VZCZCXYZ0000
PP RUEHWEB

DE RUEHTU #0248 0531024
ZNR UUUUU ZZH
P 221024Z FEB 07
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 2752
INFO RUCNMGH/MAGHREB COLLECTIVE PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS TUNIS 000248 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG 
STATE PASS TO USTR (BELL) 
USDOC FOR ITA/MAC/ONE (NATE MASON) 
CASABLANCA FOR FCS (ORTIZ) 
 
E.O. 12958: N/A 
TAGS: ECIN ETRD ELAB TS LY
SUBJECT: TUNISIAN-LIBYAN COOPERATION ON TRACK 
 
REF: A. TRIPOLI 150 AND PREVIOUS 
 
     ¶B. TUNIS 143 
     ¶C. TUNIS 101 
     ¶D. 06 TUNIS 2329 
 
¶1. (SBU) SUMMARY: In the 20th meeting of the Libyan-Tunisian 
High Commission, held in Tripoli on February 18, Tunisian 
Prime Minister Mohamed Ghannouchi and Libyan Secretary of the 
General People's Committee Mahmoudi Baghdadi signed three 
agreements aimed at improving cooperation between the two 
countries.  The agreements mark the continuation of efforts 
to facilitate increased trade and investment, which appeared 
to be off track after President Ben Ali's absence from a 
summit hosted by Libya and recent reports that Libya would 
now require visas for Tunisians and other expats.  END 
SUMMARY. 
 
¶2. (SBU) On February 18, Tunisian Prime Minister Mohamed 
Ghannouchi and Libyan Prime Minister Mahmoudi Baghdadi signed 
three cooperation agreements in the context of the 20th 
meeting of the Libyan-Tunisian High Commission.  The first 
agreement formalized the previously announced decision to 
permit reciprocal exchange convertibility between the two 
currencies (Ref B).  The two additional agreements outlined 
industrial cooperation (NFI) and established mutual 
recognition of drivers' licenses between the two countries. 
 
¶3. (SBU) This series of agreements marks the continuation of 
recent efforts to promote increased cooperation between the 
two countries, particularly on the economic front.  Relations 
between the two countries appeared to be strained when 
President Ben Ali missed a January 23 summit hosted by 
Ghaddafi for the leaders of Egypt, Algeria, Tunisia, and 
Sudan.  (NOTE: Tunisian local press reported that Ben Ali was 
sick (Ref C).  Sudanese President Bashir also failed to 
attend.  END NOTE.)  Rumors of a rupture seemed to be 
confirmed after announcements by GOL officials of changes to 
Libya's visa policy (Ref A) led to widespread reports that 
Libya would require visas for all Tunisians.  While the GOL 
later clarified that Tunisians would not require visas, only 
relevant work permits, the reports created a minor panic due 
to the high volume of Tunisians traveling to or working in 
Libya. 
 
¶4. (SBU) Although intra-Maghreb trade remains relatively 
paltry, trade between Libya and Tunisia has grown in recent 
years.  Bilateral trade reached US $1.36 billion in 2006, up 
from US $970 million in 2005.  Libya is critical to Tunisia's 
unemployment woes, hosting a large number of Tunisian 
workers, and to the tourism sector, which received 1.4 
million Libyan visitors in 2006.  Even as official figures 
demonstrate the importance of bilateral trade and investment, 
these numbers fail to capture the significant quantity of 
smuggling that occurs across the Tunisian-Libyan border.  The 
proliferation of roadside stands selling cut-rate Libyan 
gasoline and markets filled with smuggled goods from Libya, 
such as the "Libyan Souk" in Ben Guerdane (Ref D), reflect 
not only the volume of illegal trade, but the relative 
impunity with which the smuggling occurs. 
 
¶5. (SBU) COMMENT: Despite recent rumors of friction between 
the two countries, cooperation between Libya and Tunisia to 
facilitate increased trade and investment appears to be on 
track.  The GOT continues to voice support for increased 
Maghreb economic integration through its participation in 
Arab Maghreb Union summits and meetings. Yet, progress has 
been slow on this front, leading the GOT to actively pursue 
reductions in barriers to trade and investment with Libya 
through bilateral negotiations.  The steps to allow 
reciprocal currency convertibility and to reduce 
administrative hurdles will help stimulate bilateral trade 
and investment, but reducing the parallel market for smuggled 
goods will also require tough enforcement by the GOT.  END 
COMMENT. 
GODEC