PLANNING FOR A U.S. TRADE DELEGATION TO SOUTHERN SUDAN

UNCLAS SECTION 01 OF 02 KHARTOUM 001128 DEPT FOR AF/SPG, A/S FRAZER, SE WILLIAMSON DEPT FOR EB DEPT PLEASE PASS TO COMMERCE DEPT PLS PASS USAID FOR AFR/SUDAN ADDIS ABABA FOR USAU SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ASEC ETRD PGOV PREL KPKO SOCI AU UNSC SU SUBJECT: PLANNING FOR A U.S. TRADE DELEGATION TO SOUTHERN SUDAN 1.(U)This cable offers background and planning information for the forthcoming U.S. trade delegation to Southern Sudan. Please note the action request contained in paragraph 7. ¶2. (SBU) The Government of Southern Sudan remains enthusiastic about the proposed U.S. Department of State/U.S. Department of Commerce jointly sponsored visit by U.S. businesses to Sudan's South. GOSS Minister for Trade, Commerce, and Supply Anthony Makana views it as a much-needed effort to broaden awareness within the American business community of the existing "carve-out" for Southern Sudan contained in the Darfur Peace and Accountability Act. Despite recent ICC activity against Sudanese President Omar al Bashir, the GOSS remains positive about the timeliness of a mid-September/early-October visit to Southern Sudan by interested U.S. entrepreneurs and investors. Such a visit comes on the heels of GOSS-hosted trade delegations from China, Turkey, the Netherlands, France, the United Kingdom, South Africa, Kenya, Uganda, Eritrea, Ethiopia, and Egypt, as well as a planned forthcoming visit by a delegation from the United Arab Emirates. A visit by an American delegation within the timeframe outlined above would also fall around the second anniversary of Juba's inaugural "International Trade Fair." Makana would welcome participation by any of the delegates in this year's event should they be so inclined. ¶3. (SBU) The Government of Southern Sudan continues to encourage investors focused on the following sectors: natural resource exploration/extraction, finances/banking, transportation, and agriculture. While the GOSS is cognizant of bars against American petroleum companies operating in Sudan, Makana emphasized that exploration and extraction possibilities exist in the South's copper, uranium, and gold belts (some situated along the Ethiopian/Sudanese border),in addition to what he termed a "potentially lucrative timber industry," as well as untapped sources of gum Arabic. Despite the absence of a South-specific banking law (one remains under draft within the GOSS Ministry of Legal Affairs and Constitutional Development, following significant delays within the Ministry of Finance) Sudanese national banking laws remain in effect for the South, and allow for protections against nationalization and other commercial risks. Currently, Kenya Commercial Bank remains the sole bank operating in Sudan's South (an area larger than France) with a U.S.-based correspondent bank. Only nine of the South's ten states have commercial banks presently in operation - and bank branches outside of the state capital exist in only six of those states. Makana notes that the transportation sector - despite the region's challenges - will continue to be a growth market given the South's dependence on imported food and non-food commodities, pharmaceutical supplies, and construction materials. ¶4. (SBU) The South's Greater Equatoria region functioned as much of East Africa's bread-basket prior to the North/South civil war. The local governments of Eastern Equatoria and Western Equatoria states are open to large-tract farming, and state assemblies are currently exploring the possibility of tax-free economic zones in each state. Torit, capital of Eastern Equatoria, will have its airport upgraded during the 2008/2009 dry season to become a regional transportation hub akin to Rumbek International Airport, which handled much of the Operation Lifeline Sudan traffic during the late nineties. The World Bank, European Commission, and U.S. Government are currently funding road improvement projects in Eastern, Western, and Central Equatoria states which will significantly enhance the capabilities of commercial traffic to transit through the region. ¶5. (SBU) GOSS President Salva Kiir Mayardit expedited via presidential order the South's first investment law in early 2008. Makana is due to discuss the bill before the Southern Sudan Legislative Assembly in August 2008 and he expects it to pass during the present legislative session with few changes beyond the cosmetic. The current draft bill holds that foreign and local investors are to be treated equally under the law, with full rights afforded to foreign-held companies for the repatriation of the totality of their profits. Corporations may be established in the South under three different scenarios: solo ventures, joint ventures, or those incorporated with a Southerner given full partnership status. While taxes will be leveled against all companies, no matter their makeup, an Investment Authorities Commission, helmed by the Trade Minister, will be tasked with exempting companies either deemed to be operating in "strategic sectors" or those that employ a set quota of Southern Sudanese national staff. Post will forward the draft Investment Act to AF/SPG. ¶6. (SBU) U.S. Consulate General Juba envisions supporting a U.S. commercial delegation for twelve days beginning with participants' KHARTOUM 00001128 002 OF 002 arrival into Juba on Monday, September 22 and departing on Friday, October 3, 2008. ConGen Juba would arrange for meetings between the traveling party and GOSS officials, the Southern Sudanese business community, and other relevant counterparts on Tuesday, September 23. The delegation would then travel to Torit, in Eastern Equatoria, on September 24 where they would overnight before onward travel to Kapoeta. A day visit to Kapoeta would be capped by an overnight in Rumbek, the capital of Lakes State, before the group splits on September 26, with one contingent traveling to the Northern Bahr el Ghazal state capital of Aweil and the second group traveling to Western Equatoria's state capital of Yambio. The groups would reunite in Juba on September 27 before spending two days in Wau, capital of Western Bahr el Ghazal. A final two days of meetings would be arranged in Juba to entertain follow-on discussions with host government officials before the party departed Juba on October 3 via direct flights to either Addis Ababa, Nairobi, or Kampala. Post requests AF/SPG give consideration to the assignment of one short-term TDYer to Juba in order to assist with preparations in advance of the delegation's arrival and logistical elements in areas outside of Juba once the delegation commences travel. ¶7. (SBU) Makana noted the GOSS Liaison Office's fledgling efforts to establish a "South Sudan-U.S. Business Council" with counterpart offices in Washington, DC and Juba, Sudan. Post welcomes such an initiative, and believes that it will partner well with active American Chambers of Commerces elsewhere in East Africa. During then-Presidential Special Envoy Natsios' September 2007 visit to Eastern Equatoria State, the Governor offered a free gift of 10,000 square meters of land available to USAID. If the business delegation is sufficiently attracted to investment prospects in Southern Sudan, and given GOSS efforts to establish a South Sudan/U.S. Business Council, and given USG interests in ensuring the South's economic growth as one element of the policy of making unity attractive in Sudan, then USAID would be willing to explore with the U.S. Department of Commerce and other relevant actors the possibility of developing this land as a USG-sponsored business development center in Sudan's South. Torit, the capital of Eastern Equatoria, is uniquely situated along the South's growing commercial transit corridor and is home to a dynamic, pro-business state governor. A gateway into what used to be the South's bread-basket, Torit is 2.5 hours drive from Juba, and will soon boast an airport suited to international commercial air traffic within the region. A facility at such a location could generate local economic growth while serving as a platform from which interested American businesses could operate during their initial forays in the South's commercial sector. ¶8. (SBU) Field-based points of contact for this initiative are as follows: Embassy Khartoum Economic Chief John W. Struble (StrubleJW@state.gov) and Consulate General Juba Political Officer Erin Y. Tariot (ETariot@usaid.gov). FERNANDEZ