SCENESETTER FOR THE SECRETARY'S VISIT TO SHARM EL

S E C R E T CAIRO 001258

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/28/2032
TAGS: PREL PGOV EFIN ECON IZ EG
SUBJECT: SCENESETTER FOR THE SECRETARY'S VISIT TO SHARM EL
SHEIKH

Classified By: Ambassador Francis J. Ricciardone,
for reasons 1.5 (b) and (d).

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EGYPT AND IRAQ: RELATIONS WARMING
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1. (C) PM Maliki,s April 22-24 visit to Cairo marked an
important warming in Egyptian-Iraqi relations, despite deep
and lingering mutual suspicions. Mubarak, PM Nazif, and
other officials warmly received Maliki, reassured him of
Egypt's support, and set a positive tone for the May 3-4
discussions. Maliki asked for Egypt's concrete assistance,
particularly in reconstruction and security. President
Mubarak directed Nazif to set up ministerial-level bilateral
teams to address issues of mutual concern, such as energy and
trade.


2. (S) No debt relief yet: Iraq owes Egypt an estimated
$1.27 billion in debt, $861 million of which is official debt
($247 million in principal and $614 million in interest) and
$408 million in workers' remittances. Nazif has signaled to
us that Mubarak will not offer debt relief, at least not at
Sharm, preferring to withhold the favor at least until the
Egyptians "see what the Maliki government is going to do."
Finance Minister Boutros-Ghali had indicated a willingness to
forgive 100 percent of the official debt, in exchange for
up-front payment of 50-percent of the workers remittance
claims ($204 million of the $408 million).

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OTHER ISSUES
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3. (S) U.S. military assistance: Secretary of Defense Gates
told Mubarak during his April 18 visit to Cairo that we
remained committed to the President's request for USD 1.3
billion in security assistance to Egypt. He asked Minister
of Defense Field Marshal Tantawi to work with a U.S. team to
ensure that capabilities that support our nations' "shared
objectives" such as Sudan, counter-terrorism, border control,
humanitarian assistance and peacekeeping receive priority for
funding. Tantawi assented. The Egyptians are following our
discussions with Israel for additional military assistance
closely. They would like to maintain 3/4 "parity" with the
Israelis, but realize that we do not recognize linkage
between the two programs.


4. (S) Sudan: Egypt keeps pressuring President Bashir to
cooperate with the UN on Darfur but opposes further
sanctions. FM Aboul Gheit and EGIS chief Omar Soliman
visited Khartoum on April 23 and found Bashir had committed
to deployment of the hybrid force and was urging the UN to
provide funding for peacekeepers in Darfur. The GOE,s plans
to support the UN/AU hybrid effort are on track. The
Minister of Defense approved on April 24 the following
additional force contribution: 1-2 mechanized infantry
battalions, a signals company, a transport company, a field
hospital, 30 headquarters staff, and 100 military observers
for a total contribution of 1200-1900 personnel. At our
request, Egypt has also publicly committed to providing more
peacekeepers, once all Darfur rebel groups join the Darfur
Peace Agreement. We should commend the GOE's public offer of
troops for the UN/AU effort, and urge continued efforts to
move Bashir to cooperate.


5. (S) Arab League: AL SYG Amre Moussa has asked to see the
Secretary on the margins of the Iraq meetings. He will

SIPDIS
likely reiterate his and the League's commitment to
supporting the Maliki government, arguing that Maliki must
make concrete progress on both security and political
reconciliation in order to succeed. Moussa also stands ready
to resume his and the League's own reconciliation efforts
among Iraqi factions. On Lebanon, Moussa is profoundly
frustrated and worried that without a meaningful political
compromise, there could soon be a situation where there are
either two prime ministers and/or two competing Cabinets. On
the Arab Peace Initiative, Moussa will reiterate that the
Arabs will not make another gesture towards Israel until
Israel makes a significant conciliatory step vis--vis the
Palestinians.


6. (S) Domestic Issues: Capping months of arrests and
increased tensions, the military tribunals for 40 MB members
began on April 26, but were immediately adjourned until June


3. Most of the defendants have already been acquitted twice
by Cairo criminal courts. Ayman Nour's appeal for health
parole remains pending. Elections for the Shura Council
(Egypt's upper parliamentary chamber) will be held in
mid-June, under the auspices of a yet-to-be formed new
Supreme Electoral Commission. Indications are that the new
Commission will not improve on previous electoral oversight
processes. Other new legislation is being drafted for action
by Parliament in the fall. This includes the Anti-Terror Law
(which will end the state of emergency ongoing since 1981),
and a new Electoral Law. We would like to see the
anti-terror law draw a narrow definition of terrorism and the
electoral law foster development of political parties without
foreclosing opportunities for independents.


7. (S) Personal milestones: Lastly, May 4 is doubly important
as it marks President Mubarak's 79th birthday, and Gamal
Mubarak's wedding in Sharm to Khadiga El-Gamal, a 24-year old
graduate of the American University in Cairo. The event has
been eagerly anticipated by the Egyptian media, and is likely
to be the elite social event of the year. Your current
departure from Sharm is several hours prior to the reception.
We have recommended a White House message of congratulations
to President Mubarak on this double occasion.

RICCIARDONE