U.S. FOREIGN COMMERCIAL SERVICE OPENS FOR BUSINESS IN LIBYA

UNCLAS SECTION 01 OF 02 TRIPOLI 000803

SENSITIVE
SIPDIS

DEPT FOR NEA/MAG; COMMERCE FOR NATE MASON; ENERGY FOR GINA ERICKSON

E.O. 12958: N/A
TAGS: ECON EIND LY EPET ETRD
SUBJECT: U.S. FOREIGN COMMERCIAL SERVICE OPENS FOR BUSINESS IN LIBYA


1. (SBU) Summary: During his October 5 visit to Tripoli,
Department of Commerce Assistant Secretary and Director General
of the U.S. and Foreign Commercial Service Israel Hernandez
officially opened the new Foreign Commercial Service office at
the Embassy and discussed commercial opportunities with U.S. and
Libyan business leaders and cooperation with senior Libyan
government officials. Coming one month after Secretary Rice's
historic trip to Libya, Libyan government representatives
enthusiastically welcomed him, as did the small but growing
Libyan private sector and representatives of U.S. firms in the
energy, telecommunications, and construction sectors. The main
messages to him were that there are significant commercial
opportunities for American firms in Libya, but challenges still
remain in terms of visas, and legal and bureaucratic obstacles.
End summary.


2. (SBU) In a breakfast roundtable, the leaders of the major
U.S. firms in Libya briefed A/S Hernandez on their activities
here and described some of the challenges they face, such as
procuring visas (both U.S. and Libyan) for employees and Libyan
government trainees, and navigating the Libyan legal system.
Most of the U.S. companies are involved in oil exploration,
production and services, while others have contracts in the
burgeoning construction sector (such as AECOM, based in Los
Angeles). Some U.S. firms, such as Motorola, are seeking to
enter the Libyan telecommunications sector. All the
participants voiced complaints about visas, either for their
U.S. staff (and their families) to reside in Libya or for their
national staff and government partners to travel to the U.S. for
training. Some said they believe the Libyan government is
delaying the issuance of U.S. employees' visas because Libyans
must still travel abroad (i.e., to Tunis) in order to apply for
a U.S. visa. The Charge d'affaires pointed out there is a
Business Visa program at post to facilitate visas for U.S.
companies' Libyan employees and also informed the group the
Embassy expects to expand visa issuance in Tripoli in 2009.


3. (SBU) Another concern of the U.S. businesses relates to the
Libyan legal system. One general manager noted "nothing is
written, so all is interpretation." He remarked that he
believes Libya is even more litigious than the U.S. and since
there are no international law firms and no
internationally-trained lawyers, the companies have to rely on
local legal counsel. As Libya has been isolated for 20 years,
even legal firms based in the Middle East (such as in Dubai)
have limited utility in Libya since they lack experience here.
On the positive side, U.S. businesses have not had major
problems importing materials for their operations, especially
since most activities are tied to Libyan government entities,
such as the National Oil Company (NOC).


4. (SBU) A/S Hernandez also met with the Libyan Businessmen
Council, the main organization of Libya's nascent private
sector. The Council welcomed the opening of an Embassy
Commercial Office because they would like to do business with
small- and medium-sized U.S. companies. Most of the American
delegations they have seen were from large companies that dealt
mainly with the Libyan government. Most of the Council's
members, however, are smaller Libyan enterprises. One of the
Libyan representatives for a major U.S. equipment provider noted
the Libyan market is highly competitive and many European
companies (French, German, Italians) never left Libya during the
embargo years. It is therefore even more difficult for U.S.
companies to enter or re-enter this market, he said. He did not
foresee a "u-turn" on the part of the Libyans to nationalize the
economy, as in the past, but he did see a need for a more
aggressive U.S. approach to help U.S. businesses and to promote
the education of Libyans in American universities, especially in
medicine and technology.


5. (SBU) The next stop was the Libyan government's National
Planning Council in which Under Secretary Mohamed Zidoun and his
staff briefed A/S Hernandez on Libya's efforts to diversify its
economy and to privatize government enterprises. The Assistant
Secretary outlined the purpose of his trip to Libya, i.e. to
open the new U.S. FCS office here, noting that Libya was one of
the fastest growing markets for U.S. trade. He said the US
already had a significant trade deficit with Libya (USD 2.9
billion) so the new FCS office would seek to increase U.S.
exports to the Libyan market. Under Secretary Zidoun explained

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the role of the National Planning Council as a Libyan "think
tank" that prepares studies related to economic, commercial and
trade policy. The proposed government restructuring aimed to
provide better services to the population and to further
development in education, technology, and healthcare. U/S
Zidoun's staff would like to see Libya adopt U.S. models for an
educational curriculum. Libya is also trying to diversify its
"mono-source" economy so as to raise the standard of living.
Libya sees itself as a potential transport hub (like Dubai) and
in particular, seeks to be the "gateway" to the rest of Africa.
Libya also wants to learn from the Gulf countries' experiences:
"It is not enough to construct sky-scrapers but one must also
train people to run the companies that occupy them."


6. (SBU) On privatization, the Planning Council emphasized
"expanding the base of ownership." The Council has conducted
studies on how to provide services to Libyans everywhere in the
country via the municipalities (akin to counties in the U.S.).
The goal is to provide wealth directly to citizens who may spend
the money as they like. The Council's staff noted Libya has a
relatively small population concentrated along the Mediterranean
coast. Therefore, they think reforms are possible so that
government will provide only the "basics." One Council member
commented, "we cannot go back; we have suffered a lot and we are
facing hard moments" in terms of "rebuilding our country" and
engaging with the world. He said to A/S Hernandez, "we need
your help in education and training" in order to rebuild Libya.


7. (SBU) Lastly, A/S Hernandez met with the Under Secretary of
the General People's Committee (GPC) for Economy, Trade and
Investment. Under Secretary Taher Sarkez and his staff
explained the GPC's role in negotiating international trade
agreements (such as the ongoing Trade and Investment Framework
talks with USTR) and in promoting Libyan exports. A/S Hernandez
extended an invitation to Under Secretary Sarkez to visit
Commerce Department offices in the U.S. to learn about programs
to assist small- and medium-sized businesses. Under Secretary
Sarkez welcomed this opportunity. A/S Hernandez said the new
FCS office would also work with Libyan businesses who were
interested in participating in American trade shows and other
networking opportunities in the U.S. U/S Sarkez noted the need
to host more U.S. business groups in Libya and said Libya would
probably need to issue more visas to Americans. Finally, U/S
Sarkez' staff described an initiative of the GPC to promote
Libyan exports other than oil and gas, such as agricultural and
fisheries products, via the newly-created Libyan Export
Promotion Center.


8. (SBU) Comment: A/S Hernandez' trip to Libya is the first
high-level delegation here since Secretary Rice visited Libya
just a month ago. He was enthusiastically welcomed by Libyan
government representatives, the small but growing Libyan private
sector, and representatives of U.S. firms. The main messages to
him were that Libya is open to American companies and future
educational/technological exchanges but that challenges still
remain in forging the new relationship in terms of visas, legal
and bureaucratic obstacles and re-establishing new ties with
Libyans after a 25-year absence from the market. End comment.



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