This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 CAIRO 009293 
 
SIPDIS 
 
SENSITIVE 
 
NEA FOR ELA 
EB FOR CBA AND CIP 
NEA PLEASE PASS USTR 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EINV CVIS EG
SUBJECT: EGYPT TELLS EB/CBA MERMOUD IT'S "OPEN FOR BUSINESS" 
 
 
Sensitive But Unclassified.  Please Protect Accordingly. 
 
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Summary 
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¶1. (SBU) During his meetings with a large sampling of Egypt's 
political and business leaders, EB/CBA Frank Mermoud heard 
that while Egypt is "open for business" due to positive 
policy reforms, significant challenges to business 
development remain.  Expanding outreach to Egypt's ICT sector 
and encouraging more face-to-face encounters between Egypt's 
leaders and American business could help foster greater 
linkages.  Treatment of Egyptian travelers at U.S. border 
crossing points is straining our commercial relationship, 
despite Post's successes in facilitating business visas.  End 
Summary. 
 
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Expanding U.S.-Egypt Business Linkages 
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¶2. (SBU) EB/CBA Frank Mermoud visited Cairo November 12 - 15 
to engage GOE officials and private sector leaders in 
building greater business and investment linkages between 
Egypt and the U.S., seek continued cooperation on WTO reform 
proposals, and press for Egyptian support on Internet 
governance issues at the World Summit on the Information 
Society in Tunis.  Mermoud met with the Ministers of Foreign 
Trade and Industry and Investment, senior officials from the 
Prime Ministry and Ministry of Communications, a variety of 
business leaders, and addressed assembled members of the 
American Chamber of Commerce in Egypt. 
 
¶3. (SBU) Mermoud also toured the Smart Village, a business 
park designed to co-locate ICT companies and foster 
incubation of start-up ICT businesses and technologies.  The 
Smart Village, which also houses the Ministry of 
Communications and Information Technology as well as offices 
of the Prime Minister, includes regional headquarters of 
major U.S. ICT firms such as Microsoft Egypt, as well as the 
CultNat exhibit, a project aimed at digitizing and displaying 
Egypt's cultural heritage. 
 
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Open for Business 
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¶4. (SBU) Despite remaining challenges, Mermoud's GOE 
interlocutors sought to stress that Egypt was indeed "open 
for business" and would continue to enact changes designed to 
foster private sector growth and investment.  A standout 
among these initiatives is the Ministry of Investment's "One 
Stop Shop" for private business registration.  The "Shop" 
brings all the steps of business start-up to one location, 
resulting in a 72 hour turn-around of startup applications. 
Such a development, the GOE hopes, will go far in raising 
Egypt from its dismal rating of 141 out of 155 in the 
International Finance Corporation's (IFC) ranking of the ease 
of doing business in various countries.  Minister Mohieldin 
noted that an IFC team was due to visit Cairo soon and that 
they would certainly be made aware of this positive 
development. 
 
¶5. (SBU) On the R&D front, the Ministry of Communications has 
established virtual "Centers of Excellence" which seek to 
create synergies in electronic design, wireless technologies, 
and data mining for the tourism and oil and gas sectors as 
well as increase search capabilities in Arabic text 
publications.  According to Microsoft Egypt, the IPR 
situation in the software field was improving, with laws and 
regulations in place and adherence -- particularly in 
government departments -- on the rise. 
 
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Challenges Remain 
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¶6. (SBU) Despite the economic reforms enacted under PM 
Nazif's cabinet, significant challenges to increased business 
development in Egypt remain.  Tariff and tax reforms, 
monetary policy discipline, and increased privatization of 
state-owned enterprises (the number of transactions and size 
of proceeds have doubled over the last four years according 
to the Minister of Investment), have contributed to increased 
capital inflows.  During his meeting with Mermoud, Minister 
of Investment Mohieldin, however, outlined four primary 
obstacles he and his colleagues face in increasing investment 
in Egypt: 1) access to finance, 2) access to land by the 
industrial and agricultural sectors, 3) lack of acceptable 
dispute settlement procedures, and 4) an entrenched and 
corrupt bureaucracy.  Mohieldin's assessment mirrored those 
gleaned from meetings with private sector leaders from a 
variety of industries and regions in Egypt. 
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Beyond the Beltway 
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¶7. (SBU) Mermoud entreated his GOE interlocutors to add 
travel "beyond the beltway" for meetings with American 
private sector companies to their itineraries when visiting 
Washington, D.C., and offered EB/CBA's assistance in 
arranging meetings further afield.  The officials recognized 
that such meetings, particularly in the ITC sector, would 
help cement existing business relationships and expand the 
pool of potential investors in Egypt. 
 
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Common Refrain 
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¶8. (SBU) Egyptian travelers continue to face difficulties at 
U.S. border crossings, however, which they say are straining 
our bilateral commercial relationships.  Despite Embassy 
Cairo's success in establishing an expedited, 
customer-friendly business visa program, Mermoud encountered 
consistent complaints about the treatment of Egyptian 
travelers upon entering the U.S. from both government and 
private sector interlocutors.  As an example, Dr. Khaled 
Ismail, Senior Advisor to the Minister of Communications, 
raised this issue with Mermoud during their 11/13 meeting. 
Ismail, an MIT graduate and former IBM employee, said that 
the last two times he tried to enter the U.S. he was detained 
in secondary and questioned extensively about his and his 
family's background, his intentions on traveling to the U.S., 
etc. In each instance he was held for over two hours. 
 
¶9. (SBU) Ismail noted that while he understands the need for 
vigilance at the border, he said that surely there must be 
ways to prevent repetitive questioning of evidently 
"innocent" travelers, particularly those who resided legally 
in the U.S. for extended periods in the past.  Several other 
interlocutors offered unsolicited commentary on similar 
experiences, noting how this is a deterrent to travel to the 
U.S. 
 
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Comment 
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¶10. (SBU) The Smart Village grouping presents an opportunity 
for U.S. ICT sector companies seeking expansion in the region 
and for USG agencies seeking to enhance ICT development and 
IPR protection in the region.  Post recommends further USG 
outreach to the Smart Village entities and looks forward to 
facilitating contact. 
 
¶11. (SBU) USG efforts at facilitating visas for 
businesspersons are harmed if travelers repeatedly encounter 
ill-treatment at border inspection points.  While most of our 
interlocutors understand the role of name-check computers and 
the possibility of misidentification, they are less forgiving 
when every entry to the United States requires secondary 
inspection and extensive questioning.  This is a deterrent to 
travel to the U.S. and puts our companies at a disadvantage 
when competing in the global marketplace. 
 
 
JONES