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Cablegate: American Business Interest in Southern Sudan

VZCZCXRO3491
RR RUEHDU RUEHGI
DE RUEHNR #1049/01 1121353
ZNR UUUUU ZZH
R 211353Z APR 08
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC 5551
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHDS/AMEMBASSY ADDIS ABABA 0055
RUEHAE/AMEMBASSY ASMARA 5060
RUEHGI/AMEMBASSY BANGUI 0010
RUEHJB/AMEMBASSY BUJUMBURA 0347
RUEHDR/AMEMBASSY DAR ES SALAAM 5944
RUEHDJ/AMEMBASSY DJIBOUTI 5242
RUEHKM/AMEMBASSY KAMPALA 2775
RUEHKH/AMEMBASSY KHARTOUM 2021
RUEHLGB/AMEMBASSY KIGALI 5065
RUEHKI/AMEMBASSY KINSHASA 1941
RUEHNJ/AMEMBASSY NDJAMENA 0315
RUEHDU/AMCONSUL DURBAN 0165

UNCLAS SECTION 01 OF 03 NAIROBI 001049

SIPDIS

KHARTOUM PLEASE PASS TO CONSULATE JUBA

STATE FOR EEB/CBA DENNIS WINSTEAD AND AF/SPG PAMELA FIERST

STATE ALSO FOR AF/E AND AF/EPS

STATE PLEASE PASS USTR WILLIAM JACKSON

TREASURY FOR VIRGINIA BRANDON

PLEASE PASS USAID/AFR/EA

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON EFIN BEXP ETRD EINV SU KE
SUBJECT: AMERICAN BUSINESS INTEREST IN SOUTHERN SUDAN

REF: STATE 35331 NOTAL

SENSITIVE BUT UNCLASSIFIED. FOR INTERNAL USG DISSEMINATION ONLY.
CONTAINS PROPRIETARY INFORMATION.

PLEASE PROTECT ACCORDINGLY.

1. (SBU) This cable responds to reftel request to gauge sentiment
in the Kenya-based U.S. business community with regard to doing
business in Southern Sudan and likely participation in a suggested
USG-organized trade mission to Juba. In Kenya, the response of U.S.
companies is mixed: Most are keenly interested in doing business in
Southern Sudan, but all continue to perceive a lack of clarity in
the U.S. sanctions regime for Sudan as a stumbling block for their
greater participation in the Southern Sudan market. Managing area
directors of major companies like General Motors and Coca-Cola have
informed the Ambassador and FCS Counselor that they will await
approval from their corporate headquarters before venturing into the
Southern Sudan market. End summary.

2. (U) Shortly after Ambassador Ranneberger arrived in Nairobi in
August 2006, the president and board of the American Chamber of
Commerce of Kenya (ACCK) told him that among the Chamber's top three
priorities was entering the Southern Sudan market. However,
representatives of American firms located in Nairobi say they have
generally refrained from doing business in Sudan because USG
sanctions policy remains unclear to them and they fear inadvertent
violations.

-----------------------
Definite Interest . . .
-----------------------

3. (SBU) ACCK board member Steven Smith, who is CEO of Eveready
East Africa, the national chairman of both the Kenya Association of
Manufacturers (KAM) and Kenya Private Sector Alliance (KEPSA), and a
leading member of the East African Business Council (EABC), said
April 16 that he and other American business leaders in the region
remain very interested in Southern Sudan. However, Smith said they
have been hesitant to enter what they evaluate would be a promising
market because of "mixed signals" from the State Department.
"There's a lot of confusion coming from the State Department," he
contended, "on how we can do business in Southern Sudan. There
remain too many uncertainties. As a result, our legal departments
are telling us to go slowly. My own counsel instructs me to 'make
sure you know whom you're doing business with' before making any
moves into Southern Sudan."

-------------------------
. . .But Need for Clarity
-------------------------

4. (SBU) Smith emphasized that there is a "need for clarity" with
respect to U.S. policy. Once American corporations like General
Motors and Coca-Cola know the ground rules, Smith predicted they
will swiftly enter the Southern Sudan market. With the current
sanctions policy, Americans are locked out. As a result, Smith
said, the Southern Sudanese market is dominated by the Chinese,
French, and Arabs. Significant market share is being unnecessarily
lost, in his estimation.

5. (SBU) ACCK President Dr. Nelson Githinji, who is head of
corporate and governmental relations for Coca-Cola East and Central
Africa, repeated much the same comments that there is a need for the

NAIROBI 00001049 002 OF 003


U.S. to "spell things out clearly." Until then, Coke will continue
to refrain from entering Sudan as a whole even though the company
"absolutely sees Southern Sudan as a potential major market."
Similar views were expressed by Pfizer East and Central Africa
General Manager Mahmoud A. Mohamed and Sara Lee Kenya Managing
Director Eric Odipo. The Sara Lee executive said the company would
enter Southern Sudan despite its lack of infrastructure and the
absence of any supermarket or grocery store chain. To do business
there, he conceded, would require partnering with reliable traders
and kiosk operators. These handicaps aside, Sara Lee believes its
product line-up of shoe polishes, fragrances, cosmetics, and
skin-toning creams would attract Sudanese consumers.

6. (SBU) GE Africa Region President Yibrah Tesfazghi contended an
overhaul of U.S. sanctions policy on Sudan, and not just Southern
Sudan, is long overdue. The policy has not convinced Khartoum to
ameliorate its hard-line policies, much less resulted in regime
change. All the policy has accomplished, in his view, is keeping
American firms like GE from doing business in Southern Sudan. "I've
been working on this issue since 2005," Tesfazghi remarked with
obvious exasperation. "There are 'wide-open spaces' for us and
other American companies to enter, provided the policy is amended
and we get cleared access. It would be great news to GE if the
sanctions policy is loosened."

7. (SBU) Asked about GE prospects in Southern Sudan, Tesfazghi said
there are opportunities in energy and water projects, road and
railway construction, and "security products." He spoken excitedly
about GE's vision of a railway system connecting Kenya, Uganda, and
Southern Sudan. He claimed these ventures have been stymied by USG
policy. (Note: Tesfazghi is openly bullish about GE's prospects in
Africa. He confided that GE Africa profits rose 68% in 2007 and an
amazing 114% in 1Q 2008. End Note.)

8. (SBU) ACCK Administrator Brenda Gitonga acknowledged April 16
that her members remain interested in Southern Sudan. Aside from
Sara Lee East Africa and Eveready East Africa, she reported that
Colgate-Palmolive East Africa, Eaton Corporation, and Afsat
Communications are eager to do business in Southern Sudan.

9. (SBU) When informed that the State Department is contemplating
sponsoring a trade mission to Southern Sudan, former ACCK President
Carisa Graf Suleman said April 17 she has no doubt that the American
business community in Kenya would participate, provided corporate
headquarters in the United States gives its approval. "We are
definitely interested in going into Southern Sudan. Particularly
those companies selling consumer goods - Procter and Gamble,
Colgate-Palmolive, Sara Lee - will want to be involved." She
suggested that Coca-Cola and General Motors would probably be more
reticent, explaining that their shareholders have moral qualms about
doing business anywhere in Sudan before the conflict over Darfur is
resolved. (Note: Earlier in the year, Graf told FCS Counselor that
most ACCK members would likely follow GM's and Coca-Cola's lead:
proceeding cautiously until their corporate headquarters give them
the go ahead.)

------------------------
Awaiting USG Green Light
------------------------

10. (SBU) Graf Suleman, whose husband owns Afsat Communications,
remarked that the American business community is still waiting for
the USG to announce that Southern Sudan is open to American
businesses. "We especially need guidance on whether we can operate

NAIROBI 00001049 003 OF 003


in the 'marginal areas' around Khartoum," she said. She called for
our sanctions and development policies to align better with American
business interests, saying it made little sense to have USAID and
other government agencies pump money into Southern Sudan for
development projects only to see Sudanese take their earnings to buy
Chinese and French consumer goods. If USAID can spend U.S. taxpayer
dollars in Southern Sudan, surely American private entrepreneurs
should be allowed to expose their product lines to Sudanese
consumers, she contended.

11. (SBU) During a March 13 ACCK board meeting with the Ambassador,
FCS Counselor Jim Sullivan asked whether attendees would likely join
a USG-organized trade delegation to Southern Sudan. Reservations
were expressed by General Motors East Africa Managing Director Bill
Lay and Coca-Cola's Nelson Githinji. Both said they doubted their
corporate headquarters would approve such an endeavor until all
questions about the Sudan sanctions policy were answered. They also
mentioned concerns about public perceptions, especially those held
by their shareholders, of doing business in Sudan, given the ongoing
violence in Darfur.

RANNEBERGER

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