Cablegate: Tunisian-Libyan Cooperation On Track

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DE RUEHTU #0248 0531024
ZNR UUUUU ZZH
P 221024Z FEB 07
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 2752
INFO RUCNMGH/MAGHREB COLLECTIVE PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS TUNIS 000248

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/MAG
STATE PASS TO USTR (BELL)
USDOC FOR ITA/MAC/ONE (NATE MASON)
CASABLANCA FOR FCS (ORTIZ)

E.O. 12958: N/A
TAGS: ECIN ETRD ELAB TS LY
SUBJECT: TUNISIAN-LIBYAN COOPERATION ON TRACK

REF: A. TRIPOLI 150 AND PREVIOUS

B. TUNIS 143
C. TUNIS 101
D. 06 TUNIS 2329

1. (SBU) SUMMARY: In the 20th meeting of the Libyan-Tunisian
High Commission, held in Tripoli on February 18, Tunisian
Prime Minister Mohamed Ghannouchi and Libyan Secretary of the
General People's Committee Mahmoudi Baghdadi signed three
agreements aimed at improving cooperation between the two
countries. The agreements mark the continuation of efforts
to facilitate increased trade and investment, which appeared
to be off track after President Ben Ali's absence from a
summit hosted by Libya and recent reports that Libya would
now require visas for Tunisians and other expats. END
SUMMARY.

2. (SBU) On February 18, Tunisian Prime Minister Mohamed
Ghannouchi and Libyan Prime Minister Mahmoudi Baghdadi signed
three cooperation agreements in the context of the 20th
meeting of the Libyan-Tunisian High Commission. The first
agreement formalized the previously announced decision to
permit reciprocal exchange convertibility between the two
currencies (Ref B). The two additional agreements outlined
industrial cooperation (NFI) and established mutual
recognition of drivers' licenses between the two countries.

3. (SBU) This series of agreements marks the continuation of
recent efforts to promote increased cooperation between the
two countries, particularly on the economic front. Relations
between the two countries appeared to be strained when
President Ben Ali missed a January 23 summit hosted by
Ghaddafi for the leaders of Egypt, Algeria, Tunisia, and
Sudan. (NOTE: Tunisian local press reported that Ben Ali was
sick (Ref C). Sudanese President Bashir also failed to
attend. END NOTE.) Rumors of a rupture seemed to be
confirmed after announcements by GOL officials of changes to
Libya's visa policy (Ref A) led to widespread reports that
Libya would require visas for all Tunisians. While the GOL
later clarified that Tunisians would not require visas, only
relevant work permits, the reports created a minor panic due
to the high volume of Tunisians traveling to or working in
Libya.

4. (SBU) Although intra-Maghreb trade remains relatively
paltry, trade between Libya and Tunisia has grown in recent
years. Bilateral trade reached US $1.36 billion in 2006, up
from US $970 million in 2005. Libya is critical to Tunisia's
unemployment woes, hosting a large number of Tunisian
workers, and to the tourism sector, which received 1.4
million Libyan visitors in 2006. Even as official figures
demonstrate the importance of bilateral trade and investment,
these numbers fail to capture the significant quantity of
smuggling that occurs across the Tunisian-Libyan border. The
proliferation of roadside stands selling cut-rate Libyan
gasoline and markets filled with smuggled goods from Libya,
such as the "Libyan Souk" in Ben Guerdane (Ref D), reflect
not only the volume of illegal trade, but the relative
impunity with which the smuggling occurs.

5. (SBU) COMMENT: Despite recent rumors of friction between
the two countries, cooperation between Libya and Tunisia to
facilitate increased trade and investment appears to be on
track. The GOT continues to voice support for increased
Maghreb economic integration through its participation in
Arab Maghreb Union summits and meetings. Yet, progress has
been slow on this front, leading the GOT to actively pursue
reductions in barriers to trade and investment with Libya
through bilateral negotiations. The steps to allow
reciprocal currency convertibility and to reduce
administrative hurdles will help stimulate bilateral trade
and investment, but reducing the parallel market for smuggled
goods will also require tough enforcement by the GOT. END
COMMENT.
GODEC

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