VZCZCXYZ0011
PP RUEHWEB

DE RUEHTU #0221/01 0981343
ZNR UUUUU ZZH
P 081343Z APR 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 6184
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEHAD/AMEMBASSY ABU DHABI PRIORITY 0985
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0113
RUCNMGH/MAGHREB COLLECTIVE

UNCLAS TUNIS 000221 
 
SENSITVE 
SIPDIS 
 
STATE FOR EEB/CBA (WINSTEAD AND GILMAN, AND 
NEA/MAG (PATTERSON AND HAYES) 
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD) 
USDOC FOR ITA/MAC/ONE (MASON), ADVOCACY CTR (TABINE), AND 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 ETRD EINV ETTC EMIN TS
SUBJECT: TUNISIA: ECONOMIC HIGHLIGHTS 
 
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Summary 
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¶1. (U) This cable contains highlights of recent economic 
developments in Tunisia on the following topics: 
 
¶A. Tunisia and Algeria Trade Agreement 
¶B. Gulf Investments 
¶C. Europe Submarine Internet Cable Deal 
¶D. Indian Company Fertilizer Plant 
¶E. Unemployment Increase 
 
--------------------------------------------- -------- 
Tunisia and Algeria Sign Preferential Trade Agreement 
--------------------------------------------- -------- 
 
¶2. (U) On March 25, the Tunisian Parliament ratified a bilateral 
preferential trade agreement with Algeria.  The agreement is 
intended to develop trade and facilitate bilateral investment.  It 
provides duty free access for industrial goods but excludes 
agricultural products, for which negotiations have been postponed 
until 2014.  The GOT and Algeria are paving the way for a free trade 
zone, which would be Tunisia's third FTA with a Maghreb country 
(following Libya, signed June 14, 2001 and Morocco, signed March 16, 
1999). 
 
¶3. (SBU) An FTA with Algeria would likely boost Tunisian business 
presence in Algeria.  According to Tunisian business contacts, there 
are already over thirty Tunisian companies operating there in the 
manufacturing sector alone.  They include cookie producer Sotuba, 
chemical company Alkimia, Carthago Ceramic, Tunisian Profile 
Aluminum, and Altea Packaging Group, among others.  The services 
sector also has significant Tunisian presence, especially business 
services and banking.  According to the media, the Tunisian Amen 
Bank will soon establish a subsidiary in Algeria with a capital of 
TND 50 million (US $36.3 million), of which 55 percent will be held 
by the Tunisian bank. 
 
--------------------------------------- 
Gulf Investments - Some Up, Others Down 
--------------------------------------- 
 
¶4. (SBU) The Gate of the Mediterranean project, a new US $25 billion 
construction development that Sama Dubai, a subsidiary of Dubai 
Holding Group, was expected to build on the Tunis South Lake shores, 
appears to have stopped in its tracks.  In March, local media 
reported that Sama Dubai and one of its joint venture partners, 
British company EC Harris, decided to disband.  Sama Dubai's other 
Tunisian entity, Med Gate Development, was not officially closed but 
is not showing any signs of life.  According to an economic analyst, 
Sama Dubai's operations in Morocco are also halted, and the 
likelihood that the project will continue in view of the global 
economic crisis is low. 
 
¶5. (U) Conversely, the Abu Dhabi National Energy Company, TAQA, is 
currently in the planning stages of construction of a 350-500 
megawatt combined cycle gas power plant in Bizerte (northern 
Tunisia).  Despite the waning state of other Gulf investments, 
TAQA's MENA Region Manager Majid Iraqui is quoted in the press as 
saying that his company has enough surplus cash to finance the 
equity component of this year's planned projects.  TAQA is also 
planning to develop projects in Morocco. 
 
-------------------------------------------- 
Tunisia-Europe Submarine Internet Cable Deal 
-------------------------------------------- 
 
¶6. (U) On March 26, Tunisie Telecom signed a contract with Interoute 
Communications, a fiber optic network company based in London, to 
lay submarine cable linking North Africa to Interoute's pan-European 
fiber optic network.  The cable, due to connect in Sicily in 
October, would give Tunisia ownership over the entirety of its 
internet traffic grid, which now relies on consortium-owned subsea 
cables such as SEAMEWE 4.  The project will be comprised of 170 km 
of unrepeated fiber optic cable run from Kelibia, to Interoute's 
landing station in Mazara del Vallo, Sicily.  From Sicily the cable 
will link into 24 networked countries and offer 3.2 Tera-bits Per 
Second of capacity. 
 
¶7. (SBU) Tunisia Telecom and Interoute have signed deals in the 
past, and Dubai Holding owns shares in both companies.  In 2007, 
Tunisie Telecom finalized a deal with Interoute to provide two-way 
SDH connectivity and VoIP services from any location in Tunisia to 
any port on Interoute's entire Next Generation network.  Although 
Interoute's majority shareholder is the Sandoz family Foundation, 
based in Switzerland, Dubai Holding invested 125 milion Euro (US 
$156 million) in Interoute at the end of 2005.  Dubai Holding then 
acquired Tunisie Telecom on March 2006 for US $2.25 billion. 
 
¶8. (SBU) Note:  The new cable will allow simultaneous streaming of 4 
million videos.  End Note. 
 
---------------------------------------- 
Indian Company to Build Fertilizer Plant 
---------------------------------------- 
 
¶9. (U)  On March 24, the Tunisian-Indian Fertilizers Company (TIFC), 
the Islamic Development Bank and the European Investment Bank signed 
a US $316 million loan agreement to finance the TIFC chemicals 
production unit project, located in Skhira (southeastern Tunisia). 
The agreement involves two state-owned Tunisian companies (Compagnie 
des Phosphates de GAFSA) and Groupe Chimique Tunisien), and two 
Indian partners (Coromandel Fertilizers Ltd and Gujarat State 
Fertilizers and Chemicals Ltd.), who will extract phosphate rock, 
process it into fertilizer, and sell it in India over the next 30 
years. 
 
¶10. (U) The project's goal is to construct and operate a phosphoric 
acid production plant with a capacity of 360,000 metric tons per 
year.  Currently, Tunisia produces approximately 1 million metric 
tons of phosphoric acid per year.  All production will be exported 
to India through long-term purchasing contracts signed by the two 
Indian project partners, who will supply their fertilizer plants 
with the product.  The new plant will be established alongside an 
existing phosphoric acid plant in Skhira.  The project is expected 
to generate substantial export earnings, tax revenues and employment 
for the region. 
 
-------------------------------------------- 
GOT Says Unemployment Increased 0.17 Percent 
-------------------------------------------- 
 
¶11. (U) According to official figures released by the Central Bank, 
unemployment increased 0.17 percent year on year from 2007 to 2008, 
reaching an overall rate of 14.2 percent. 
 
¶12. (SBU) Comment: The GOT has traditionally been reluctant to 
unveil detailed figures about unemployment.  However, given the 
visible effects of the international economic crisis, it may have 
calculated that it was best to release this information, which is 
likely a significant under-estimate.  End comment. 
 
GODEC