ASMARA,S UNFAIR EGYPTIAN TRADE FAIR

C O N F I D E N T I A L SECTION 01 OF 02 ASMARA 000366 SIPDIS DEPARTMENT FOR AF/E LONDON AND PARIS FOR AFRICA WATCHERS E.O. 12958: DECL: 07/21/2018 TAGS: ERTD PREL PGOV EG ER SUBJECT: ASMARA,S UNFAIR EGYPTIAN TRADE FAIR ASMARA 00000366 001.2 OF 002 Classified By: Ambassador Ronald K McMullen for reason 1.4 (d) ¶1. (C) SUMMARY: An Egyptian trade fair in Asmara concluded July 18, after a week-long shopping frenzy generated by Eritreans restricted by their tyrannical government from traveling abroad or buying almost anything in Eritrea. The regime extracted a high price from Egypt for agreeing to allow the trade fair. The ruling party "took" 22 of 42 containers of Egyptian products, saying only that it would discuss price and payment terms at a later date. END SUMMARY. ¶2. (C) PARTY TRUMPS GOVERNMENT -------------- Despite three previous Egyptian trade fairs in Eritrea, the Government of the State of Eritrea (GSE) flip-flopped several times after initially agreeing to allow the trade fair to proceed. Egyptian vendors, with the aid of the Egyptian embassy in Asmara, shipped 42 containers of building materials and consumer goods to Massawa after getting the initial GSE green light, which then changed to amber and then to red. As the containers languished in the Port of Massawa for months, Port Authorities levied demurrage charges, threatening to open the containers and auction the goods by July 20 if the fees were not paid. In desperation, the Egyptian ambassador went to Hagos Ghebrehiwet, the ruling party's economic guru, to try to secure the containers' release. Hagos overruled the Minister of Trade and Industry and the trade fair went on, although not quite as planned. ¶3. (C) THE PARTY SEIZES MOST OF THE CONTAINERS -------------- - The Egyptian ambassador to Eritrea, when congratulated by the ambassador for persuading the regime to allow the trade fair to go on, revealed the steep price extracted by Hagos. All containers with cement, plumbing and electrical fixtures, and all tiles and building materials were "taken" by the party (which runs all of Eritrea's legal construction companies). Hagos reportedly tendered a vague promise to pay for the materials at a later date, but price and terms of payment were not specified. Worryingly for the Egyptians, other Eritrean authorities ordered the vendors of consumer electronics not to sell any items from their booths at the exhibition, as the authorities wanted to buy everything. After taking receipt of the electronic items, the Eritrean authorities paid only half of the price of the goods, according to the Egyptian DCM. ¶4. (C) SHOPPERS, BELLY DANCERS, AND VENDORS -------------- The trade fair opened with a ceremonial flourish, featuring an Egyptian folkloric troupe complete with whirling dervishes and (Ukrainian, we suspect) belly dancers. Thousands of shoppers eager to rush the pavilion were held back by paramilitary forces armed with AK-47s. For consumers in Asmara, where even basics such as milk, bread, sugar, and cooking oil are largely unavailable in local markets, the chance to purchase a plastic replica of King Tut's head, an inlaid cane, or a leather jacket, was an opportunity not to be missed. The Egyptian vendors, at a post-exhibition farewell dinner hosted by the Egyptian ambassador, were rowdy and almost giddy (be to leaving Eritrea?). Those that didn't have their goods taken by the Eritrean authorities reportedly sold "almost everything." ¶5. (C) COMMENT: The Egyptian trade fair disaster is ample warning to any foreign entity considering doing business in Eritrea - in a country with no rule of law, capricious authorities are willing and able to make huge demands on the resources of foreign entrepreneurs. The Russian CDA mentioned that Russia had also inquired about holding a trade fair in Eritrea, but was told it wouldn,t be allowed until "Russia changed its behavior in the UN Security Council." Post notes that the Eritrean regime took a majority of the incoming trade fair containers at almost the same time as it agreed to accept over a thousand refouled refugees from Egypt. End Comment. ASMARA 00000366 002.2 OF 002 MCMULLEN