CODEL COSTELLO PROMOTES OPEN SKIES AGREEMENT AND

UNCLAS SECTION 01 OF 03 TUNIS 001136

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB (DIBBLE),NEA/MAG (HARRIS),
EEB/TRA/AN (FINSTON),H
STATE PASS USTR (BUNTIN) AND USAID (MCCLOUD)
USDOC FOR ITA/MAC/ONE (HOLLY VINEYARD AND NATHAN MASON) AND
ADVOCACY CTR (JAMES)
CASABLANCA FOR FCS (ORTIZ)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: EAIR ECON EINV ETRD TS
SUBJECT: CODEL COSTELLO PROMOTES OPEN SKIES AGREEMENT AND
REVIEWS PORT SECURITY

REF: A. TUNIS 1106


B. TUNIS 192

--------------
Summary
--------------


1. (SBU) During a August 18-20 visit to Tunisia, the 11
members of CODEL Costello were warmly welcomed by GOT
officials, who were eager to highlight Tunisia's economic
success and express their enthusiasm for the recently founded
Tunisia caucus. Prime Minister Mohamed Ghannouchi focused on
the economy and opportunities for increasing US investment,
with members of the delegation encouraging GOT consideration
of franchising and of a US-Tunisian Open Skies Agreement.
During the delegation's meeting with the Minister of Foreign
Affairs, Abdelwahab Abdallah talked at length of the strength
of US-Tunisian friendship and emphasized Tunisia's commitment
to defending liberty. In response to the Ambassador's and
the delegation's questions about the potential for an Open
Skies Agreement, Minister of Transport Abderrahim Zouari
stated that President Ben Ali has instructed the Ministry to
finalize a direct aviation line to the United States and that
the Embassy will receive a response to the draft text "within
the next few days." He indicated that the GOT agrees on the
"broad lines." The delegation capped off their stay in
Tunisia with a visit to the Port of Rades to view security
procedures. End Summary.


2. (U) CODEL Costello participants as follows:

REP. JERRY COSTELLO (D-IL)
REP. JOHN DUNCAN (R-TN)
REP. SOLOMON ORTIZ (D-TX)
REP. BUD CRAMER (D-AL)
REP. LUIS GUTIERREZ (D-IL)
REP. TIM HOLDEN (D-PA)
REP. NYDIA VELAZQUEZ (D-NY)
REP. LEONARD BOSWELL (D-IA)
REP. RUBEN HINOJOSA (D-TX)
REP. MICHAEL CAPUANO (D-MA)
REP. HENRY BROWN (R-SC)

--------------
Prime Minister Stresses US Investment
--------------


3. (SBU) In his meeting with the CODEL, Prime Minister
Mohamed Ghannouchi focused on Tunisia's economic success and
future challenges, rattling off a string of economic
statistics. Ghannouchi stated that the United States is a
"privileged partner" in Tunisia and that he hopes to attract
increased US investment. He highlighted Tunisia's stable
growth (4.5 percent over the past five years),large middle
class (80 percent),and low poverty rate (3.9 percent),but
acknowledged that in order to reduce unemployment and raise
living standards Tunisia would have to enhance reform
efforts. Chairman Costello noted the delegation's interest
in strengthening US-Tunisian relations and finding ways to
bring more US investment to Tunisia. Ghannouchi emphasized
the currently low level of US investment, pointing out that
just 60 out of 2800 foreign companies are American and only
USD 200 million out of USD 20 billion in foreign investment
is American. (Note: These figures differ from Embassy
figures, due to differences in methodologies. Embassy
estimates total US investment at around USD 700 million, with
some 67 US companies present in Tunisia. End Note.) He
identified car and plane part manufacturing, the El Houaria
electricity project, Enfidha deep water port tender, and
Djerba desalinization plant as potential opportunities for US
investment.


4. (SBU) Costello raised the possibility of an Open Skies

TUNIS 00001136 002 OF 003


agreement and encouraged the GOT to enter into discussions.
Ghannouchi noted Tunisia's goal to become a hub for services
and that this would require transport upgrades, including in
the aviation sector. He stated that the GOT is targeting 8
percent growth in services. Rep. Nydia Velazquez, who chairs
the House Small Business Committee, stressed the potential of
franchising to tackle job creation and strengthen the
economy. Ghannouchi responded that the GOT will consider
franchising, but remarked that there are already a few areas
where franchising exists. He stated that authorization for
franchises depends on needs and the investment.


5. (SBU) In response to Rep. Cramer and Rep. Boswell's
comments on the importance of cooperation on security issues,
Ghannouchi agreed that international cooperation is crucial
to fight terrorism but stressed that it is also important to
resolve the sources of terrorism, such as poverty and poor
education. Ghannouchi also welcomed Rep. Cramer's work to
advance US-Tunisian relations through the creation of a
Tunisia caucus.

--------------
MFA Praises Long History of Friendship
--------------


6. (SBU) Before embarking on a nearly 45 minute soliloquy on
the history of US-Tunisian friendship, the importance of
liberty, and Tunisia's developmental success, Minister of
Foreign Affairs Abdelwahab Abdallah thanked Rep. Cramer and
praised the inauguration of the Tunisia Caucus. Abdallah
stated that Tunisia has chosen "to defend liberty externally
and internally", calling Tunisia's choice of democracy an
"irreversible process." He also highlighted Tunisia's
vigilance with regard to security issues and emphasized
Tunisia's "full" cooperation with the United States in
confronting terrorism. When Chairman Costello asked about
Tunisia's political reforms, Abdallah stated that since 1987
President Ben Ali has helped guarantee pluralism and noted
that there are now six different political parties
represented in the parliament. Abdallah emphasized that
political parties need to develop, but highlighted GOT
support of political parties' newspapers as a means to help
political parties express their opinion.

--------------
Minister of Transport Supports Open Skies
--------------


7. (SBU) Minister of Transport Abderrahim Zouari started the
meeting by recalling his 1997 visit to the State Department
as Minister of Foreign Affairs in celebration of the 1797
agreement on commercial exchanges and navigation. Zouari
stated that US-Tunisian cooperation was richer than ever, but
that there remained much to do in regard to aviation
cooperation. Zouari stated that President Ben Ali has given
instructions to the Ministry to ensure there are direct
flights to the United States and Canada. He noted that he
had received the preliminary Open Skies text and there is
agreement on the "broad lines." Zouari told the group that
the Ministry will provide a response to the text "within the
next few days." Zouari additionally stressed the readiness
of Tunisair to enter into codeshare agreements with US
airlines. Ambassador Godec raised the visit of the
interagency economic delegation as another opportunity to
advance these issues, also noting his desire for future
meetings with the Minister.


8. (SBU) In a brief side meeting with Ambassador Godec,
Chairman Costello, and Rep. Jimmy Duncan, as well as during
the larger meeting, Chairman Costello encouraged Zouari to
follow-up with Ambassador Godec on the potential Open Skies
Agreement and Northwest Airlines' codeshare request.
Costello emphasized the positive impact a direct line would

TUNIS 00001136 003 OF 003


have on tourism and investment. After Zouari stated that
Tunisair will launch a tender for the purchase of 20 new
planes at the end of the year, Costello urged Zouari to
consider Boeing planes as Tunisair renews its fleet over the
next several years. Zouari indicated, as he has previously
(Ref B),that Boeing's chances of winning the tender would
improve if they manufactured components and spare parts in
Tunisia. When Costello asked if Zouari had met Secretary of
Transportation Mary Peters, Zouari extended an invitation to
Secretary Peters to visit Tunisia, and stated that he

SIPDIS
welcomed the opportunity to meet with her.

--------------
Port Security
--------------


9. (U) During a visit to the Port of Rades, Tunisia's main
container port, the group met with the Director General of
the Merchant Marine and Ports Office (OMMP) Samir Hakimi and
the OMMP's Director of Port Security and Safety Sahbene Ben
Fadhel. Hakimi and Ben Fadhel noted that the Port is in full
compliance with the International Ship and Port Facility
Security Code and has been recognized for security best
practices. The delegation was given a demonstration of the
Port's container scanning procedures. The OMMP stated that
100 percent of all imported and exported containers are
scanned.

--------------
Comment
--------------


10. (SBU) The GOT welcomed CODEL Costello's visit as an
opportunity to demonstrate Tunisia's success and the strength
of US-Tunisian relations. Though GOT officials did not stray
far from their previous statements, the delegation's visit
helped to raise economic issues such as franchising and the
Open Skies Agreement and therefore lay the groundwork for the
planned September visit of an interagency economic
delegation.


11. (U) CODEL Costello did not have a chance to clear this
message before departing Tunisia.
GODEC