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Cablegate: Algerian Business Group Lobbying for Maghreb

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DE RUEHAS #0157/01 0421622
ZNR UUUUU ZZH
R 111622Z FEB 08
FM AMEMBASSY ALGIERS
TO RUEHC/SECSTATE WASHDC 5252
INFO RUEHMD/AMEMBASSY MADRID 8800
RUEHNK/AMEMBASSY NOUAKCHOTT 6220
RUEHFR/AMEMBASSY PARIS 2545
RUEHRB/AMEMBASSY RABAT 2163
RUEHTU/AMEMBASSY TUNIS 7015
RUEHCL/AMCONSUL CASABLANCA 3252
RUEPGBA/CDR USEUCOM INTEL VAIHINGEN GE

UNCLAS ALGIERS 000157

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON PREL AG MO TS
SUBJECT: ALGERIAN BUSINESS GROUP LOBBYING FOR MAGHREB
INTEGRATION

1. (SBU) Summary: The often outspoken head of a prominent
Algerian business association told Ambassador January 13 that
together with other North African business leaders he is
lobbying for the Maghreb governments to take steps promptly
to enable Maghreb economic integration. The business leaders
developed an action plan last November that includes a public
awareness campaign about the benefits of a Maghreb-wide
market as well as the establishment of a business information
center for Maghreb businesses and perhaps even of a
private/public Maghreb bank to help finance projects. The
businessman noted that the Algerian government is moving
forward on bilateral trade liberalization agreements with
Tunisia, Mauritania and Libya but not Morocco because of
political sensitivities. He and his business association
think this is a mistake. He welcomed our help with a public
awareness campaign highlighting the benefits of an integrated
market in the Maghreb, perhaps by sharing the experience of
NAFTA. End Summary.

2. (SBU) Boualem M'rakach, the President of the Algerian
Business Owners Association (in French, CAP) told us that a
group of business associations is trying to lobby the five
Maghreb governments to dismantle barriers and enable economic
integration. M'rakach said the CAP has agreed on an action
plan with Hedi Djilani of the Tunisian Industry, Trade and
Crafts Union (in French, UTICA), El Alami Moulay Hafid of the
General Confederation of Moroccan Businesses (CGEM), Shaban
Ibrahim alMuntaser of the Libyan Businessmen's Council (CPL)
and Mohamed Ould Bettah of the Mauritanian National Business
Owners Confederation (CNPM). These five business
associations have joined into a multinational association
called the Maghreb Employers Union that is to establish an
office in Algiers, M'rakach said. The first president of the
Maghreb Employers Union (UME) is to be Hedi Djilani.

3. (SBU) M'rakach said the UME leaders last met in Tunis
November 28-29 and focused their discussions on how to
attract more foreign investment. (He asserted that the
Moroccan delegation was disappointed at the scale of direct
foreign investment into Morocco, but he said the Algerian
team bemoaned the dearth of foreign investment in Algeria.)
The business leaders are quietly lobbying for a new Maghreb
bank to be established, but M'Rakach said the Algerian
Finance Minister is not, so far, sympathetic. The UME
leaders also agreed to organize a fund to finance feasibility
studies.

4. (SBU) In a communique issued at the end of the November
28-29 meetings, the five associations together as the UME
called for the five governments to take steps such as the
following to promote private investment and enable regional
economic integration:

-- reducing red tape in establishing businesses and
setting up a one-stop shop for Maghreb investors' projects;
-- introducing new technologies for the preparation of
administrative paperwork;
-- removing all barriers to capital flows within the
Arab Maghreb Union;
-- ensuring business laws in the five countries are
compatible;
-- simplifying tax codes;
-- improving the laws governing the labor markets;
-- establishing a Maghreb business arbitration center;
-- establishing industrial zones along borders.

5. (SBU) M'Rakach noted that January 13-14 a Tunisian
delegation had visited Algiers to promote a bilateral
economic agreement that would reduce barriers to goods and
investment flows. Algeria, he observed, already had similar
agreements with Mauritania and Libya. Ambassador asked how,
if the politics were ever right, Algeria would go from a
series of bilateral agreements to a broader
regional deal. M'Rakach said the only real challenge was the
Algeria-Morocco relationship, but even there both Algerian
and Moroccan businessmen wanted trade and investment barriers
to come down. Moroccan banks and insurance companies, he
claimed, want to invest in Algeria. (Comment: the Moroccan
ambassador told Ambassador in early December that a
delegation of Moroccan bankers had visited in Algeria and
were looking at establishing small bank offices here. End
Comment.) M'Rakach quickly admitted that the Western Sahara
dispute is a huge impediment between Morocco and Algeria. In
the end, he concluded, the two countries should learn to

develop business relations and isolate the Western Sahara
dispute from commercial relations. He was strongly in favor
of opening the border.

6. (SBU) M'Rakach said the five associations met with
Murilo Portugal, Deputy Managing Director of the IMF, during
their November 28-29 meetings in Tunisia. M'Rakach said the
Maghreb Employers Union hopes to secure some financial help
from the IMF for its plans to promote investment in the
Maghreb and establish at least one Maghreb-wide business
center. Ambassador noted that this seemed well outside the
normal IMF role of balance of payments support. Ambassador
observed that the kinds of microeconomic reforms the UME had
in mind seemed closer to the kind of issues the World Bank
addresses. M'Rakach acknowledged that the UME had had no
contacts with the World Bank. (Comment: As we reported
reftel, the IBRD withdrew its resrep late in 2007. We'll
link up M'Rakach with the IFC representative here at least.
End Comment.) M'Rakach noted that the UME hopes to develop a
more detailed set of recommendations to present to the
Maghreb ministers and central bank governors gathering for
the spring 2008 IMF/IBRD meeting.

7. (SBU) M'Rakach showed Ambassador the approved action
plan that also includes organizing a forum to tout the
benefits of Maghreb regional integration and bring together
businessmen to talk about investment projects. M'Rakach said
it was essential in Algeria to highlight the economic
benefits of regional integration to move government officials
who are more focused on the Western Sahara dispute. He said
presentations by experts who could talk about the NAFTA or EU
experiences of regional economic integration would be very
helpful in highlighting the benefits and changing the lexicon
of Maghreb integration from political disputes to business
and investment. (There is no time planned for such a
conference but he would like to see it organized in 2008.)

8. (SBU) COMMENT: M'Rakach is one of the more outspoken
business association leaders in Algiers. Under his
direction, the CAP published a detailed assessment of the
2007 Algerian government budget which included criticisms of
some government policies. M'Rakach has been particularly
critical of GoA policies to bail out flailing state-owned
enterprises. He clearly views lobbying for change to be one
of his Algerian association's main functions, and he thinks
the UME can and should do the same. The Algerian Prime
Minister met the UME leaders in September 2007, but M'Rakach
said there is still very far
to go in convincing the Algerian authorities to move forward
in practical ways on regional integration. Finding ways to
help associations lobby for prompt steps towards building a
Maghreb-wide market would help our own long-term interest in
Maghreb economic growth and stability.


FORD

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