Identifier
Created
Classification
Origin
07TUNIS1202
2007-08-30 16:33:00
CONFIDENTIAL
Embassy Tunis
Cable title:  

SCENESCETTER FOR ECONOMIC DELEGATION

Tags:  ETRD EINV EAIR KIPR BEXP EFIN TS 
pdf how-to read a cable
VZCZCXRO4711
PP RUEHTRO
DE RUEHTU #1202/01 2421633
ZNY CCCCC ZZH
P 301633Z AUG 07
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 3789
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0924
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7528
RUEHEG/AMEMBASSY CAIRO PRIORITY 1474
RUEHLO/AMEMBASSY LONDON PRIORITY 1351
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0906
RUEHFR/AMEMBASSY PARIS PRIORITY 1821
RUEHRB/AMEMBASSY RABAT PRIORITY 8431
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0134
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4134
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 04 TUNIS 001202 

SIPDIS

SIPDIS

STATE FOR EEB (DIBBLE),NEA/MAG (HOPKINS AND HARRIS)
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD)
USDOC (VINEYARD),ITA/MAC/ONE (NATHAN MASON),ADVOCACY CTR
(JAMES),AND CLDP (TEJTEL AND MCMANUS)
USDOC PASS USPTO (ADAMS, BROWN AND MARSHALL)
CASABLANCA FOR FCS (ORTIZ)
CAIRO FOR FINANCIAL ATTACHE (SEVERENS)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: DECL: 08/30/2007
TAGS: ETRD EINV EAIR KIPR BEXP EFIN TS
SUBJECT: SCENESCETTER FOR ECONOMIC DELEGATION

REF: A. TUNIS 1136


B. TUNIS 959

Classified By: Ambassador Robert F. Godec for Reasons 1.4 (b) and (d).

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

C O N F I D E N T I A L SECTION 01 OF 04 TUNIS 001202

SIPDIS

SIPDIS

STATE FOR EEB (DIBBLE),NEA/MAG (HOPKINS AND HARRIS)
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD)
USDOC (VINEYARD),ITA/MAC/ONE (NATHAN MASON),ADVOCACY CTR
(JAMES),AND CLDP (TEJTEL AND MCMANUS)
USDOC PASS USPTO (ADAMS, BROWN AND MARSHALL)
CASABLANCA FOR FCS (ORTIZ)
CAIRO FOR FINANCIAL ATTACHE (SEVERENS)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: DECL: 08/30/2007
TAGS: ETRD EINV EAIR KIPR BEXP EFIN TS
SUBJECT: SCENESCETTER FOR ECONOMIC DELEGATION

REF: A. TUNIS 1136


B. TUNIS 959

Classified By: Ambassador Robert F. Godec for Reasons 1.4 (b) and (d).

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


1. (SBU) Embassy Tunis warmly welcomes PDAS Elizabeth Dibble,
DAS Holly Vineyard, Elizabeth Hopkins, Paul Burkhead, and
Alex Severens to Tunis from September 9 - 12, 2007. After a
productive roundtable with the GOT and private sector on a
US-Tunisia Free Trade Agreement and a series of Ambassadorial
meetings with GOT ministers clamoring for increased US trade
and investment, the time is right to press for further
economic reform in Tunisia. As the GOT aims to double per
capita income and reduce unemployment, we have an excellent
opportunity to emphasize that economic reform will help
attract the US trade and investment necessary to achieve
these ambitious targets. Your visit will not only capitalize
on recent GOT enthusiasm to reinvigorate our economic
engagement, but could set the stage for Minister of
Development and International Cooperation Nouri Jouini's
October visit to Washington, DC, the Tunisian-American
Chamber of Commerce's October Door Knock Mission, and the
planned November business delegation to Tunisia. This signal
of our total economic engagement in Tunisia will help
translate GOT statements of interest into tangible
commitments. Focus on economic reform and governance would
also provide another avenue for us to promote the broader
Freedom Agenda, including political reform. END SUMMARY.

--------------
Socio-Economic Context
--------------


2. (SBU) Tunisia proudly -- and justifiably -- calls itself a

"country that works." Despite Tunisia's relatively small
economy and lack of natural resources, the Tunisian
government provides basic education, health care, housing and
a workable infrastructure to its population. Tunisian women
enjoy more rights and opportunities than in any other Arab
Muslim country. As a result of these policies, the majority
of Tunisians is generally moderate and desires a government
intent on modernizing the country and integrating it fully
into the world economy.


3. (U) Tunisia has the most diversified economy in the region
and enjoys one of the highest standards of living on the
continent. The country does not have vast reserves of
hydrocarbons like its neighbors Algeria and Libya but has
prospered under long-standing government policies to develop
manufacturing industries for export and to promote tourism.
The Government of Tunisia also seeks to attract foreign
direct investment and strengthen its traditional agricultural
sector. Thanks to these policies, Tunisia's economy has
maintained average annual growth rates of almost five percent
over the past ten years. At the same time, social programs
limit population growth, provide a high standard of
education, and ensure a relatively decent standard of living
for all. Average annual per capita income is approximately
US $3000.

--------------
Challenges for the Tunisian Economy
--------------


4. (C) Even as Tunisia can justifiably trumpet its economic
success, the slow pace of reform -- both economic and
political -- is beginning to take a toll on the economy.
While the GOT undertook liberal economic reforms under an IMF
structural adjustment program in the mid-eighties, rigid

TUNIS 00001202 002 OF 004


state control and the continued protection of key sectors
have created an anemic private sector with low levels of
investment. The Tunisian economy continues to post positive
growth rates, but a persistently high unemployment rate is a
cause for concern for a government that touts its image as a
development success story. The planned 2008 implementation
of the Association Agreement with the European Union is yet
another challenge looming on the horizon, opening Tunisia's
currently protected companies to competition from often more
efficient EU producers.

--------------
Our Agenda
--------------


5. (C) Your visit provides an opportunity to reinvigorate our
economic engagement in Tunisia by outlining a long-term
vision for US-Tunisian economic relations. Liberalization of
the Tunisian economy is in Tunisia's best interest and will
help to attract the US trade and investment necessary for
Tunisia reach its 11th Plan targets. Your meetings can not
only to highlight specific concerns, but also emphasize our
continued interest in Tunisia and help re-energize the TIFA
process. Recent statements by GOT Ministers and, most
notably, Ben Ali himself indicate that there is a consensus
within the GOT that Tunisia must support economic engagement
with the United States. We have requested meetings with the
Prime Minister, Minister of Foreign Affairs, Minister of
Development and International Cooperation, Minister of
Health, Minister of Transportation and Minister of Commerce.

-- TIFA and FTA: Following the 2005 TIFA Council meetings,
there has been little forward progress on outstanding
impediments to bilateral trade and investment. Re-starting
the TIFA meetings would provide an avenue to address these
longstanding issues and would also highlight continued USG
interest in Tunisia. This visit provides an opportunity to
translate recent GOT statements of support into tangible
commitments. Your meetings with Minister Jouini and other
GOT officials can pave the way for Minister Jouini's October
visit to Washington, DC and set the stage for the next round
of TIFA meetings.

-- IPR: Although the GOT has taken positive steps to address
intellectual property right protection, more work remains to
be done to prevent the retail sale of pirated optical disks
and protect US pharmaceutical products. In January, the GOT
suspended the "correlation system" which excluded drugs
manufactured abroad in favor of locally produced generics;
however, drugs placed on the list of correlated drugs prior
to the suspension continue to be excluded from the
marketplace. Removing US pharmaceutical products from this
exclusionary list is our top IPR priority. We have requested
a meeting with the Minister of Health to reiterate our
continuing concern with this issue.

-- Franchising: GOT restrictions on franchising have not only
prevented familiar name brands from entering the market, but
also hinder the operations of companies such as ExxonMobil
that are already present in Tunisia. Minister Jouini told
the Ambassador Tunisia is prepared to permit franchising.
Recently, working-level contacts at the Ministry of Commerce
have confirmed that a franchising law is in the works and may
be completed by the end of this year. Your meetings with
Minister Jouini and Minister of Commerce Zenaidi will provide
an opportunity to emphasize the positive impact on investment
and job creation to help to push this to fruition. You may
also wish to highlight the issues that must be addressed by
any franchising legislation.

-- Open Skies: During an August 20 meeting with CODEL
Costello (Ref A),Minister of Transportation Abderrahim
Zouari stated that President Ben Ali had instructed the

TUNIS 00001202 003 OF 004


Ministry to finalize a direct aviation line with the United
States and that the Embassy would receive a response to its
draft text shortly. Zouari noted that the GOT agrees on the
"broad lines" of the agreement. We hope your visit will
produce a firm commitment to negotiate.

--------------
Political Overview
--------------


6. (SBU) Tunisia is a constitutional republic with a
population of approximately 10 million, dominated by a single
political party, the Democratic Constitutional Rally (RCD).
Zine El Abidine Ben Ali has been the president since 1987.
Although three opposition parties fielded candidates in the
October 2004 presidential election, official results
indicated that President Ben Ali won approximately 94 percent
of the registered popular vote. The official turnout was
reportedly higher than 90 percent of registered voters,
although there were indications that voter turnout figures
were fraudulently inflated. Tunisia has a bicameral
legislature. In addition to the Chamber of Deputies, a
second legislative body, the Chamber of Advisors, was created
in a 2002 referendum amending the Constitution. The
legislature plays a limited role as an arena for debate on
national policy but never introduces legislation and
virtually always passes bills presented by the Executive with
only minor changes. National elections - both presidential
and legislative - will be next held in 2009.


7. (SBU) Political liberties remain tightly controlled and
civil society development is stifled. Tunisia's sluggishness
on political reform has been a point of contention in the
US-Tunisian relationship in recent years. Although President
Ben Ali has introduced some positive political reforms in the
past two years (pardoning some political prisoners, lifting a
form of censorship for print media, registering a new
political party and independent media outlets),civil society
and human rights groups remain deeply cynical and continue to
report many instances of government harassment, intimidation,
and limits on their activities. Journalists reject the
suggestion that press censorship has ended and local media
usually lacks any meaningful coverage of domestic political
issues. In the 2006 Reporters Without Borders Worldwide
Press Freedom Index, Tunisia was ranked 148 out of 168
countries.

--------------
Advancing the Freedom Agenda
--------------


8. (C) Advancing the President's Freedom Agenda remains our
top priority despite GOT resistance to our efforts to promote
democratic reform and respect for human rights. Economic
freedom is an important component of the Freedom Agenda goals
-- and one that meets with less resistance. Although Tunisia
has achieved an impressive level of economic development,
lingering unemployment and rising inflation indicate that
problems remain. The economic realm provides an area for
positive engagement and mutual benefit and underscores that
the dialogue we seek with the GOT is not limited to political
reform. Strengthening the economic relationship between our
two countries will also increase our influence in Tunisia,
creating leverage that can be used to further our broader
Freedom Agenda goals. The GOT recognizes that delivering
continued economic growth is an imperative in the social
contract between this government and the Tunisian people.
Leveraging the GOT's desire for trade and investment is an
effective tool in our arsenal to promote reform and good
governance.

--------------
Security Situation

TUNIS 00001202 004 OF 004


--------------


9. (SBU) The Government of Tunisia remains concerned about
signs of increasing Islamic extremism and considers national
security as one of its major priorities. There is a threat
of terrorism in Tunisia, particularly in light of the recent
establishment of al-Qaeda in the Islamic Maghreb (AQIM). In
January 2007, the Government of Tunisia announced that
Tunisian security forces disrupted a terrorist group in
December 2006/January 2007, killing or capturing many
individuals who reportedly planned to carry out acts of
violence in Tunisia. The US Embassy in Tunis was reportedly
among the group's intended targets. In 2002, a faction of
al-Qaeda claimed responsibility for an attack on the Ghriba
synagogue on the southern island of Djerba, the first
al-Qaeda related terrorist attack after September 11.
GODEC