SOUTHERN TUNISIA'S ENCOMIUM TO BEN ALI

C O N F I D E N T I A L SECTION 01 OF 04 TUNIS 001597

SIPDIS

SIPDIS

STATE FOR NEA/MAG (HARRIS)
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD)
USDOC FOR 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: 12/20/2017
TAGS: ECON EFIN ETRD TS
SUBJECT: SOUTHERN TUNISIA'S ENCOMIUM TO BEN ALI

REF: A. TUNIS 1528

B. TUNIS 1443

C. TUNIS 591

D. TUNIS 107

E. 06 TUNIS 2414

F. 06 TUNIS 2329

G. 06 TUNIS 1305

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

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Summary and Introduction
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1. (C) During a December 10-13 trip to the southern cities of
Djerba, Medenine, Zarzis and Tataouine, with a stop in Sfax,
Ambassador Godec met with a wide-range of government
officials, community leaders, and private business people,
who were generally effusive in their praise of President Ben
Ali and reticent to acknowledge any of the challenges facing
the region. Government officials were quick to point to
dramatic improvements in the region's infrastructure
following Ben Ali's 1987 coup and claimed that unemployment
was not a major concern. Djerba's small, but active, Jewish
community also hailed Ben Ali's promotion of religious
tolerance and moderation and told the Ambassador they have no
problems. Yet, the reality is more complex, and visits to
area companies and a tour of the region reveal that claims of
prosperity are overstated. Unemployment, cross-border
smuggling to and from Libya, and emigration are very real
concerns in southern Tunisia. END SUMMARY.

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We Love Ben Ali
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2. (C) In meeting after meeting with the Ambassador during
his visit to southern Tunisia December 10-13, government
officials, community leaders and private business people
largely delivered fawning praise of Ben Ali. According to
the Governor of Medenine, Nejib Barkallah, the governorate
witnessed an "explosion" of growth after November 7, 1987,
the date of President Ben Ali's coup. Not to be outdone, in
a December 12 meeting, the Governor of Tataouine, Ridha Bel
Haj, declared that Tataouine "was just desert" before the
change, but "thanks to the President there is now visible
progress." Waxing on about the region's infrastructure, he
added, "We are spoiled by our President, who never stops
spoiling us." The Governor of Sfax, Mohamed Ben Salem
formerly Governor of Tataouine, added that after the change,
there was a "new life" in Tataouine.

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A Booming Economy?
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3. (C) While the governors were quick to hail the economic
development and prosperity in the region, with the notable
exception of Djerba, southern Tunisia is more of a backwater
than a hub of economic activity. The island of Djerba has
had great success as a tourist destination for Europeans,
hosting about two million tourists annually. Although the
GOT has attempted to promote "Saharan" tourism to Medenine
and Tataouine, the number of tourists to the desert pales in
comparison to those visiting Tunisia's beaches. In meetings
with the various governors, the Ambassador noted the recent
New York Times article naming Tunisia as the number three
destination for 2008 and remarked that American tourists were
likely to be more interested in visiting historical sites and
the desert. The Ambassador emphasized that increased US
tourism would probably encourage greater US investment. The
region has succeeded in attracting US interest in the energy
sector, including Pioneer Natural Resources, which is
involved in oil and natural gas exploration.

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4. (C) A December 11 visit to the Zarzis Free Trade Zone
revealed that despite the enthusiastic projections of its
Director General Khaled Touibi there was very little
activity. (NOTE: Following the meeting with DG Touibi, we
learned that he had received notice just prior to our arrival
he was being replaced. END NOTE.) The Free Trade Zone
stated that the zone is at 93 percent occupancy, but
continues to host only 50-some companies -- the same number
as in 2006 (Ref E). During a tour of the zone, the only
visible activity was a man pushing a wheel barrow, with no
sign of the trucks, cars, and people one would expect to see
in a functional free trade zone.


5. (SBU) In Zarzis, the El Bibane Elecricity Company (SEEB),
a Caterpillar subsidiary, began private electricity
generation in November 2003. The electricity generated by
the plant is sold to the Tunisian Electricity and Gas Company
(STEG) under a 20-year purchase agreement. Although Plant
Manager Nejib Ayeb was upbeat, the plant has not been
functioning for nearly two years due to problems with their
supply of gas. Ayeb told the Ambassador during a December 11
visit that the plant expected to resume operations within the
next several weeks. (COMMENT: Ayeb's optimism, and his
assertion that SEEB had great relations with STEG, could have
been influenced by the presence of several uniformed and
plain clothes police during the visit. END COMMENT.)
Despite the long hiatus in operation, Ayeb indicated SEEB
plans to invest in a third gas-fired turbine if gas supplies
are sufficient.

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What Unemployment?
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6. (C) Despite an official nation-wide unemployment rate of
13.9 percent, interlocutors throughout the region declared
that unemployment was "not a problem" (Ref B). The Mayor of
Djerba even went so far as to categorically state that there
was "almost no unemployment" in Djerba. The number of
apparently idle men on the streets and in the cafes
throughout the region would suggest these statements are at
odds with reality. Anecdotally, it is widely believed that
the region is a major source of emigration to Europe and even
to Libya. The governors and the President of Djerba's Jewish
Community, Yousuf Uzon, were quick to deny the phenomenon.
However, in a side conversation with one member of the Jewish
community, he acknowledged that his three children lived in
the United States, the United Kingdom, and Israel.
Rural-urban migration also plays a role in keeping the
region's official unemployment low. During a tour of the
Berber village of Chenini, a Berber guide told the Ambassador
that many of the homes in the village had been abandoned as
families moved to cities such as Tunis. The guide noted that
all the newstands in Tunis were run by Chenini expatriates --
a statement accepted as fact by Embassy FSNs.

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Religious Freedom Paradise
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7. (C) Tunisia justifiably prides itself on its religious
moderation and secularism. Governor of Medenine Barkallah
told the Ambassador that in one part of Djerba two churches,
a mosque, and a synagogue coexisted peacefully literally
right next to one another. The Ambassador noted that
Tunisia's religious moderation serves as a model. Djerba's
Jewish community was equally resolute in their praise of
President Ben Ali's support of their community. Yousuf Uzon,
President of Djerba's Jewish Community, stated that the
community lived in perfect harmony and there were no
problems, mirroring the message from a previous visit to the
community in December 2006 (Ref D). During a dinner with
community members on December 11 (the final evening of

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Hannukah),the group exclaimed that there is no threat from
Islamic extremism in Tunisia in contrast to Algeria, where
the two recent bombings had just taken place. (NOTE: During
the Ambassador's visit to the Jewish community, there were
more than five plain clothed police following the group. The
"omda", or district mayor, also accompanied the group and
joined a dinner hosted in honor of the Ambassador. END NOTE.)

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Libyan Trade
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8. (C) Although the Governor of Medenine asserted that there
was no problem with illegal trade over the Tunisian-Libyan
border, the multitude of cars and trucks returning from Libya
packed to the brim with wares paint a different picture (Ref
F). Roadside vendors selling cut-rate Libyan gasoline are
common in the region. The roadside price is .900 to .950
Tunisian dinars (US $0.73 - 0.76),when the official price is
now 1.200 dinars (US $0.97). Most Tunisians believe that the
government tolerates private citizens' illegal importation of
cheaper Libyan (and other foreign) products as a means of
increasing citizens' purchasing power. While the GOT has
announced its long-term intention to eliminate parallel
markets for illegally imported products, there is little
indication that efforts to do so are currently underway.
Despite his earlier denial of smuggling between Tunisia and
Libya, the Governor of Medenine later remarked that low food
prices in Tunisia have led to an outflow of food products,
such as milk, to Libya (Ref A).

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Arid Research Impressive
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9. (C) During an almost three-hour tour of the Institute for
Arid Regions outside Medenine, Director Houcine Khattali
provided the Ambassador with an overview of the Institute's
extensive research on arid regions. Khattali told the
Ambassador that Tunisia's southern deserts are not
encroaching, but that the population is advancing into the
desert. The Institute overseas a variety of branch offices
that are conducting scientific and agricultural testing on
the flora of the region, and studying how indigenous flora
and fauna could be exploited or improved, including for
medicinal purposes. The Institute, which was founded in
1976, is benefiting from USDA Foreign Agriculture
Service-funded research programs. Khattali told the
Ambassador that he was interested in being connected with
other US institutions undertaking similar research on arid
regions.

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Sfax: Tunisia's "Economic Capital"
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10. (SBU) In contrast to its less prosperous governorates to
the south, Sfax is often referred to as Tunisia's "economic
capital." During a December 13 meeting with the Ambassador,
Governor of Sfax Mohamed Ben Salem rattled off an impressive
string of numbers highlighting Sfax's economic dominance
compared to other governorates. Sfax produces 30 percent of
the country's olives, 40 percent of olive oil, and is
responsible for over 80 percent of oil exports. The
governorate is also responsible for a disproportionate share
of poultry, seafood, and milk production and hosts over 2,200
factories. The Embassy continues to explore opportunities to
increase engagement with Sfax, including opening a potential
Virtual Presence Post to coincide with a new Amideast center
and a branch office of the Tunisian-American Chamber of
Commerce (Ref C).

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Comment

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11. (C) Good rural development policies and public and
private investment is clearly producing progress in
southeastern Tunisia. Nevertheless, the region still faces
major challenges. The unwillingness to acknowledge the
existence of any problems reveals the heavy hand of Ben Ali's
regime at least as much as the success of GOT policies.
While Tunisia's southern governorates boast a workable
infrastructure, unemployment is, in fact, a major concern.
Morever, despite investment in tourism in Djerba and in the
energy sector in Tataouine, residents of the region are not
immune to national challenges, as the governors were quick to
claim. One need only look to the idle men, shuttered
storefronts, and ramshackle homes to question such
statements. Similarly, the Jewish community's reticence to
discuss their own challenges reflects their insecurity and
the importance of maintaining the patronage of the GOT (Ref
G). As is often the case, the reality is more complex.
Ultimately, the GOT failure to admit that there are problems,
and to allow Tunisians to acknowledge shortcomings, means
they will not be able to adequately address these challenges.



12. (C) Regardless of the GOT's reticence to acknowledge the
region's challenges, or perhaps because of it, increased US
outreach to the region is likely to pay big dividends.
Several interloctors were nostalgic for the heyday of
American cooperation through USAID and the Peace Corps in the
1960s. The Embassy will continue to look for opportunities
to promote economic and commercial ties, to participate in
cultural events in the region, by bringing American musical
groups or speakers, and to facilitate linkages between
universities and research institutions, such as the Institute
for Arid Regions. END COMMENT.
GODEC