy, the economy in northern Algeria,
where most of the population lives, is sluggish and a source
of instability. For all its talk about democracy the
Algerian government comes up short on implementation, and the
political arena is stagnant. You will arrive when the
campaign season for November 29 local elections is in full
swing. Roughly 72 percent of the population is under the age
of 30, and large segments of this population generally feels
the government is out of touch with their lives and that the
system offers them nothing. The harraga problem -- youth
risking their lives to leave on improvised boats for Italy or
Spain -- has grown significantly over the past year.
Recruitment by Islamist extremists also feeds off the
alienation widespread among Algerian youth. Algeria thus has
enormous potential but faces big challenges: the immediate
future will determine whether much-needed reforms will ease
the underlying socioeconomic pressures or whether continued
stagnation will begin to threaten stability.

NUCLEAR ENERGY
--------------


3. (C) Our cooperation with Algeria in the nuclear arena has
been largely technical to date, within the context of NNSA.
Algeria has two reactors, a small one-megawatt plant at
Draria built by Argentina, and the larger 15-megawatt
Es-Salaam facility some 300km south of Algiers, built by
China. Both are decades old. Our sense is that the
Algerians are primarily interested in upgrading what they
already have. Press speculation, particularly around the
time of French President Sarkozy's initial visit to Algeria
last summer, has run rampant with rumors that Algeria is
seeking to develop commercial nuclear energy with French
expertise and cooperation. This is mostly speculation; our
contacts at the French Embassy confirm that there is no
substance to any nuclear deal with France thus far. You
should nonetheless expect Energy Minister Khelil to be hoping
you will express a U.S. interest in helping Algeria develop
nuclear power generation.


4. (U) In December 2006, Algeria participated in the IAEA
workshop for countries considering nuclear energy
development. Algeria is party to the Non-Proliferation
Treaty with a safeguards agreement in force. It is a party
to the Conventions on Notification and Assistance in Case of
a Nuclear Accident as well as the Physical Protection
Convention. It is not a party to the Convention on Nuclear
Terrorism or to the Joint Convention on the Safety of Spent
Fuel Management. Algeria has signed but not ratified the
Nuclear Safety Convention. According to our records, 34
Algerian students have received PhDs from American
universities in nuclear studies since 1969. An additional 13
have received PhDs in physics from American universities.
Algerian participation in IAEA Technical Cooperation projects
has focused on isotope hydrology, health sciences and
agriculture rather than on nuclear power applications.

IRAN
--------------


5. (C) Top Algerian government officials perceive that Iran
helped the Algerian Islamists that sought to topple the
Algerian government in the early 1990s; they harbor no deep
love for the Iranian government. Iranian President
Ahmadinejad visited Algeria last summer, and we know that
Energy Minister Chekib Khelil has visited Iran within the
context of OPEC. Our MFA contacts claim that they have
relayed to the Iranians a message very similar to our own,
urging Iran to comply with the IAEA process and the will of
the international community. When the Algerians raised the
subject of sanctions for non-compliance with IAEA
inspections, MFA contacts tell us, the Iranian delegation
became suddenly "prudent and cautious" on how to respond.
Our Algerian counterparts generally are proud of their
country's adherence to principles such as compliance with
international organizations over overt bilateral alliances
with foreign powers. At the same time, the official, public
GOA position -- repeated on a number of occasions by
different senior officials -- is that Algeria supports Iran's
right to pursue peaceful nuclear energy development. The
Algerians in government and on the street strongly oppose
U.S. military action against Iran.

TIP
---


6. (C) The problem of trafficking in persons is one of both
substance and semantics. The Algerians are not at all
pleased about being placed in our Tier 3 status, but they
consistently deny that they have a TIP problem. Instead,
they view it as part of the problem of illegal migration, and
have maintained that their laws on this are sufficient to
cover TIP as well. The reality is that Algeria is a transit
country for internationally trafficked persons, primarily
from sub-Saharan Africa en route to Morocco, Tunisia and
Europe. Algeria is neither a source nor a destination
country. Local NGOs and international organizations estimate
that most trafficking victims enter Algeria voluntarily as
illegal migrants, then become victims of labor exploitation
in connection with earning the cost of their passage to
Europe. Algeria does not have a law that specifically
addresses TIP, although from November 19-21, a delegation
from the Ministry of Justice is visiting Washington to
discuss TIP legislation and a Multilateral Legal Assistance
Treaty with our Department of Justice and FBI.


7. (C) In a July 14 meeting, MOJ, MFA and National Solidarity
Ministry representatives told us that the government will
propose TIP-related amendments to existing laws by the end of

2007. In that same meeting, we were told of the existence of
an inter-ministerial group that produces a report on
trafficking. The 2007 report was due to be completed by
mid-August 2007. You should encourage the Algerian
government to acknowledge the TIP problem officially, and ask
the status of the proposed amendments to their laws. You
should also encourage the TIP inter-ministerial group to
develop an action plan and offer our help as it does so.

DRUG TRAFFICKING
--------------


8. (C) Until recently, most drug seizures reported in the
local press have been under 20 kg. Cocaine smuggling from
West Africa has, however, exploded in the last year and we
are seeing multiple-ton seizures of cocaine in transit to
Europe. Morocco continues to be the major regional
transshipment point between sub-Saharan Africa and Europe,
but Algerian officials worry that alternate shipping routes
will arise as the transit market saturates and the police
become more successful at interdiction. There is also a
possibility that terrorist elements might use ancient trade
routes in southern Algeria, northern Mali and northern Niger
smuggle drugs to finance their operations. Press reports
have not focused on this angle, mainly choosing to report
instead on the quantity of drugs seized and not those
responsible. The Algerians have requested DEA support and
training. DEA in turn has not sought any cooperation on drug
seizure information since there is no direct link between the
seizures and the U.S.

MONEY LAUNDERING AND TERRORIST FINANCING
--------------


9. (U) A U.S. interagency financial sector assessment team
visited Algeria February 24-28 to evaluate Algerian needs and
lay the groundwork for greater cooperation on money
laundering/terrorist financing (ML/TF). Algerian requests
focused primarily on training, which paved the way for
several additional events later this year. With the
cooperation and support of the ICE Attache in Rome, we held a
successful bulk cash smuggling workshop in early November for
police and customs officials. In early September, we held a
workshop on money laundering and terrorist financing for
judges, prosecutors, police, gendarmerie and customs
officials, and five Algerian government officials
participated in a counterterrorism and bank examination
training session at the FDIC in Washington, DC, at the end of
June.


10. (C) Algeria has established a legal framework to fight
ML/TF by enacting a bill in 2005 and adopting major UN
conventions. The 2005 law aims to strengthen the powers of
the Cellule du Traitement de Renseignement Financier (CTRF),
an independent financial intelligence unit within the
Ministry of Finance, created in 2002. The law offers
guidance for the prevention and detection of ML/TF, along
with institutional and judicial cooperation and penal
provisions. Over the last three years, Algeria has taken
significant steps to enhance its statutory ML/TF regime.
Several bureaucratic barriers remain to the ultimate goal of
enabling the CTRF to become the focal point for all ML/TF
investigations. Algeria also needs training for customs
officials to recognize trade-based ML and value transfer
transactions. CTRF is currently organizing training sessions
for insurance companies, lawyers and others to help them
identify suspicious transactions.
FORD