TUNISIAN-LIBYAN COOPERATION ON TRACK

UNCLAS TUNIS 000248 SIPDIS SENSITIVE SIPDIS STATE FOR NEA/MAG STATE PASS TO USTR (BELL) USDOC FOR ITA/MAC/ONE (NATE MASON) CASABLANCA FOR FCS (ORTIZ) E.O. 12958: N/A TAGS: ECIN ETRD ELAB TS LY SUBJECT: TUNISIAN-LIBYAN COOPERATION ON TRACK REF: A. TRIPOLI 150 AND PREVIOUS ¶B. TUNIS 143 ¶C. TUNIS 101 ¶D. 06 TUNIS 2329 ¶1. (SBU) SUMMARY: In the 20th meeting of the Libyan-Tunisian High Commission, held in Tripoli on February 18, Tunisian Prime Minister Mohamed Ghannouchi and Libyan Secretary of the General People's Committee Mahmoudi Baghdadi signed three agreements aimed at improving cooperation between the two countries. The agreements mark the continuation of efforts to facilitate increased trade and investment, which appeared to be off track after President Ben Ali's absence from a summit hosted by Libya and recent reports that Libya would now require visas for Tunisians and other expats. END SUMMARY. ¶2. (SBU) On February 18, Tunisian Prime Minister Mohamed Ghannouchi and Libyan Prime Minister Mahmoudi Baghdadi signed three cooperation agreements in the context of the 20th meeting of the Libyan-Tunisian High Commission. The first agreement formalized the previously announced decision to permit reciprocal exchange convertibility between the two currencies (Ref B). The two additional agreements outlined industrial cooperation (NFI) and established mutual recognition of drivers' licenses between the two countries. ¶3. (SBU) This series of agreements marks the continuation of recent efforts to promote increased cooperation between the two countries, particularly on the economic front. Relations between the two countries appeared to be strained when President Ben Ali missed a January 23 summit hosted by Ghaddafi for the leaders of Egypt, Algeria, Tunisia, and Sudan. (NOTE: Tunisian local press reported that Ben Ali was sick (Ref C). Sudanese President Bashir also failed to attend. END NOTE.) Rumors of a rupture seemed to be confirmed after announcements by GOL officials of changes to Libya's visa policy (Ref A) led to widespread reports that Libya would require visas for all Tunisians. While the GOL later clarified that Tunisians would not require visas, only relevant work permits, the reports created a minor panic due to the high volume of Tunisians traveling to or working in Libya. ¶4. (SBU) Although intra-Maghreb trade remains relatively paltry, trade between Libya and Tunisia has grown in recent years. Bilateral trade reached US $1.36 billion in 2006, up from US $970 million in 2005. Libya is critical to Tunisia's unemployment woes, hosting a large number of Tunisian workers, and to the tourism sector, which received 1.4 million Libyan visitors in 2006. Even as official figures demonstrate the importance of bilateral trade and investment, these numbers fail to capture the significant quantity of smuggling that occurs across the Tunisian-Libyan border. The proliferation of roadside stands selling cut-rate Libyan gasoline and markets filled with smuggled goods from Libya, such as the "Libyan Souk" in Ben Guerdane (Ref D),reflect not only the volume of illegal trade, but the relative impunity with which the smuggling occurs. ¶5. (SBU) COMMENT: Despite recent rumors of friction between the two countries, cooperation between Libya and Tunisia to facilitate increased trade and investment appears to be on track. The GOT continues to voice support for increased Maghreb economic integration through its participation in Arab Maghreb Union summits and meetings. Yet, progress has been slow on this front, leading the GOT to actively pursue reductions in barriers to trade and investment with Libya through bilateral negotiations. The steps to allow reciprocal currency convertibility and to reduce administrative hurdles will help stimulate bilateral trade and investment, but reducing the parallel market for smuggled goods will also require tough enforcement by the GOT. END COMMENT. GODEC