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Cablegate: Oecd-Mena Investment Program: Bahrain Meeting Of

This record is a partial extract of the original cable. The full text of the original cable is not available.

260841Z Sep 05





E.O. 12958: N/A

Sensitive but Unclassified; Please protect accordingly. Not
for internet distribution.

1. (SBU) Summary: Working Groups 1 (Open and Transparent
Investment Policies - WG 1) and 2 (Investment Promotion
Agencies and Business Associations as Drivers of Reform - WG
2) of the OECD-MENA Investment initiative met in Bahrain
September 12-14 to review and approve their contributions to
a stock-taking report on the investment climate in MENA
countries and recommendations for priority areas of reform to
improve the investment climate. The other three working
groups have or will meet to review their progress and
recommendations before the October 3 meeting of the Steering
Group in Istanbul. Participants also reviewed the draft
Declaration for adoption at the Ministerial meeting to be
hosted by Jordan on November 17. The discussion will provide
the basis for a draft to be circulated to participants. It is
hoped the Steering Group can agree on a final text to be sent
to participants well in advance of the Ministerial.

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2. (SBU) In a meeting with the US, UK, Japan and OECD
representatives, Bahrain's Minister of Industry and Commerce
Dr. Hassan Fakhro agreed to use his chairmanship of an
upcoming meeting of GCC Industry and Commerce ministers to
promote the OECD-MENA initiative. Both World Bank and
Multilateral Investment Guarantee Agency (MIGA) officials
participated actively and constructively in the discussions.
Participants welcomed Iraq,s first-time attendance at a
OECD-MENA event. End Summary.


3. (SBU) Bahrain, Egypt, Iraq, Jordan, Lebanon, Morocco,
Oman, the Palestinian Authority, Qatar, Saudi Arabia, Syria,
Tunisia, UAE/Dubai, and Yemen attended from the region. An
array of agencies (investment promotion agencies, investment,
commerce, development and finance ministries, and tax
agencies) were represented. Officials representing the UK,
Japan, Switzerland, France and the US attended, including Wes
Scholz and John Finn (State Department Investment Office) and
Thomas Sams (Commerce Near East Office). The World Bank,
MIGA, UNIDO and Arab Council for Economic Unity also

Ministerial Declaration

4. (SBU) As a result of the discussion of the draft
ministerial declaration for the November 17 meeting in
Jordan, it is likely that the revised text will:

- note the challenges the region faces and the need for
immediate action;

- welcome the results of the working groups;

- call for MENA countries that have not already done so
(Egypt and Bahrain have) to organize their country economic
teams to draw on the recommendations in their development of
specific national reform agendas with specific targets for
action within the next 12 months; and

- arrange another ministerial meeting to review progress at
the end of that period.

A number of MENA countries including Egypt, Morocco and the
Palestinian Authority stressed the importance of a strong
statement of support by OECD countries in the declaration.
It is possible that a statement of support may be developed
separate from the ministerial declaration, giving OECD
members firmer control of its content. It might also provide
an opportunity for other institutions (e.g. World Bank, IFC)
to pledge their support.

5. (SBU) Participants generally agreed that the first draft
of the ministerial declaration was too long and detailed,
particularly in listing priorities for reform. Many agreed
with the World Bank and U.S. interventions suggesting that a
few key critical areas for action needed to be emphasized.
In addition, rather than annexing the detailed
recommendations of all the working groups, the declaration
should welcome the work of the working groups, note
approvingly their recommendations, and pledge MENA countries
to draw on them in identifying their individual priorities
for action in developing their national plans for the next
year. This responded to the concerns of a number of MENA
country interventions noting that individual MENA country
representatives at the ministerial would not be able to
commit their governments to detailed recommendations that
related to responsibilities of other ministries.

--------------------------------------------- -
WG 1: Open and Transparent Investment Policies
--------------------------------------------- -

6. (SBU) Members agreed to update information contained in
the report on Investment Climate and Regulation of
International Investment in MENA Countries as soon as
possible. Members asked that three informal task forces be
established to look into foreign direct investment screening,
real estate acquisition, and administrative simplification
and transparency. In order to increase their understanding
of the provisions of International Investment Agreements
(IIAs), the Working Group members agreed to exchange
information with OECD experts on IIAs, draft a source book
with reference material on investment treaties, and explore
existing training programs on investment treaties. Following
a discussion of the report drafted by the Task Force on
Business Ethics and Anti-Bribery Policies in Selected MENA
Countries, Working Group members encouraged the Task Force to
continue its efforts to develop and implement the report's
action plan and to increase participation by both the private
sector and civil society. The Task Force on FDI Statistics
presented its report, which is based on input from selected
countries. The Working Group asked that the Task Force
continue its work focusing on all MENA countries, with
particular attention on data collection, dissemination, and

WG 2: Driving Forces for Economic Reform

7. (SBU) The OECD presented the brochure it drafted on the
OECD-MENA Investment Initiative, noting that it would be used
in OECD and MENA countries to explain the initiative and
not/not to promote investment in the region. (MENA
representatives sought a second brochure to address the
latter, which the OECD agreed to consider.) The OECD also
presented its website for the Initiative. Working Group
members agreed to organize workshops on the role of
investment promotion agencies (IPAs) as investment policy
advocates and as one-stop shops. They agreed on the need for
more information on MENA IPAs. Members agreed with the
report from the Task Force on Investment Incentives, but
sought more information on Free Trade Zones (FTZs) and
Special Economic Zones (SEZs). In particular, they agreed to
undertake a self-assessment of FTZ and SEZ incentives and to
establish a methodology to evaluate those incentives. They
also agreed to evaluate non-tax incentives. Finally, Working
Group members discussed the proposed Investor of the Year
awards (that would be announced at the November Investment
Ministerial) and a Business Day preceding the Ministerial.
They urged that the Business Day be carefully planned, so as
to include a wide variety of MENA-based business groups.

8. (SBU) Following the WG 2 session, a representative from
the Turkish Federation of Chambers of Commerce gave a
presentation on the Federation's plans for the development of
the Erez Industrial Estate in Gaza, in consultation with
Israeli and Palestinian officials and James Wolfensen.
9. (SBU) OECD representatives from the US, the UK, and Japan
met with Minister of Industry and Commerce Dr. Hassan Fakhro
to brief him on the OECD-MENA investment initiative.
Minister Fakhro agreed to use his chairmanship of an upcoming
meeting of GCC Industry and Commerce ministers to promote the


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