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OO RUEHWEB

DE RUEHC #4580 3382007
ZNR UUUUU ZZH
O 042006Z DEC 09
FM SECSTATE WASHDC
TO AMEMBASSY CAIRO IMMEDIATE 0000

UNCLAS STATE 124580 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG ETRD EG
SUBJECT: UNDER SECRETARY HORMATS, NOVEMBER 23, 2009 
MEETING WITH EGYPTIAN MINISTER OF TRADE AND INDUSTRY 
RACHID RACHID 
 
¶1.  (SBU) SUMMARY.  In an hour long meeting, Under Secretary 
for Economic, Energy and Agricultural Affairs Robert Hormats 
and Egyptian Minister of Trade and Industry Rachid Rachid 
discussed the global economic situation and its impact on 
Egypt.  Both agreed that it was important to ensure the 
strong bilateral relationship was reflected in strong 
business to business ties, as these gave the average citizen 
a stake in the relationship.  Minister Rachid asked for U/S 
Hormats' help with QIZ expansion to Upper Egypt, and 
Ambassador Shoukry raised G20 participation for Egypt.  U/S 
Hormats encouraged Rachid to engage with U.S. companies, 
including General Electric, on new technology and the 
development of wind and solar power, and possibly, finding 
the means to export solar power to Europe.  END SUMMARY. 
 
¶2. (U) Participants: 
 
U.S. 
Under Secretary Hormats 
Colleen Hyland, Special Assistant 
Katherine Allen (NEA Notetaker) 
 
EGYPT 
Minister Rachid 
Ambassador Sameh Shoukry 
Samiha Fawzy, Deputy Minister 
Ashraf El-Rabiey, Minister Plenipotentiary 
 
------------------------------ 
Global Macroeconomic Situation 
------------------------------ 
 
¶3.  (SBU) In discussing Egypt's continued growth, even during 
the global financial crisis, Minister Rachid credited major 
economic reforms accomplished over the last five years, which 
helped bring inflation under control in 2007-8 and paid off 
again during the recent crisis.  Rachid highlighted the 
construction sector's continued growth of 15 percent during 
the crisis, and he attributed this success in part to 
government stimulus projects in infrastructure and in part to 
a new housing law that increased the ease of building 
especially in rural areas. 
 
¶4.  (SBU) Rachid referenced his meetings with American CEOs 
in New York during the prior week and noted that many were 
worried about spending, consumption, and job creation.  U/S 
Hormats agreed, adding that relatively few companies were 
achieving robust top line revenue growth.  The health of the 
financial services sector was improving compared to several 
months ago, which was a good sign.  However, U/S Hormats did 
not expect that debt-burdened American consumers would return 
to previous levels of consumption in the near future. 
 
---------------- 
Renewable Energy 
---------------- 
 
¶5.  (SBU) U/S Hormats mentioned a recent meeting with General 
Electric (GE) CEO Jeff Immelt and observed that GE was very 
interested in solar energy projects in Egypt.  Rachid pointed 
out that Egypt had made a commitment that by 2020, Egypt 
would derive 20 percent of its energy consumption from 
renewable sources, both wind and solar.  One of the most 
efficient wind tunnels in the world, Rachid explained, was 
along the coast of the Red Sea, and Egypt was aggressively 
pursuing concessions from BP, Italian companies, and Egyptian 
companies. 
 
¶6.  (SBU) Rachid described solar as another potential source, 
but expressed some concern with the cost, which he said was 
three to four times higher than wind and four to five times 
higher than oil and gas.  He acknowledged solar power was 
gaining momentum, however, and that the Europeans were 
enthusiastic about drawing on North African solar power.  U/S 
Hormats encouraged Rachid on the project, noting that it was 
a means to decrease European dependence on Russian gas, and 
it could tie in with objective of the Copenhagen climate 
conference in December. 
 
¶7.  (SBU) Rachid expressed a strong interest in U.S. 
cooperation to help Egypt with new energy and environmental 
technologies.  Due to domestic energy consumption growing at 
10 percent annually, and similar trends with water, Rachid 
characterized efficiency and conservation as urgent needs for 
Egypt.  He hoped to work with the U.S. to develop a longer 
list of projects where the two countries could cooperate. 
 
--------------------------------- 
U.S.-Egyptian Business Engagement 
--------------------------------- 
 
¶8.  (SBU) U/S Hormats asked about the existing forums for 
bilateral discussions of energy and environmental projects. 
Rachid highlighted a new bilateral business council now 
formed with 15 members on the Egyptian side and 10-12 on the 
U.S. side so far.  Rachid did not mention U.S.-Egyptian 
efforts to develop a new framework for a bilateral trade 
dialogue. 
 
---------------------------------- 
Qualifying Industrial Zones (QIZs) 
---------------------------------- 
 
¶9.  (SBU) Rachid raised the issue of QIZs, emphasizing that 
the QIZ agreement had been a significant step in 
Egyptian-Israeli and Egyptian-U.S. relations, both 
politically and in terms of increasing trade volume.  Egypt 
wanted to extend the QIZ project to Upper Egypt to attract 
investment and reduce unemployment, which Rachid said was 15 
percent in Upper Egypt, reaching 20 percent in some areas. 
It would be good for the peace agreement, Rachid argued, if 
Egypt's bilateral relationships with Israel and the U.S. 
could be seen as key factors in developing the poor areas of 
Egypt.  Rachid also pointed out that the QIZ would complement 
major infrastructure improvements in Upper Egypt to 
facilitate development, including airports, natural gas 
lines, river transportation, and railway expansion.  Rachid 
asked for U/S Hormats' help with the expansion.  U/S Hormats 
appreciated the success of the QIZs to date and promised to 
take a hard look at the Egyptian proposal. 
 
¶10. (SBU) Rachid asserted that the additional zones would 
only add USD 100-200 million of textile exports to the U.S. 
over the next five years (above the current level of USD 900 
million).  Rachid said that the increase in Egyptian exports 
would not displace American jobs, but would primarily shift 
U.S. imports from China and Asia to the Middle East. 
 
--- 
G20 
--- 
 
¶11.  (SBU) As Rachid and U/S Hormats moved to end the 
meeting, Ambassador Shoukry raised the Egyptians' request to 
participate in the G20 and asked for U.S. support.  U/S 
Hormats relayed that the Secretary would soon send a letter 
on the issue, and that the United States recognized Egypt's 
importance in Africa and the Middle East.  The United States 
takes the request seriously, U/S Hormats said, but the issue 
was complex since the G20 already included more than 20 
countries.  U/S Hormats concluded that he saw a definite need 
to build the bilateral relationship for economic, political, 
and strategic reasons, and agreed with Rachid that it was 
important to develop economic ties as these gave the average 
citizen a stake in the relationship. 
CLINTON