LIBYA'S MINISTRY OF ECONOMY AND TRADE WELCOMES COOPERATION

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SENSITIVE
SIPDIS

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

E.O. 12958: N/A
TAGS: ECON PGOV LY
SUBJECT: LIBYA'S MINISTRY OF ECONOMY AND TRADE WELCOMES COOPERATION
WITH U.S.


1. (U) Summary: In a meeting with visiting NEA/MAG Director
Stephanie Williams, Under Secretary for Economy, Trade and
Investment Taher Sarkaz emphasized the importance of U.S.-Libya
cooperation and outlined steps his ministry taking to facilitate
trade and investment. Libya is keenly interested in technical
economic assistance, particularly in the area of small- and
medium-sized business development, which the GOL views as a key
potential area for future growth. Sarkaz commented favorably on
the U.S.-Libya Trade and Investment Framework Agreement (TIFA)
currently being negotiated, and expected it to be finalized
soon. Williams highlighted the importance of capitalizing on
the new period of bilateral cooperation ushered in by
implementation of the U.S.-Libya claims agreement and
underscored U.S. interest in pursuing further cooperation on
economic and trade issues. End summary.


2. (U) Visiting NEA/MAG Director Stephanie Williams,
accompanied by A/DCM and Econoff, met with Under Secretary for
Economy, Trade and Investment Taher Sarkaz on November 6. Sarkaz
stressed the importance to the GOL of U.S.-Libya cooperation in
the areas of economy and trade. Citing various studies the
General People's Committee (ministry-equivalent) for Economy and
Trade had undertaken with assistance from the World Bank and
private consulting firms, he said the GOL is keenly focused on
facilitating greater trade and developing Libya as a more
attractive destination for foreign direct investment (FDI).
Those efforts were informed by a desire to diversity to the
extent possible Libya's economy, which was largely dependent on
oil and gas.


3. (SBU) Sarkaz said the ministry had focused in the last
several years on easing rules governing the establishment of new
companies, a subject in which he was personally interested. Of
particular concern were efforts to expedite the entry of new
foreign investors into the market, including introduction of new
laws that would allow foreigners to own 100 per cent of their
investment projects in Libya. (Note: Investors are currently
required by law to have a Libyan partner; the percentage of the
joint venture that must be Libyan-owned varies by sector. End
note.). He noted that the minsitry had facilitated the issuance
of a law that allows Libyan nationals to invest their own
capital in Libya and offers them incentives on par with those
offered to foreign investors. (Note: In a hangover from Libya's
more revolutionary period, there were until recently tight
strictures on the types of economic activities, particularly
those related to investment, that Libyan citizens could
undertake. End note.) Noting that the ministry was heavily
involved in privatization efforts, Sarkaz said the General
People's Committees were under instructions to help shift the
focus in Libya's economy from the public to the private sector.
(Note: In a separate meeting, the Secretary of the GPC for
Manpower, Employment and Training recently told us that the GOL
was working to reduce the number of public sector employees from
one million to 130,000 in the net 3-5 years. End note.)


4. (U) Pointing to the Misurata Free Trade Zone (located east
of Tripoli),Sarkaz also discussed efforts to create a law
governing free trade zones to help promote Libya as a transit
hub between Europe and Africa. Efforts are underway to
establish a parallel free trade zone west of Tripoli in the
Zwara-Abu-Kammash area, a project headed by Saadi al-Qadhafi, a
son of Muammar al-Qadhafi. That project is particularly
important since a large percentage of Libya's trade flows across
its western border with Tunisia. In addition, Libya was working
to develop its port and transport infrastructure to enable it to
better capitalize on its long coastline and proximity to
south-central Europe.


5. (SBU) Addressing Libya's needs for technical assistance,
Sarkaz said there is a great need for Libyan economic experts to
visit the U.S. and learn from their American counterparts,
particularly with respect to helping grow the small and
medium-enterprise sector. Sarkaz also expressed interest in any
help the U.S. could provide in helping make the GOL more
efficient and eliminate the waste of public funds. He
acknowledged that Libya needed to modernize its customs
authority, ports authority, tax system and banking system to
underpin other reforms the GOL is pursuing. He asked for U.S.
assistance in introducing a computerized database to collect and
analyze economic data, with the goal of providing up-to-date

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statistics to decision-makers and planning advisors.


6. (SBU) Sarkaz noted that negotiations for a U.S.-Libya Trade
and Investment Framework Agreement (TIFA) were underway, and
that it was expected to be finalized soon. Williams welcomed
the news and underscored U.S. interest in further economic
cooperation.
STEVENS