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Cablegate: Planning for a U.S. Trade Delegation to Southern Sudan

VZCZCXRO5326
OO RUEHROV
DE RUEHKH #1128/01 2101030
ZNR UUUUU ZZH
O 281030Z JUL 08 ZDK
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1440
INFO RUCNIAD/IGAD COLLECTIVE
RHMFISS/CJTF HOA

UNCLAS SECTION 01 OF 02 KHARTOUM 001128

DEPT FOR AF/SPG, A/S FRAZER, SE WILLIAMSON
DEPT FOR EB
DEPT PLEASE PASS TO COMMERCE
DEPT PLS PASS USAID FOR AFR/SUDAN
ADDIS ABABA FOR USAU

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ASEC ETRD PGOV PREL KPKO SOCI AU UNSC SU
SUBJECT: PLANNING FOR A U.S. TRADE DELEGATION TO SOUTHERN SUDAN

1.(U)This cable offers background and planning information for the
forthcoming U.S. trade delegation to Southern Sudan. Please note
the action request contained in paragraph 7.

2. (SBU) The Government of Southern Sudan remains enthusiastic about
the proposed U.S. Department of State/U.S. Department of Commerce
jointly sponsored visit by U.S. businesses to Sudan's South. GOSS
Minister for Trade, Commerce, and Supply Anthony Makana views it as
a much-needed effort to broaden awareness within the American
business community of the existing "carve-out" for Southern Sudan
contained in the Darfur Peace and Accountability Act. Despite recent
ICC activity against Sudanese President Omar al Bashir, the GOSS
remains positive about the timeliness of a
mid-September/early-October visit to Southern Sudan by interested
U.S. entrepreneurs and investors. Such a visit comes on the heels
of GOSS-hosted trade delegations from China, Turkey, the
Netherlands, France, the United Kingdom, South Africa, Kenya,
Uganda, Eritrea, Ethiopia, and Egypt, as well as a planned
forthcoming visit by a delegation from the United Arab Emirates. A
visit by an American delegation within the timeframe outlined above
would also fall around the second anniversary of Juba's inaugural
"International Trade Fair." Makana would welcome participation by
any of the delegates in this year's event should they be so
inclined.

3. (SBU) The Government of Southern Sudan continues to encourage
investors focused on the following sectors: natural resource
exploration/extraction, finances/banking, transportation, and
agriculture. While the GOSS is cognizant of bars against American
petroleum companies operating in Sudan, Makana emphasized that
exploration and extraction possibilities exist in the South's
copper, uranium, and gold belts (some situated along the
Ethiopian/Sudanese border), in addition to what he termed a
"potentially lucrative timber industry," as well as untapped sources
of gum Arabic. Despite the absence of a South-specific banking law
(one remains under draft within the GOSS Ministry of Legal Affairs
and Constitutional Development, following significant delays within
the Ministry of Finance) Sudanese national banking laws remain in
effect for the South, and allow for protections against
nationalization and other commercial risks. Currently, Kenya
Commercial Bank remains the sole bank operating in Sudan's South (an
area larger than France) with a U.S.-based correspondent bank. Only
nine of the South's ten states have commercial banks presently in
operation - and bank branches outside of the state capital exist in
only six of those states. Makana notes that the transportation
sector - despite the region's challenges - will continue to be a
growth market given the South's dependence on imported food and
non-food commodities, pharmaceutical supplies, and construction
materials.

4. (SBU) The South's Greater Equatoria region functioned as much of
East Africa's bread-basket prior to the North/South civil war. The
local governments of Eastern Equatoria and Western Equatoria states
are open to large-tract farming, and state assemblies are currently
exploring the possibility of tax-free economic zones in each state.
Torit, capital of Eastern Equatoria, will have its airport upgraded
during the 2008/2009 dry season to become a regional transportation
hub akin to Rumbek International Airport, which handled much of the
Operation Lifeline Sudan traffic during the late nineties. The World
Bank, European Commission, and U.S. Government are currently funding
road improvement projects in Eastern, Western, and Central Equatoria
states which will significantly enhance the capabilities of
commercial traffic to transit through the region.

5. (SBU) GOSS President Salva Kiir Mayardit expedited via
presidential order the South's first investment law in early 2008.
Makana is due to discuss the bill before the Southern Sudan
Legislative Assembly in August 2008 and he expects it to pass during
the present legislative session with few changes beyond the
cosmetic. The current draft bill holds that foreign and local
investors are to be treated equally under the law, with full rights
afforded to foreign-held companies for the repatriation of the
totality of their profits. Corporations may be established in the
South under three different scenarios: solo ventures, joint
ventures, or those incorporated with a Southerner given full
partnership status. While taxes will be leveled against all
companies, no matter their makeup, an Investment Authorities
Commission, helmed by the Trade Minister, will be tasked with
exempting companies either deemed to be operating in "strategic
sectors" or those that employ a set quota of Southern Sudanese
national staff. Post will forward the draft Investment Act to
AF/SPG.

6. (SBU) U.S. Consulate General Juba envisions supporting a U.S.
commercial delegation for twelve days beginning with participants'

KHARTOUM 00001128 002 OF 002


arrival into Juba on Monday, September 22 and departing on Friday,
October 3, 2008. ConGen Juba would arrange for meetings between the
traveling party and GOSS officials, the Southern Sudanese business
community, and other relevant counterparts on Tuesday, September 23.
The delegation would then travel to Torit, in Eastern Equatoria, on
September 24 where they would overnight before onward travel to
Kapoeta. A day visit to Kapoeta would be capped by an overnight in
Rumbek, the capital of Lakes State, before the group splits on
September 26, with one contingent traveling to the Northern Bahr el
Ghazal state capital of Aweil and the second group traveling to
Western Equatoria's state capital of Yambio. The groups would
reunite in Juba on September 27 before spending two days in Wau,
capital of Western Bahr el Ghazal. A final two days of meetings
would be arranged in Juba to entertain follow-on discussions with
host government officials before the party departed Juba on October
3 via direct flights to either Addis Ababa, Nairobi, or Kampala.
Post requests AF/SPG give consideration to the assignment of one
short-term TDYer to Juba in order to assist with preparations in
advance of the delegation's arrival and logistical elements in areas
outside of Juba once the delegation commences travel.

7. (SBU) Makana noted the GOSS Liaison Office's fledgling efforts to
establish a "South Sudan-U.S. Business Council" with counterpart
offices in Washington, DC and Juba, Sudan. Post welcomes such an
initiative, and believes that it will partner well with active
American Chambers of Commerces elsewhere in East Africa. During
then-Presidential Special Envoy Natsios' September 2007 visit to
Eastern Equatoria State, the Governor offered a free gift of 10,000
square meters of land available to USAID. If the business
delegation is sufficiently attracted to investment prospects in
Southern Sudan, and given GOSS efforts to establish a South
Sudan/U.S. Business Council, and given USG interests in ensuring the
South's economic growth as one element of the policy of making unity
attractive in Sudan, then USAID would be willing to explore with the
U.S. Department of Commerce and other relevant actors the
possibility of developing this land as a USG-sponsored business
development center in Sudan's South. Torit, the capital of Eastern
Equatoria, is uniquely situated along the South's growing commercial
transit corridor and is home to a dynamic, pro-business state
governor. A gateway into what used to be the South's bread-basket,
Torit is 2.5 hours drive from Juba, and will soon boast an airport
suited to international commercial air traffic within the region. A
facility at such a location could generate local economic growth
while serving as a platform from which interested American
businesses could operate during their initial forays in the South's
commercial sector.

8. (SBU) Field-based points of contact for this initiative are as
follows: Embassy Khartoum Economic Chief John W. Struble
(StrubleJW@state.gov) and Consulate General Juba Political Officer
Erin Y. Tariot (ETariot@usaid.gov).

FERNANDEZ

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