VZCZCXYZ0006
RR RUEHWEB

DE RUEHEG #1749/01 2530843
ZNR UUUUU ZZH
R 100843Z SEP 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 3566
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS CAIRO 001749 
 
SIPDIS 
 
STATE FOR NEA/ELA 
 
E.O. 12958:  N/A 
TAGS: ECON EINV EFIN ETRD EAGR ENRG PGOV EG
SUBJECT: EGYPT'S ECONOMY: September 10 PRESS ROUND-UP 
 
¶1. (U) The following are notable economic news stories that appeared 
over the past week in the Egyptian press: 
 
--------------------------------------------- -- 
Preparing for Free Trade Negotiations with MERCOSUR 
--------------------------------------------- -- 
 
¶2. (U) Minister of Trade and Industry Rachid Mohamed Rachid affirmed 
Egypt's commitment to conclude a free trade agreement with Southern 
Common Market (MERCOSUR) countries, including Argentina, Brazil, 
Paraguay and Uruguay. This development came during a meeting held by 
the Minister on August 31 with MERCOSUR countries' ambassadors in 
Cairo. Rachid stated that MERCOSUR is considered the largest 
industrial and economic group in Latin America, and the fourth 
largest economic group in the world. An  agreement would pave the 
way for a large increase in the volume of trade between Egypt and 
the MERCOSUR countries (Al Ahram, 9/1/2009). 
 
--------------------------------------------- ----- 
Debate over the Location of Egypt's First Nuclear Plant 
--------------------------------------------- ----- 
 
¶3. (U) Scientists, engineers and businessmen disagree on the best 
location for Egypt's first nuclear power plant. On August 30, 
several nuclear scientists and engineers requested that President 
Hosni Mubarak intervene to stop the businessmen, who are involved in 
Egypt's tourism sector, from trying to take El Dabaa area (located 
in the northwest) away from the Nuclear Power Plants Authority 
(NPPA). Previous media accounts have stated El Dabaa is not a 
suitable location for a nuclear power plant and should instead be 
designated for business and tourism projects. On August 31, Yassen 
Ibrahim, the Chairman of NPPA, indicated that 70% of the site 
selection studies required by Australian consultant Worley Parsons 
have been completed.  He added that El Dabaa remains the best place 
for the power plant. If the site location is changed, the project 
would be delayed for more than three years. Tourism experts and 
businessmen such as Ibrahim Kamel, the chairman of KATO Investment 
(one of Egypt's large private companies with manufacturing, 
aerospace, real estate, tourism, and banking interests) noted that 
establishing tourism projects in this North Coast area would be more 
profitable than building a nuclear power plant. Fouad Sultan, former 
Minister of Tourism, explained that the choice of El Dabaa as the 
location for the first nuclear power plant was made 20 years ago, 
and that it is no longer feasible because of the increase in tourism 
in the area (Al Masry Al Youm, 8/31/2009, Al Ahali, 9/2/2009, Al 
Alam Al Youm, 9/2/2009). 
 
--------------------------------------- 
Suspending the Asset Management Program 
--------------------------------------- 
 
¶4. (U) The Ministry of Investment (MoI) is considering suspending 
its asset management program - a GoE administered plan where public 
companies would be sold but the government would retain a two-third 
stake in strategic companies such as aluminum, cement, 
pharmaceuticals, and fertilizers. In its place, the government would 
introduce a new system called "privatization derivatives". The 
derivatives include limited privatization, such as leasing and 
partially-selling assets and divesting from joint venture companies 
but do not involve selling off entire public companies. The MoI has 
already started using the privatization derivatives system in the 
business sector. Sources indicated the decision to suspend the sale 
of entire companies was not carefully studied. Media accounts also 
pointed out that the Minister of Investment still believes in the 
importance of having the asset management program, despite the need 
to privatize a significant number of public companies. 
Al Masry Al Youm, 8/31/2009). 
 
 
 
--------------------------- 
Oil Spill in the Suez Canal 
--------------------------- 
 
¶5. (U) On August 28, a Panama-flagged oil tanker broke in two as it 
traveled through the Red Sea Canal, spilling 60 tons of fuel.  The 
tanker was headed to the Suez Canal for maintenance work and was 
only carrying the 60 tons for its own usage.  By September 1, the 
Suez Canal Authority had towed the stricken tanker away from the 
southern entrance to the Suez Canal; normal shipping was not 
disrupted.  Ahmed Fadel, Chairman of the Suez Canal Authority, said 
the ship did not severely pollute the area and was towed away from 
other ship moorings (All local newspapers, 8/28/2009, 9/2/2009). 
 
------------------------------------ 
Egyptian Natural Gas Goes to Lebanon 
------------------------------------ 
 
¶6. (U) On August 31, Sameh Fahmy, Minister of Petroleum, announced 
that Lebanon will begin receiving Egyptian natural gas through the 
Arab pipeline next month. He added that the gas would be exported to 
Lebanon via Syria in a pilot program on September 8 and will start 
pumping commercial quantities on September 15. The Lebanese Minister 
of Energy Alan Taparian indicated in May 2009 that Lebanon will 
receive 30 million cubic feet of natural gas via the Arab pipeline 
(Al Ahram, 9/2/2009). 
 
--------------------------------------------- --- 
GASC Imposes Strict Wheat Quality Specifications 
--------------------------------------------- --- 
 
¶7. (U) The General Authority for Supply Commodities (GASC) announced 
that it imposed strict quality specifications for its wheat 
purchases. GASC Vice Chairman Nomani Nomani stated that GASC 
increased the test weight requirement for US wheat from 58 lb/bushel 
to 58.5 lb/bushel and its minimum protein content requirement by 0.5 
percent to 9.5 percent. Nomani affirmed that these are normal 
procedure so that US origin specifications would match the 
specifications of wheat of other countries. He pointed out that 
Egypt requires a minimum protein content of 11.5 percent for Russian 
wheat and 11 percent for French wheat. GASC also spelt out a maximum 
cadmium and lead content of 0.2 percent and set pesticide and 
fumigation residues at a maximum of 0.1 percent for wheat of all 
origins. The new tender terms also state that bids should reflect 
the rules and regulations of Egyptian's quarantine services. The 
debate in Egypt over wheat quality became politically heated after 
the government rejected two Russian wheat shipments earlier this 
year over quality concerns (Al Masry Al Youm, 9/3/2009). 
 
Scobey