GOT TO SENATOR MITCHELL ON AMERICAN SCHOOL: WE'RE

C O N F I D E N T I A L TUNIS 000243 SIPDIS STATE FOR NEA/FO - HUDSON; NEA/MAG; NEA/SCA/EX; STATE ALSO FOR A/OPR/OS - CAMERON E.O. 12958: DECL: 04/22/2019 TAGS: ASCH OFDP PREL TS SUBJECT: GOT TO SENATOR MITCHELL ON AMERICAN SCHOOL: WE'RE READY TO NEGOTIATE REF: TUNIS 237 AND PREVIOUS Classified By: Ambassador Robert F. Godec for reasons 1.4 (b) and (d) ¶1. (SBU) Toward the end of his hour-long meeting with Prime Minister Ghannouchi and Foreign Minister Abdallah on April 15 (septel),Special Envoy George Mitchell raised the Ministry of Finance's final tax decree assessing the American Cooperative School in Tunis (ACST) for 9.1 million Tunisian Dinars (approximately US $6.6 million) in back taxes. Referencing the recent letter from NEA AA/S Jeffrey Feltman to Abdallah on the issue, Mitchell expressed appreciation for the Tunisian Government's willingness to negotiate. He emphasized the United States, deep attachment to the school and said that the USG would like to resolve the issue in an amicable and fair manner. He noted that we hope for a prompt solution. He asked that the tax decree be rescinded and said an American team would be sent to negotiate. ¶2. (SBU) Ghannouchi noted that he had just spoken with the Finance Minister about this issue. Based on that conversation, Ghannouchi offered his assurances that the issue is a "simple issue of fiscal control" twice repeating that such "normal fiscal audits" happen to thousands of companies. Ghannouchi referred to what he said were relevant provisions of the non-double-taxation agreement. He said US experts are welcome to come to speak to their Tunisian counterparts. He was certain that they would find a solution on the basis of the law. ¶3. (C) The Foreign Minister joined the discussion, citing Senator Mitchell's reference to the quality of bilateral relations. Abdallah said that it was precisely this quality of RELATIONS that permits us to be "extremely optimistic" in this case. He twice pointed out that we are in the very early stages of a process that could take up to two years to play out. Thus, he said, there should not be worries. There is no intention to close the school, he emphasized. It's not a POLITICAL question or a question of closing the school, he again said. That is a dramatized point of view, he said (rather dramatically),and there is no need to dramatize. Abdallah noted that Tunisia has enjoyed strategic RELATIONS with the United States for more than 200 years and the GOT does not want these RELATIONS to be impacted by this matter. In this context, the FM said he had reproached the Finance Minister, who had retorted that it's a "very normal" issue. ¶4. (C) On the way out of the meeting, Ambassador Godec and FM Abdallah had a tete-a-tete. Ambassador Godec underscored the US desire for negotiations and our interest in finding a reasonable, negotiated settlement. The Foreign Minister warmly promised that he was committed to this as well and that we would get it done. ¶5. (SBU) In reftel, Post sums up other recent developments on the ACST, and offers recommendations on a way forward. Please visit Embassy Tunis' Classified Website at: http://www.state.sgov.gov/p/nea/tunis/index.c fm Godec