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 He asked that the tax decree be rescinded and said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