VZCZCXYZ0027
PP RUEHWEB

DE RUEHTU #1168/01 3251403
ZNR UUUUU ZZH(CCY ADX00FE8E6C TOQ0164)
P 201403Z NOV 08 ZDS
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 5750
RUCNMGH/MAGHREB COLLECTIVE
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUCNMGH/MAGHREB COLLECTIVE
RUEHMK/AMEMBASSY MANAMA 0119

UNCLAS TUNIS 001168 
 
C O R R E C T E D C O P Y//SUBJECT LINE// 
 
SENSITIVE 
SIPDIS 
STATE FOR NEA/MAG (NARDI AND HAYES) 
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (NATHAN MASON), CLDP (TEJTEL AND 
MCMANUS) 
CASABLANCA FOR FCS (ORTIZ) 
CAIRO FOR FINANCIAL ATTACHE (SEVERENS) 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD TS
SUBJECT: ECONOMIST HOSTS BUSINESS GOVERNMENT ROUNDTABLE: THE GOT 
LISTENS BUT DOES IT HEAR? 
 
REF: TUNIS 1101 
 
------- 
Summary 
------- 
 
¶1. (U) The Economist Intelligence Unit recently hosted its 
first business roundtable in Tunisia with strong government 
and company participation.  Prime Minister Mohamed Ghannouchi 
gave remarks on the GOT's current economic development plan 
and responded to questions from business leaders and 
diplomats.  The Prime Minister was one of five ministers who 
participated in the event.  Highlights and observations from 
the event included advice from African Development Bank 
President Donald Kaberuka, urging the GOT to stay the course 
on economic reform, and confirmation that the financial 
crisis is likely to have a negative effect on key sectors of 
Tunisia's economy, including exports and tourism.  End 
Summary. 
 
--------------------- 
A Case of the Shoulds 
--------------------- 
 
¶2. (U) GOT officials received a long list of "shoulds" during 
the Economist Intelligence Unit-organized business roundtable 
held on October 24.  African Development Bank (ADB) President 
Donald Kaberuka summarized the suggestions best when he 
called on the GOT to capitalize on this crisis-generated 
opportunity to redefine the role of the central government in 
the economy.  He highlighted three areas where the GOT should 
focus: 
 
- deepening the banking sector in order to increase small and 
medium sized business access to credit and financing; 
- continuing to reduce bureaucratic red tape for new business 
and project development; and 
- strengthening regional integration. 
 
¶3. (U) Kaberuka reaffirmed the ADB's support, by means of 
loans and guarantees, for Tunisia's continued economic 
growth.  He highlighted how Africa, usually one of the areas 
worst off during economic downturns, has so far been less 
affected during this crisis.  However, Kaberuka said that 
those African countries dependent on foreign aid might feel 
the pinch should recession affect donor countries.  He 
concluded that Tunisia could turn the crisis to its advantage 
if the GOT takes appropriate actions. 
 
----------------------------------- 
The Impact of the Crisis on Tunisia 
----------------------------------- 
 
¶4. (SBU) Roundtable speakers said Tunisia's exports, foreign 
direct investments and tourism will be negatively affected by 
prolonged economic downturns in the country's key trading 
partners.  (The assessments largely confirmed earlier Embassy 
reports.  See reftel.)  Presenters, such as Ala'a Al Youssif, 
the senior economist and panelist from the Gulf Finance House 
(GFH), reaffirmed the need for the GOT to focus on mobilizing 
Tunisian household savings, increase efforts to attract 
foreign investors and position itself as a financial hub for 
the African continent.  (NOTE: The Gulf Finance House is a 
Sharia Investment Bank based out of Bahrain with plans to 
open a three billion dollar financial harbor in Tunis by 
2009.) 
 
-------------------------- 
The GOT is in the House... 
-------------------------- 
 
¶5. (SBU) Prime Minister Mohamed Ghannouchi capitalized on the 
elite audience of business executives and diplomats to 
reiterate previous comments regarding Tunisia's 
competitiveness, continued positive economic growth and 
above-African-average standard of living and education 
levels.  He emphasized the GOT's consistent approach to 
economic development and long history of investment in 
education and modernization.  He admitted the need to more 
 
 
closely align higher education with the needs of the private 
sector while reminding the audience of the GOT's focus on 
attracting value-added industries given the lack of 
availability of natural resources.  In addition, he sought to 
assuage concerns about the recent fluctuations in the 
Tunisian stock market by confirming the low foreign portfolio 
investment figures.  Ghannouchi responded to Kaberuka's 
suggestions by describing the following objectives: 
 
- Achieve one percent decline in unemployment annually; 
- Capitalize on Tunisia's market reputation of stability to 
attract foreign investment; 
- Resolve salary and wage concerns through free and 
constructive dialogue to maintain stability; and 
- Continue EuroMed integration efforts. 
 
¶6. (U) Moreover, Ghannouchi confirmed that the GOT has no 
intention of nationalizing any companies, and explained that 
only a handful continue to have government stakes.  Among 
them are Groupe Chimique, the chemical company, the Phosphate 
Company of Gafsa, and a cement plant that is used to regulate 
the price of cement in the market.  Lastly, Prime Minister 
Ghannouchi reiterated Tunisia's willingness to accept mega 
FDI projects and the willingness on the part of the GOT to 
"work" with interested parties. 
 
-------------------------- 
... And so is the Elephant 
-------------------------- 
 
¶7. (SBU) One topic absent from the roundtable was corruption. 
 Transparency International recently released corruption 
rankings, in which Tunisia fell from 61 to 62.  One point may 
seem unremarkable; however, it marks the seventh straight 
year of increasing perceptions of corruption.  One Tunisian 
business owner, Nazeh Ben Ammar, asked the Minister of 
Industry during a panel discussion about irregularities in 
the customs process, and later commented to EconOff that the 
answer provided was less than adequate. 
 
--------------------- 
Other Business Issues 
--------------------- 
 
¶8. (U) Coca-Cola used its sponsorship and participation on a 
discussion panel to directly comment on the fairness of a tax 
imposed on carbonated beverages.  Mr. Brahim Laroui, 
President of Coca-Cola in Tunisia, was not surprised when 
Employment Minister Slim Tlatli responded that the GOT was 
not considering changing the beverage tax.  The Gulf Finance 
House, the event's other co-sponsor, encouraged greater 
efforts to reform the financial sector, which would benefit 
their plans to create a finance hub in Tunis. 
 
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Comment 
------- 
 
¶9. (SBU) Overall, participants saw the event as broadly 
positive, with business representatives welcoming the 
government's strong presence.  Participants were pleased with 
the opportunity to question GOT officials, exchange views and 
network, free of charge. Not surprisingly, the ministers 
hewed closely to the government's official line.  They, too, 
appreciated the opportunity to interact directly with a key 
constituency.  The Economist Intelligence Unit commented that 
they normally charge for this type of event.  In this case, 
funding was provided by Coca-Cola and GFH (septel).  The EIU 
chose to make attendance by invitation in order to attract 
the "right" people, i.e., decision makers and business 
leaders.  Taking advantage of the opportunity, participants 
delivered some clear and useful messages to the GOT.  In 
return, GOT leaders had an opportunity to court the business 
community.  Ideally, the forum will encourage further reform 
by government (and new investment by business).  But while 
GOT officials listened, only time will tell whether they 
heard.  End Comment. 
 
Please visit Embassy Tunis' Classified Website at: 
 
http://www.state.sgov.gov/p/nea/tunis/index.c fm 
Godec