NEW LIBYAN MINISTER OF ECONOMY VOWS TO STAMP OUT CORRUPTION; WELCOMES U.S. FIRMS TO INVEST

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000258



SIPDIS



STATE PLEASE PASS USTR; STATE FOR NEA MAG; ENERGY FOR GINA

ERICKSON; MASON AND HISHAM ELKOUSTAF; CAIRO FOR TREASURY LIAISON

ALEX

SEVERENS; LONDON AND PARIS FOR NEA WATCHERS



E.O. 12958: DECL: 3/24/2019

TAGS: LY, ECON, EAGR, EPET, EFIN, PGOV, ETRD

SUBJECT: NEW LIBYAN MINISTER OF ECONOMY VOWS TO STAMP OUT CORRUPTION;

WELCOMES U.S. FIRMS TO INVEST



REF: A) TRIPOLI 157; B) TRIPOLI 198



TRIPOLI 00000258 001.2 OF 002





CLASSIFIED BY: Gene Cretz, Ambassador, U.S. Embassy Tripoli,

U.S. Department of State.

REASON: 1.4 (b),(d)

1. (C ) Summary: On March 24, the Ambassador met with

Mohammad Ali al-Hweij, the recently-appointed Secretary of the

General People's Committee for Industry, Economy and Trade

(Economy ministry-equivalent) to discuss economic and trade

issues as well as Libya's total ban on the import of

Caterpillar's equipment. Al-Hweij said Caterpillar needed to

find new agents in Libya (as the current ones were sons of

government officials) and welcomed the visit of a Caterpillar

representative and was confident the issue could be solved. He

also said Libya wanted U.S. firms to invest in export free zones

to help Libya diversify its economy away from oil. He pledged

his ministry's help in securing Libyan visas for American

companies. End summary.



CATERPILLAR BAN: SOLUTION IS MULTIPLE AGENTS AND NO RELATIVES

OF GOVERNMENT OFFICIALS



2. (C) Responding to the Ambassador's urging that the

Caterpillar issue had to be resolved expeditiously, Al-Hweij

said he was aware of the problem (ref A),explaining that it was

not acceptable for U.S. companies to have exclusive agents;

rather, the Libyans would prefer that Caterpillar work through

more than one agent and have multiple distributors throughout

the country. They would like to see at least three agents with

one each covering Tripoli, Miserata and Benghazi. He noted the

current Caterpillar agents were the sons of government

officials, which constituted "corruption" according to the law.

Al-Hweij welcomed the upcoming visit of Caterpillar's regional

manager, inviting him to come meet with him "anytime." The

Ambassador said he appreciated this approach and hoped the issue

would be solved before the expected visit of National Security
<br />Advisor Muatassim al-Qadhafi to the U.S. so that a Trade and

Investment Framework Agreement (TIFA) could be signed. He also

welcomed Al-Hweij's confirmation that he would act across the

board against any commercial practices that violated existing

laws against corruption.



U.S. COMPANIES ARE WELCOME TO INVEST IN FREE ZONES



3. (C) Al-Hweij said Libya would like American firms to invest

in "industrial" zones, such as the Zwara Export Free Zone (ref

B),and that he was ready to discuss such projects and the

advantages for companies that invest. As for privatization,

Libya is processing privatizing 12 companies and expects to

complete this process by the end of the year. The only sectors

left to privatize are Healthcare and Education which are still

under the auspices of the government. He noted it would be

difficult to privatize universities since the professors were

considered government employees and it was not clear how they

could be given "shares" in their institutions.



AL-HWEIJ PLEDGES HELP ON VISAS



4. (C) The Ambassador informed al-Hweij that the U.S.

Embassy's consular section would be issuing U.S. visas to the

general public by the end of this month. Al-Hweij welcomed this

news and said he pledged his help on securing Libyan visas for

U.S. business travellers who want to come to Libya.



USG PROGRAMS: COMMERCIAL LAW DEVELOPMENT PROGRAM, U.S. TRADE

DELEGATION, AGRICULTURE



5. (C) Al-Hweij said the Department of Commerce's program to

improve the commercial legal environment fit into the Libyan

government's program of revising its laws, including commercial

laws. He said the possible visit of a U.S. lawyer with

expertise in this area would be helpful in reviewing their new

commercial laws. He encouraged more direct dialogue between

businessmen and government officials, commenting there should be

"no more Cold War!" He welcomed the visit of a high-level U.S.

Department of Commerce Trade delegation in November, as well as

the visits of U.S. Trade and Development Agency and the Foreign

Agriculture Service. He said Libya welcomed any assistance that

could help diversify its economy away from oil, and to increase

employment opportunities for young people who constituted half

the population. The influx of economic immigrants from

sub-Saharan Africa was another challenge for Libya.





TRIPOLI 00000258 002.2 OF 002





6. (C) Comment: The newly-appointed Secretary for Industry,

Economy and Trade appears determined to resolve the Caterpillar

import ban issue. The upcoming visit of the Caterpillar

representative will be a good test of whether al-Hweij, who

clearly understands the connection between this issue and future

commercial and economic relations with the U.S., will back up

his words with actions. His anti-corruption rhetoric is

refreshing and laudable if he really intends to apply it across

the board as he insisted. The ultimate challenge will come when

he confronts the extensive commercial corruption of the

political elites here, including that of the al-Qadhafi family

itself.

CRETZ