Identifier
Created
Classification
Origin
09CAIRO568
2009-04-02 15:38:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Cairo
Cable title:  

SCENESETTER FOR CODEL TAUSCHER'S VISIT TO CAIRO

Tags:  OREP TAUSCHER PGOV ECON KPAL EG IS 
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VZCZCXYZ0008
PP RUEHWEB

DE RUEHEG #0568/01 0921538
ZNR UUUUU ZZH
P 021538Z APR 09
FM AMEMBASSY CAIRO
TO SECSTATE WASHDC PRIORITY 2086
UNCLAS CAIRO 000568 

SENSITIVE
SIPDIS

H FOR REPRESENTATIVE TAUSCHER; NEA/ELA FOR CANEDO

E.O. 12958: N/A
TAGS: OREP TAUSCHER PGOV ECON KPAL EG IS
SUBJECT: SCENESETTER FOR CODEL TAUSCHER'S VISIT TO CAIRO

UNCLAS CAIRO 000568

SENSITIVE
SIPDIS

H FOR REPRESENTATIVE TAUSCHER; NEA/ELA FOR CANEDO

E.O. 12958: N/A
TAGS: OREP TAUSCHER PGOV ECON KPAL EG IS
SUBJECT: SCENESETTER FOR CODEL TAUSCHER'S VISIT TO CAIRO


1. SUMMARY: (SBU) Representative Tauscher, welcome to Egypt.
Your visit comes as Egypt continues its efforts to mediate a
permanent cease-fire between Israel and Hamas, to facilitate
intra-Palestinian negotiations to form a new, interim
government, and to stop the smuggling of arms into Gaza. The
U.S., European countries, and regional governments are
working to create security arrangements that would improve
the flow of humanitarian assistance to Gaza. Many Egyptians
see the new U.S. administration as a cause for cautious
optimism in both the bilateral relationship and in U.S.
engagement with the region. Senator George Mitchell has
twice visited Egypt and the region as U.S. Special Envoy for
Middle East Peace and will likely return to Cairo in April.
We have requested meetings for you with President Mubarak,
intelligence chief General Omar Soliman, Foreign Minister
Ahmed Aboul Gheit, and Defense Minister Tantawi, as well as
with disarmament officials. End summary.

--------------
Israel-Palestine
--------------


2. (SBU) The election of President Obama generated much
optimism in Egypt and hopes that the new administration would
quickly focus on problems in the Middle East. In particular,
the Egyptian leadership wants the U.S. to urgently address
the Israeli-Palestinian conflict, and Special Envoy Mitchell
has assured them that the Administration will press hard for
progress. The Egyptians have traditionally served as an
intermediary between us, the Israelis, and the Palestinians.
Since the January 2008 Hamas breach of the Egypt-Gaza border,
the Egyptian role has shifted to focus on intra-Palestinian
reconciliation and the establishment of a lasting
Hamas-Israel cease-fire. EGIS Chief Soliman has worked to
cement a Israeli-Hamas cease-fire but believes he was badly
undercut by the Israeli introduction of the release of IDF
Corporal Gilad Shalit as a new pre-condition for the
cease-fire. For the moment, rocket strikes from Gaza are
relatively low in frequency.


3. (SBU) The Egyptians believe that Palestinian
reconciliation is a prerequisite to delivery of the
approximately $5 billion in Gaza reconstruction assistance

pledged at the March 2 Sharm El Sheikh Conference. Neither
the Egyptians, nor the international community can work with
Hamas as a partner on security, political or economic
reconstruction issues; Rafah crossings will remain closed
until the Palestinian Authority returns to operate the Gaza
side of the crossing for normal business. However, the
Egyptians periodically open their side of the border for
humanitarian and emergency medical cases. The Egyptians will
tell you that limiting movement in and out of Gaza is
necessary, but will urge that you impress upon the Israelis
the need to maintain adequate humanitarian inflows to Gaza.
The Egyptian government will stress that opening up for
legitimate trade and forging effective measures against
smuggling should go hand-in-hand. Public opinion however
remains deeply angered by the Gaza "siege" and is eager to
see if the new administration will push to allow normal
commerce to flow into Gaza. The Egyptian public is also
anxious to see how the U.S. will deal with the new Israeli
government and the expansion of settlements.


4. (SBU) Egyptian security forces continue to improve
counter-smuggling efforts along the Gaza border and further
afield, through increasing their security presence in
northern Sinai and giving greater focus to preventing weapons
from entering the Sinai. Egyptian officials claim to have
identified and sealed over 100 tunnels since the beginning of
the year, with new discoveries occurring daily. Recently
arrived U.S.- supplied counter-smuggling equipment - once
installed and fully operational - could help improve Egypt's
ability to fully exploit the tunnels and break up smuggling
rings. The government has requested additional border
security assistance and we are currently exploring ways to
provide the requested assistance. Long-term success,
however, depends on removing the economic incentives driving
smuggling on both sides of the border.

--------------
Other Regional Issues
--------------


5. (SBU) Egypt has shown increasing confidence that Iraq has
turned the corner, although concerns remain that the
Shi'a-led government is prone to Iranian influence. An Iraqi
delegation recently visited Cairo for consultations on how to
reestablish Iraqi-Egyptian economic and political ties.
Foreign Minister Aboul Gheit visited Baghdad in October 2008
(the first such visit in over 18 years) and is moving forward
to reopen Egypt's embassy in Baghdad. On Iran, Egypt is
concerned by rising Iranian influence in the region, has
supported UN sanctions, and is increasingly active on
countering Iran, e.g. in Gaza and to some extent in Lebanon,
working with Saudi Arabia and other Arab states to support
Lebanese political and territorial sovereignty. Egypt has
deployed peacekeeping troops to the UN Mission in Darfur,
just agreed to send troops to the UN Mission in Congo and is
taking a greater role within the African Union on regional
security and political issues. President Mubarak met
Sudanese President Omar Bashir on March 25 in Cairo,
reportedly to discuss the Darfur conflict. Egypt hosts a
large population of Sudanese refugees and is deeply concerned
that continuing instability in Sudan will pose a threat to
its own security, compromise its access to Nile water, and
increase the flow of refugees. Consequently, Egypt opposes
the International Criminal Court's issuance of an arrest
warrant for Bashir.

--------------
Internal Politics and Economics
--------------


6. (SBU) We continue to promote democratic reform in Egypt,
including the expansion of political freedom and
pluralism, and respect for human rights. Egyptian democracy
and human rights efforts, however, are being stymied, and the
GoE remains skeptical of our role in democracy promotion,
complaining that any efforts to open up will result in
empowering the Muslim Brotherhood, which currently holds 86
seats in Egypt's 454-seat parliament. An ongoing challenge
remains balancing our security interests with our democracy
promotion efforts. On April 6, 2008, a new opposition group
calling for political and economic reforms organized a strike
through "Facebook" that noticeably quieted the streets of
Cairo. The opposition group is calling for a similar April 6
strike this year. The April 6, 2008 strike coincided with a
separate labor action in the Delta industrial city of Mahalla
that led to violent, fatal clashes between police and
protesters.


7. (U) Economic reform is ongoing although Egypt still
suffers from widespread poverty affecting 35-40% of the
population. Reforms in trade and tax policy, financial
reform, privatization and increased transparency have led to
6-7% economic growth over the past three years. Foreign
investment increased from around $3 billion in 2005 to $11
billion in the last year, mostly in the petroleum sector,
though growth in foreign investment appears to be dropping
off. Despite this success, significant problems remain,
including high inflation, high levels of poverty, and
unemployment, and endemic corruption. Egyptian-U.S. trade has
more than doubled in the last four years, reaching almost $9
billion in 2008. The U.S. exports to Egypt about twice as
much as it imports. Egyptian banks operate very
conservatively and have been spared involvement in risky
financial products, but the effects of the global
economic crisis on Egypt are beginning to be felt. As the
global credit crunch worsens, Egypt remains vulnerable as
exports, Suez Canal revenues, tourism, and remittances -- its
largest sources of revenue -- are all down and likely to
continue to fall. The Egyptian government viewed the
reduction in Economic Support Funds (ESF) by half to $200
million in FY2009 as an affront, and has high expectations
that the new administration and Congress will approve higher
levels in FY2010. The Ambassador and USAID Mission Director
have emphasized the impact of the ongoing financial crisis on
budget discussions in the U.S.


8. (SBU) We continue to stress the importance of advancing
military to military cooperation, long a cornerstone of the
U.S. - Egyptian relationship. Security agreements, a
revamped exercise program, establishing shared objectives,
and interoperability are a few areas where we are seeking to
strengthen the relationship.
SCOBEY