VZCZCXYZ0000
PP RUEHWEB

DE RUEHTU #0022 0140848
ZNR UUUUU ZZH
P 140848Z JAN 10
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 7139
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHDC

UNCLAS TUNIS 000022 
 
SENSITIVE 
SIPDIS 
 
FOR EEB, NEA/MAG, AND AF/EPS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN XA TS
SUBJECT: NOBEL LAUREATE JOSEPH STIGLITZ OFFERS GRIM 
ECONOMIC FORECAST 
 
Sensitive but Unclassified; please protect accordingly. 
 
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Summary 
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¶1. (SBU) During a visit hosted by the African Development 
Bank (AfDB), 2001 Nobel laureate Joseph Stiglitz gave a 
speech and met with Tunisian policymakers.  He offered a 
pessimistic view of the prospects for global economic 
recovery in 2010 and suggested that the global recession may 
last through 2012.  He criticized the economic policies that 
he said were responsible for causing the crisis and offered a 
post-crisis economic strategy for Africa.  Tunisian 
policymakers, in their meetings with Stiglitz, did not seek 
policy advice but rather questioned him on how long the 
crisis might endure.  End summary. 
 
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A Blistering Critique, with Lessons for Africa 
--------------------------------------------- - 
 
¶2. (U) Columbia University Professor Joseph Stiglitz visited 
Tunisia at the invitation of the AfDB to give a presentation 
on "Post-Financial Crisis:  Options for Africa."  Speaking on 
January 11 to a large and enthusiastic audience of AfDB 
staff, diplomats, business leaders, journalists, and others, 
Stiglitz delivered a broad attack on free-market economic 
policies and called for a renewed role for state intervention 
to prevent further crises.  Stiglitz said that in loosening 
regulations on the U.S. financial sector, the Federal Reserve 
allowed lenders to prey on the ignorance of mortgage 
borrowers and, through securitization, pass the risk of 
sub-prime mortgages on to the global financial system.  He 
concluded that "unfettered markets are not self-correcting, 
not necessarily stable, and not efficient." 
 
¶3. (U) Stiglitz outlined a response for Africa based on 
diversification, innovation, and preparation and led by the 
so-called "Developmental State."  He urged Africa to look to 
Asia as both a market and a source of investment, and to 
diversify its income base away from commodities through 
government-led innovation and strategic investment, 
particularly in agriculture and natural resource management. 
Looking forward, he advised African policymakers to reduce 
their exposure to risk through a careful approach to 
liberalization and to increase their capacity to respond to 
crises by building up reserves.  A summary of Stiglitz's 
presentation is available at www.afdb.org. 
 
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Tunisian Policymakers Confident but Impatient 
--------------------------------------------- 
 
¶4. (SBU) After his AfDB talk, Stiglitz went on to meet with 
Tunisian Prime Minister Mohamed Ghannouchi, Defense Minister 
Kamel Morjane, and Minister of Development and International 
Cooperation Mohamed Jouini.  His January 12 speech to GOT 
representatives, hosted by the National Defense Institute, 
was characterized by the state-run newspaper La Presse as an 
"homage to Tunisia's preventive strategy against the crisis." 
 Stiglitz told Econoff that in private meetings, GOT 
officials described their success in avoiding the worst 
effects of the crisis through capital controls and 
counter-cyclical spending.  They did not pose questions to 
help shape GOT policy, but rather asked Stiglitz how long he 
expected the recession to last. 
 
GRAY