VZCZCXRO5791
PP RUEHTRO
DE RUEHTU #1073/01 2211141
ZNR UUUUU ZZH
P 091141Z AUG 07
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 3645
INFO RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0910
RUEHAS/AMEMBASSY ALGIERS PRIORITY 7509
RUEHDO/AMEMBASSY DOHA PRIORITY 0421
RUEHLO/AMEMBASSY LONDON PRIORITY 1337
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0898
RUEHFR/AMEMBASSY PARIS PRIORITY 1810
RUEHRB/AMEMBASSY RABAT PRIORITY 8419
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0124
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4122
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 TUNIS 001073 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG (HARRIS) 
STATE PASS USTR (BUNTIN), USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (NATHAN MASON), ADVOCACY CTR (JAMES), AND CLDP 
(TEJTEL AND MCMANUS) 
USDOC PASS USPTO (ADAMS, BROWN AND MARSHALL) 
CASABLANCA FOR FCS (ORTIZ) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EINV EFIN KTEX TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS 
 
REFS: 06 TUNIS 2573 
 
06 TUNIS 2465 
06 TUNIS 2464 
 
¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. Trade Gap Narrows 
¶B. President Signs US $14 Billion Emirati Project Bill 
¶C. GOT Offers Tax Amnesty for Capital Repatriation 
 
----------------- 
Trade Gap Narrows 
----------------- 
 
¶2. (U) According to recently published Tunisian National Institute 
of Statistics (INS) data, the trade deficit for the first half of 
2007 declined 7.4 percent over the same period of 2006.  Exports, 
which account for 45 percent of GDP, rose 29.8 percent to 9.818 
billion TND (US $7.432 billion), with imports only up 21.9 percent 
to 11.695 billion TND (US $8.853 billion).  Agricultural exports, 
mainly olive oil and dates, registered a 28.9 percent increase with 
1.073 billion TND (US $812.261 million).  Textile and apparel 
exports, a key foreign currency earner, rose 22.5 percent to 3.227 
billion TND (US $2.44 billion).  Notably, the value of petroleum 
product imports fell by 17.8 percent to 1.175 billion TND (US 
$889.475 million). 
 
¶3. (SBU) Comment: The rise in textile exports is welcome development 
for the GOT after relatively weak performance in 2005 and 2006 (Refs 
B and C).  The improvement indicates that the GOT's strategy to 
improve productivity and encourage value-added production is finally 
yielding results.  The fall in petroleum imports is notable, but 
there is no further information regarding whether the decline is a 
result of falling demand (due to higher oil prices) or increased 
domestic supply.  While there have been significant discoveries and 
increases in production over the past year, downstream processing 
has been minimal, forcing Tunisia to import most of its refined 
petroleum products.  End Comment. 
 
--------------------------------------------- ------ 
President Signs US $14 Billion Emirati Project Bill 
--------------------------------------------- ------ 
 
¶4. (U) On July 17 President Ben Ali signed into law legislation 
paving the way for the largest internal investment project in the 
country's history.  The US $14 billion real-estate project between 
GOT and Sama Dubai, the property unit of state-owned Dubai Holding, 
will create luxury apartments, offices, trade centers and hotels on 
an 837 hectare property north of the capital.  According to local 
news reports, the deal came under scrutiny in Parliament due to 
concerns that the project might stimulate further concessions of 
Tunisian lands to foreigners.  Several articles of the original 
agreement were reportedly amended to stress the sovereignty of 
Tunisian law and to allow the GOT to oppose certain provisions and 
precludes foreign appropriation.  The GOT estimates that the 
investment will boost the GDP growth rate to 6.3 percent by 
stimulating business activities in all sectors, especially building 
materials.  The GOT projects that the investment will create 15,000 
new positions for skilled workers, with the total number of jobs 
estimated at nearly 130,000 including unskilled work.  There is 
widespread speculation that Sama Dubai has received authorization to 
bring in a large number of unskilled foreign workers to complete the 
project. 
 
¶5. (SBU) Comment: The Sama Dubai investment is one of many large 
Emirati investments currently on the horizon (Ref A).  The GOT has 
been eager to attract foreign direct investment in order to boost 
GDP growth and tackle the country's very high unemployment rate 
(officially 13.9 percent).  The recent visit of a high-level UAE 
delegation, led by Vice President and Prime Minister Shaikh Mohammad 
Bin Rashid Al-Maktoum, highlights the ongoing interest of both 
countries in joint investment projects.  Although FDI from the Gulf 
 
TUNIS 00001073  002 OF 002 
 
 
is growing in Tunisia, much of the investment is targeted towards 
large real estate projects or privatizations.  While investments 
such as the Sama Dubai project or Tunisie Telecom privatization will 
raise Tunisia's FDI figures, these types of investment may not lead 
to the type of job creation necessary to significantly reduce 
unemployment.   End Comment. 
 
--------------------------------------------- -- 
GOT Offers Tax Amnesty for Capital Repatriation 
--------------------------------------------- -- 
 
¶6. (U) According to the recently published official gazette, on June 
25, 2007, President Ben Ali signed Law No. 2007-41, a tax amnesty to 
encourage Tunisians to repatriate currency possessed illegally.  The 
amnesty will apply to individuals and companies who have (1) failed 
to repatriate their unsanctioned income and assets held abroad, (2) 
failed to declare personal holdings of foreign currency, or (3) 
exceeded the amount of undeclared dinars that one can take outside 
of the country.  Tunisians repatriating their capital will be able 
to keep their funds in foreign currency. 
 
¶7. (SBU) Comment and Background: Although the Central Bank has eased 
restrictions on foreign currency transactions in recent years, the 
dinar is not yet fully convertible.  In order to transfer money 
abroad or hold a specified amount of hard currency Tunisian 
companies and residents must apply for authorization from the 
Central Bank.  Strict annual limitations on foreign currency for 
residents and the often onerous Central Bank authorizations have 
driven many Tunisians to keep their money abroad illegally.  While 
the full amount of capital held abroad is unknown, one Embassy 
contact referenced a World Bank study that estimated that the amount 
of capital held abroad might equal the level of external debt.  With 
Tunisia's external debt at roughly 20.2 billion dinars (US $15.8 
billion), or 46 percent of GDP, the GOT is eager to capture even a 
fraction of this capital and reincorporate it into the Tunisian 
economy.  End Comment and Background. 
GODEC