EGYPTIAN PARLIAMENTARIANS QUESTION QIZ PROGRAM

UNCLAS CAIRO 001825 SIPDIS SENSITIVE SIPDIS USTR FOR SAUMS E.O. 12958: N/A TAGS: ECON ETRD IS EG SUBJECT: EGYPTIAN PARLIAMENTARIANS QUESTION QIZ PROGRAM REF: A. 2006 CAIRO 7219 ¶B. 2005 CAIRO 1013 Sensitive but Unclassified, not for Internet distribution. ¶1. (U) More than 140 members of Egypt's People's Assembly recently petitioned the government to reevaluate the Qualified Industrial Zone (QIZ) agreement, according to June 8 press accounts. The parliamentarians requested an analysis of the economic performance of the agreement since 2004, when it was signed by the GOE, Israel and the United States, but did not state outright opposition to it. The 140 parliamentarians represent 30 percent of the seats in parliament. Although their party affiliation was not specified in the reports, opposition and independent MP's hold only 107 seats in the Assembly, so at least 33 ruling party MP's have apparently signed onto this initiative. ¶2. (SBU) Ali Awni, head of the QIZ unit in the Ministry of Trade and Industry, told econoffs that he was not concerned by the inquiry, which he described as routine. The QIZ program has faced periodic opposition from members of Parliament and receives increased attention during troubled periods in Egyptian-Israeli relations, such as during the violence between Israel and Lebanon in the summer of 2006 (ref A). ¶3. (U) While Muslim Brotherhood (MB) parliamentarians have been particularly critical of the program, a policy platform recently released by the MB included 26 pages of economic policy pronouncements that were skeptical of "outside economic influence," but made no specific mention of the QIZ or trade with Israel (septel). The only public QIZ demonstrations have been by workers calling for their factories to be included in the program (ref B). The GOE estimates that over 100,000 workers are now employed in QIZ factories. ¶4. (U) Separately, the QIZ unit reported in May that overall QIZ exports to the United States have surpassed USD $1 billion during the life of the program. The May meeting of the GOE-GOI-USG committee that administers the program took no action on a long-standing GOE request to lower the required level of Israeli content in QIZ exports from 11.7 to 8 percent. JONES