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Cablegate: Minister of Economy Positive On Bilateral Engagement, Concerned About Domestic Reform Plans Tripoli 00000741 001.2 of 002

TRIPOLI 00000741 P CO 19-SEP-08 MINISTER OF ECONOMY POSITIVE ON BILATERAL ENGAGEMENT, CONCERNED ABOUT DOMESTIC REFORM PLANS [8046536]From: CBPC, EACTAPP [EACTAPP@state.sgov.gov]
Sent: Friday, September 19, 2008 2:24 PM
To: EACTTripoli
Subject: TRIPOLI 00000741 P CO 19-SEP-08 MINISTER OF ECONOMY POSITIVE ON BILATERAL ENGAGEMENT, CONCERNED ABOUT DOMESTIC REFORM PLANS [8046536]

CONFIDENTIAL

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DE RUEHTRO #0741/01 2631226
ZNY CCCCC ZZH
P 191226Z SEP 08
FM AMEMBASSY TRIPOLI
TO RUEHC/SECSTATE WASHDC PRIORITY 3913
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHLO/AMEMBASSY LONDON PRIORITY 0907
RUEHFR/AMEMBASSY PARIS PRIORITY 0591
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHTRO/AMEMBASSY TRIPOLI 4430

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000741

DEPT OF COMMERCE FOR NATE MASON; DEPT OF ENERGY FOR GINA
ERIKSON

E.O. 12958: DECL: 9/18/2018
TAGS: PGOV LY EFIN EPET ETRD ECON OVIP
SUBJECT: MINISTER OF ECONOMY POSITIVE ON BILATERAL ENGAGEMENT, CONCERNED ABOUT DOMESTIC REFORM PLANS TRIPOLI 00000741 001.2 OF 002

CLASSIFIED BY: Chris Stevens, Charge d'affaires, U.S. Embassy Tripoli. REASON: 1.4 (d)

1. (C) Summary: During a September 16 meeting, Dr. Ali al-Issawy, the Secretary of the General People's Committee for the Economy, Trade and Industry (equivalent of minister of economy and trade) told the CDA that he looked forward to the visit of Assistant Secretary of Commerce Israel Hernandez in October, and to finalizing the Trade and Investment Framework Agreement. Commenting on GOL plans to distribute oil revenues directly to the public and to privatize Libya's public sector, al-Issawy expressed concern about the impact on prices and the Libyan work ethic. Al-Issawy said he was interested in pairing U.S. and Libyan universities, and requested U.S. experts visit Libya to advise on the mortgage market. End summary.

WELCOMING A/S HERNANDEZ

2. (SBU) Minister al-Issawy said he looked forward to the planned visit of Assistant Secretary of Commerce and Director General of the U.S. and Foreign Commercial Service, Israel Hernandez in October. CDA, introducing the Embassy's new FCS officer, said the visit was intended to highlight the growing commercial relationship between the two countries, and to open the Embassy's U.S. and Foreign Commercial Service office.

TIFA: WAITING FOR THE END OF RAMADAN

3. (SBU) Al-Issawy said he looked forward to finalizing the Trade and Investment Framework Agreement (TIFA). He suggested that his staff work directly with Embassy staff (in coordination with USTR) to finalize the agreement. He preferred to wait until after Ramadan to meet and go over any remaining points in the text. (Note: Embassy had previously sent the latest USTR-cleared draft to the ministry's lead negotiator, Mr. Dia Hammouda and his team).

PLANS IN PROGRESS ON OIL WEALTH DISTRIBUTION

4. (C) Referring to Muammar al-Qadhafi's recent national day speech, the CDA asked about plans to distribute Libya's oil revenue directly to the public. The Minister expressed concern about inflation, noting they could not simply hand out cash. It would be preferable to distribute a combination of cash, securities and shares. He said the final decision on a framework for the distribution was not yet finished. Once the plan was finished, he believed it would be presented to the General People's Congress for final approval.

"LIBYA HAS A CULTURE OF RENT, NOT WORK"

5. (C) Minister al-Issawy commented that some Libyans were already dreaming about using the money they will eventually receive to live in Tunisia or Malta (two favorite nearby holiday destinations). He added some students are already wondering about the utility of studying because they think they won't need to find jobs once the wealth distribution program starts. He attributed these attitudes to what he called Libya's "culture of rent" as opposed to a "culture of work."

6. (C) On the other hand, the Minister noted a wealth distribution plan could smooth the way for greater liberalization of the economy, especially in terms of lifting price controls and doing away with subsidies. His thinking was that if people have more disposable income, they will be able to afford unsubsidized goods. When asked when the program would start, he said teams were working "day and night" to finalize the wealth distribution program and the related privatization plans.

MOVING AHEAD ON PRIVATIZATION AND LOOKING FOR U.S. PARTNERS IN HIGHER EDUCATION

7. (SBU) Minister al-Issawy said plans for privatizing key sectors of the economy, including health, education, utilities, and transportation were almost finished. The CDA said he had heard concerns from Libyans that they would be negatively affected by privatizing health and education, in particular. The Minister agreed these were the sectors that worried people the most.

8. (SBU) On higher education, in particular, the Minister said they were interested in joint ventures with U.S. universities, such as MIT. The CDA told him the Ministry of Foreign Affairs had raised a similar idea. He noted there were many models in the region for such collaboration, including in Dubai, Qatar, and Morocco. The CDA said the Embassy would provide him with more information on these partnerships.

.AND ALSO LOOKING TO LEARN FROM THE U.S. MORTGAGE CRISIS TRIPOLI 00000741 002.2 OF 002

9. (SBU) The Minister also asked if the Embassy could provide an expert to speak about the mortgage situation in the U.S. since Libya plans to privatize the housing sector and make loans more broadly available to potential home-owners. He mentioned Freddie Mac and Fannie Mae. The CDA said he would look into potential U.S. experts to engage with the GOL.
STEVENS

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