VZCZCXRO6221
PP RUEHTRO
DE RUEHTU #0783/01 2941711
ZNR UUUUU ZZH
P 211711Z OCT 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 6903
INFO RUCNMGH/MAGHREB COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 TUNIS 000783 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT PLEASE PASS USTR AND PEACE CORPS 
COMMERCE FOR ITA/NATE MASON 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON EAIR PREL TS
SUBJECT: TUNISIAN MINISTER OF DEVELOPMENT WANTS TO REVIVE 
TIFA TALKS, CLAIMS OPEN SKIES ARE ON THE HORIZON, DISCUSSES 
ECONOMIC TRANSFORMATION AND CHALLENGES 
 
REF: A. 08 TUNIS 296 
     ¶B. 08 TUNIS 293 
 
Sensitive but unclassified.  Please protect accordingly. 
 
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Summary 
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¶1. (SBU) During an October 19 introductory call, Minister of 
Development and International Cooperation Mohammed Jouini 
told the Ambassador he lamented the loss of momentum in the 
bilateral economic dialogue since the promising TIFA Council 
meetings in March of 2008 and hoped to see the process 
reinvigorated.  Jouini also claimed President Ben Ali had 
taken a decision that would pave the way for conclusion of 
open skies agreements with the U.S. and other countries in 
the near future.  Jouini also discussed GOT efforts to 
advance structural transformation, noting Tunisia was making 
progress in liberalizing its services sector - a key aspect 
of its strategy to combat unemployment.  End summary. 
 
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Restart TIFA 
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¶2. (SBU) Welcoming the Ambassador to Tunis, Jouini said he 
hoped the coming years would see a reinvigoration and upgrade 
of the bilateral economic dialogue.  Jouini specifically 
regretted the loss of momentum follwing a promising set of 
TIFA Council meetings in March 2008.  Working groups 
established to focus on several sectors petered out and the 
process became ad-hoc, the Minister claimed.  Both sides 
gradually lost sight of the framework envisioned in March of 
2008, and the process faded away.  Now is the time to revive 
it, Jouini asserted.  (Comment: In fact, after a promising 
start at the TIFA Council talks, the GOT rather abruptly 
reverted to radio silence, largely unbroken until this 
meeting.  End comment.) 
 
¶3. (SBU) The Ambassador underlined that the USG would like to 
move forward with the framework discussed in March of 2008 
and was ready to reengage and reinvigorate the TIFA process. 
As in many other aspects of our bilateral cooperation, the 
amount of progress we can make will be proportional to the 
quality of our working-level contacts.  The early November 
visit by the Tunisia desk officer would provide a good 
opportunity for the U.S. side to sit down with Tunisian 
counterparts and identify means to get the TIFA process up 
and running again.  Jouini welcomed the idea, said he hoped 
the two sides could develop a work plan for 2010, and 
designated his Director-General for Bilateral Cooperation and 
a Director charged with handling cooperation with the U.S. as 
points of contact. 
 
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Open Skies 
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¶4. (SBU) Shifting gears, the Ambassador noted that the U.S. 
was interested in concluding an open skies agreement with 
Tunisia and had forwarded for consideration a revised draft 
agreement to the Ministry of Foreign Affairs on September 14. 
 Jouini indicated that he supported such an agreement and 
predicted that it would come to fruition within two years. 
The Minister pointed to October 11 remarks made by President 
Ben Ali as he launched his reelection campaign, in which he 
pledged to promote liberalization of the civil aviation 
sector.  The Ambassador said this was good news and looked 
forward to hearing specific Tunisian reactions to the draft 
agreement the U.S. had presented. 
 
 
---------------- 
Financial Crisis 
---------------- 
 
¶5. (SBU) Jouini devoted much of the meeting to outlining his 
view of Tunisia's economic challenges and its efforts to 
transform and modernize the economy.  The impact of the 
Global financial crisis has been relatively mild in Tunisia, 
but, with up to 1/3 of the economy directly linked to foreign 
trade, the country was not immune to such global shocks. 
Tourism receipts had not grown in 2008-09, but neither had 
the fallen, putting the country on a better footing than 
tourism-dependent neighbors such as Egypt and Morocco. 
 
TUNIS 00000783  002.2 OF 003 
 
 
 
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Unemployment 
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¶6. (SBU) Tunisia needs to maintain high GDP growth so that 
the job market can keep pace with new job seekers in the 
population (growing at 1 percent annually), Jouini noted, 
hoping the country would reattain 6 percent growth in 2010. 
The unemployment challenge, while difficult, is not as bleak 
as some believe, Jouini observed.  63-65 percent of new job 
market entrants find work within one year, he noted, and 80 
percent are employed within two years.  The GOT is also 
"putting mechanisms in place" to assist the remainder o 
long-term unemployed youth, Jouini added. 
 
¶7. (SBU) Investments in education were key to retaining 
Tunisia's comparative advantage in human capital and 
increasing the country's potential as a destination for 
foreign direct investment, Jouini underlined.  The education 
system was itself strained by exploding demand - there are 
about 400 thousand Tunisians enrolled in universities today 
as opposed to 120 thousand just ten years ago, he noted.  The 
growth of student enrollment is attributable both to 
population growth and to a policy of relaxation of admissions 
standards in order to extend educational opportunities as 
widely as possible, Jouini said. 
 
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Structural Transformation 
------------------------- 
 
 
¶8. (SBU) The Ambassador mentioned new bilateral cooperation 
programs currently in development by the U.S. Department of 
Commerce's Commercial Law Development Program that would 
increase exchanges between U.S. and Tunisian scientists and 
engineers, and a program that would offer technical 
assistance as the GOT implements its new law on franchises, 
as well as a MEPI grant to promote entrepreneurship being 
designed by the U.S. Small Business Administration.  Jouini 
welcomed all of these initiatives, noting they fit in with 
Tunisia's objective of overhauling and restructuring its 
service sector. 
 
¶9. (SBU) Tunisia has a long and proud tradition of vibrant 
small businesses, Jouini noted, a constituency that has long 
resisted efforts to liberalize the service sector.  Such 
opposition paralleled resistance a decade earlier to 
liberalization of manufacturing, Jouini observed, while today 
no one disputes that this was the only rational course. 
There is today growing acceptance of liberalization of 
services as well, Jouini believed, and there is great 
potential for growth in the areas of transportation, finance, 
health care, and retailing. 
 
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Peace Corps 
----------- 
 
¶10. (SBU) Toward the meeting's close, the Ambassador asked 
Jouini for his sense of whether the GOT might be receptive to 
reestablishing a Peace Corps program in Tunisia.  Tunisia had 
"graduated" from the Peace Corps and USAID programs in the 
1990s, but some today believe ending the Peace Corps program 
in Tunisia was short sighted.  Jouini regretted that the U.S. 
had in the 1990s disengaged from many useful bilateral 
assistance activities and many opportunities had been lost in 
the process.  Jouni said he was unable to offer a definitive 
GOT view on a potential return of the Peace Corps but 
suggested that the idea be broached in the context of a 
broader cooperative framework rather than as a stand alone 
proposal. 
 
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Comment 
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¶11. (SBU) The GOT's abrupt and mainly unilateral 
disengagement from the TIFA process following the promising 
2008 TIFA Council meetings remains mysterious to us and leads 
us to take with a grain of salt Jouini's comments about 
reinvigorating the process.  We will nonetheless test the 
GOT's seriousness in the coming weeks and keep Washington 
agencies advised of developments.  End comment. 
 
 
TUNIS 00000783  003 OF 003 
 
 
GRAY