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Viewing cable 09TUNIS184, AMERICAN CEMETERY PROJECT HELD HOSTAGE BY GOT

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Reference ID Created Released Classification Origin
09TUNIS184 2009-03-30 17:25 2011-08-30 01:44 CONFIDENTIAL Embassy Tunis
VZCZCXYZ0000
OO RUEHWEB

DE RUEHTU #0184/01 0891725
ZNY CCCCC ZZH
O 301725Z MAR 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6133
INFO RUEHFR/AMEMBASSY PARIS IMMEDIATE 1950
RUEHRO/AMEMBASSY ROME IMMEDIATE 0798
C O N F I D E N T I A L TUNIS 000184 
 
SIPDIS 
 
PARIS AND ROME FOR ABMC 
 
E.O. 12958: DECL: 03/30/2019 
TAGS: PREL ABMC OFDP ODIP TS
SUBJECT: AMERICAN CEMETERY PROJECT HELD HOSTAGE BY GOT 
 
REF: TUNIS 182 
 
Classified By: Ambassador Robert F. Godec, Reason 1.5 (b) and (d) 
 
1.  (SBU) Summary:  The Government of Tunisia is holding a 
major improvement project at the North Africa Cemetery and 
Memorial financially hostage by denying a value added tax 
(VAT) exoneration request valued at 220,000 Tunisian Dinars 
(about $160,000) until the US Mission begins to deduct and 
report taxes to the Ministry of Finance.  Active lobbying to 
the contrary has not yet budged the GOT position. In the 
meantime, the contractor, under direct pressure from the 
Ministry of Finance, has announced its intention to stop work 
unless an exemption document is produced or VAT is paid. 
Unless the matter is resolved within the next two weeks, the 
contractor intends to stop work. We believe that the 
Department should include this issue as it addresses the tax 
issues faced by the American Cooperative School in Tunis 
(reftel).  A major difference between the two matters is that 
the cemetery is an integral part of the US Mission in Tunisia 
the status of which is not in doubt.  End Summary 
 
2.  (SBU) Last fall the Embassy submitted a routine VAT 
exemption request on behalf of the American Battle Monuments 
Commission (ABMC) involving an irrigation project valued 
approximately $1 million.  The VAT exemption is valued at 
220,000 Tunisian dinars (currently about $160,000).  The 
response from the Ministry, dated January 12 and received 
after an unusually long delay, granted the exemption provided 
that the Mission acquire a fiscal identification number and 
begin deducting and reporting incomes taxes of Embassy LES. 
In addition, Ministry of Finance officials informed us 
separately that they wanted the Embassy to deduct taxes from 
lease payments and to report the names of the landlords with 
whom we had negotiated the leases. 
 
3.  (SBU)  After consultation with L, the Mission responded 
on February 12 that we were unable to comply with the desires 
of the GOT since it impinged upon the Mission's rights and 
obligations under the Vienna Convention on Diplomatic 
Relations, that the Tunisians had no such obligations in the 
United States and that the United States did not carry out 
what the GOT was requesting in any other country.  The 
Embassy formally asked that the issue of VAT for ABMC be 
delinked from each other and that the VAT exoneration be 
granted in a normal fashion, especially given that the 
cemetery is an integral part of the US Mission in Tunisia. 
 
4.  (SBU) In a subsequent meeting between the DCM and the 
Director for Protocol at the MFA, the latter blamed the 
Ministry of Finance (MOF) for the situation, saying that MOF 
was attempting to crack down on various problems involving 
foreign missions and that Protocol was attempting to organize 
a high level meeting between MFA and MOF to break through the 
deadlock.  The Director of Protocol described the problem as 
resolvable but did not give a timeframe. 
 
5.  (SBU) The contractor hired by ABMC to undertake the 
irrigation project passed word that the MOF was planning an 
audit of its accounts, with particular emphasis on VAT 
matters.  The contractor has stated in a formal letter to 
ABMC that it will need to cease work unless ABMC provides a 
VAT exemption certificate or pays the VAT within the next two 
weeks. 
 
6.  (C) Earlier this month, the Ambassador wrote the Minister 
of Finance, asking for his direct intervention to resolve the 
issue.  There has been no reply.  The Ambassador has also 
discussed the cemetery tax issues with senior MFA officials 
on several occasions, mostly recently March 26 with MFA Chief 
Staff Mahmoud Khemiri and Special Assistant to the Foreign 
Minister Mehrez Ben Rhouma.  In that meeting, the Ambassador 
emphasized that the cemetery is an integral part of the US 
Embassy and has been since Tunisia's independence.  The 
character of the cemetery is "completely diplomatic," he 
emphasized.  The Ambassador noted that the United States does 
not withhold taxes from the paychecks of local employees. 
The conditions that the Finance Ministry is trying to impose, 
he said, are in violation with the Vienna Convention on 
Diplomatic Relations.  The Ambassador asked again that the 
GOT immediately issue the VAT exemption and stressed that 
failing to do would not be well received in Washington at the 
beginning of a new Administration.  It could also provoke a 
negative reaction in the Congress, he observed. 
 
7.  (C) Comment: This tax issue has reached the point where 
it will damage the operations of the cemetery and leave it 
looking in disrepair.  This is not how this consecrated 
ground should be treated and would be a major depature from 
the respectful and helpful attitude of the GOT since the site 
was completed in 1960 on land donated by the GOT under 
President Bourghiba.  We need to resist the current attempt 
to divide one piece of the Mission from the rest and 
emphasize the importance of the site to the United States. 
Coming in parallel with the American school issue, the events 
involving the cemetery raise once again the question of GOT 
motivations.  End Comment 
Godec