PRIME MINISTER DISCUSSES ESF, ELECTIONS, SINAI DEVELOPMENT, AND POST SAID EXPANSION

C O N F I D E N T I A L CAIRO 001924



SIPDIS



USAID/ME, STATE FOR F, NEA AND EB



E.O. 12958: DECL: 10/07/2019

TAGS: EAID, ECON, PREL, PGOV, EWWT, ETRD, EG

SUBJECT: PRIME MINISTER DISCUSSES ESF, ELECTIONS, SINAI

DEVELOPMENT, AND POST SAID EXPANSION



Classified By: Ambassador Margaret Scobey for reasons 1.4 (b) and (d)



1. (C) Key Points:



-- Prime Minister Nazif says the GOE will consider allowing

international observers to participate in upcoming elections,

but noted that the issue "is on the table in any election."

He believes that a more capable and engaged political

opposition is needed.



-- Nazif supports a new mechanism for ESF with a greater

emphasis on education. He wants more opportunities for

Egyptians to study in the U.S. and continued USG funding of

some select GOE positions.



-- Nazif advocates continued USG assistance to Bedouin

communities in the Sinai.



-- Under a GOE master plan, Port Said will quadruple in size

by expanding port facilities, adding an industrial zone, and

creating a new city housing up to two million people.



2. (SBU) The Ambassador called on Prime Minister Ahmed Nazif

on October 5 and discussed a wide-range of issues, including

the state of Egyptian political opposition, a possible role

for international observers in upcoming elections, the future

of ESF, USG assistance to the Sinai, and GOE plans to develop

Port Said and its environs.



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PM Wants New Approach on ESF

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3. (C) The Ambassador told Nazif that she continues to

discuss the future of ESF with Minister of International

Cooperation (MIC) Fayza Aboulnaga and noted that clear

differences remain on how to move forward. As she had done

with Aboulnaga on September 9, the Ambassador explained that

debt relief should not be discussed in the context of

economic assistance; while the concept of an endowment is

appealing, a modest start (both in funding and scope) would

be more likely to garner USG support; and greater clarity on

the level and duration of ESF after 2010 will not be

forthcoming until further along in the FY2011 budget process.





4. (C) Nazif said he is still for a new approach on ESF, one

that differs from past program-specific funding. He agreed

that, so long as there is agreement in principle on a

jointly-managed, jointly-funded endowment, then its size can

grow over time. The Ambassador noted that both U.S. and

Egyptian interests are important in continuing talks with MIC

on the subject, particularly USG requirements for

accountability of U.S. funds.



5. (C) Nazif expressed his desire that future ESF focus on

education, particularly for supporting study in the U.S. He

added that study in the U.S. offers not only opportunities

for advanced degrees but also a more favorable context for

learning. He asserted that growth of Egyptian IT and Banking

Sectors has helped reduce the brain drain of U.S. graduates

departing for more lucrative jobs in the Gulf and elsewhere.

Nazif requested that ESF funds continue to support the

salaries of GOE experts, but the Ambassador replied that the

external funding of positions is being phased out. Nazif

advised that he is trying to identify a way to secure salary

support for select positions from his own budget but has been

unsuccessful thus far. (Comment: While USD funding of

salaries has been phased out, USAID has agreed that local

currency in Egypt's "special account" could be used for this

purpose as a transition to bringing these technical positions

into the GOE's budget. End comment.)



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Sinai

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6. (C) The Ambassador told Nazif that she has also discussed

with Aboulnaga the issue of U.S. assistance in the Sinai,

particularly how best to move forward with the $50 million in

FY2009 Supplemental funds. Ambassador noted that in

cooperation with Sinai's Governor progress had recently been

made in implementing $10 million in programs supported by

earlier funding. The Ambassador emphasized that USAID is

prepared to move quickly in implementing other Sinai-focused

programs and will continue to work with MIC on the means to

do so. Nazif said that the Sinai needs both medium and

long-term programs focusing on meeting the basic needs of the

Bedouin population.



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Science and Technology Cooperation

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7. (C) The Ambassador reviewed with Nazif some of themes of

President Obama's Cairo Speech, particularly science and

technology in education, and Nazif suggested that the U.S.

and GOE align their programs. He noted that there are five

higher-level schools called "centers of excellence" which

could benefit from USG-GOE coordinated involvement.

Technical schools spread throughout the country could also

use more attention, he continued, adding "we need more

technicians than university graduates." He also described

specific GOE funds dedicated to education and science and

technology. The Ambassador offered to have post follow up on

these ideas with Nazif's staff.



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Elections

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8. (C) The Ambassador raised the issue of People's Assembly

and Shura Council elections in 2010 and the Presidential

election in 2011 and said that the USG stands ready to

provide support, including technical assistance. She added

that she hoped the GOE would soon accept NGO registration for

IFES, a U.S.-based international NGO specializing in

elections. She noted that recent elections in Lebanon and

Iran will prompt greater scrutiny of upcoming elections in

Egypt. Nazif replied that there needs to be greater

engagement on the part of political parties, otherwise

extremists will fill the void. He added that ensuring the

participation of women was also a challenge. He said that he

doubted the NDP worried about losing its majority. Nazif

said one problem is the opposition parties themselves: their

leaders' cannot speak English, are generally of "a lower

level," and focus on the negative without articulating

solutions.



9. (C) The Ambassador also asked Nazif to consider the

participation of international election monitors in the

upcoming elections. Nazif replied that this issue "is always

on the table in any election" and he is "sure it will be

considered." He added that Egypt's political reform process

is complicated and its pace may be slower than what some

would prefer.



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Port Plans

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10. (SBU) Nazif began by mentioning his October 4 tour with

President Mubarak of ongoing construction at Port Said. He

said that Port Said is the fourth largest port in the

Mediterranean, handling 6.2 million containers in the past

year, and the fastest growing port in the world. A master

plan for the port will quadruple its size, with an industrial

zone to the south and continued post expansion eastward, to

include a development housing a million people. Nazif said

that, at a later stage, a city for two million people will be

created. He added that the GOE intends to construct a bridge

or tunnel to traverse the Suez Canal east of Port Said.



Scobey