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Cablegate: Tunisian Minister of Development Wants to Revive

VZCZCXRO6221
PP RUEHTRO
DE RUEHTU #0783/01 2941711
ZNR UUUUU ZZH
P 211711Z OCT 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 6903
INFO RUCNMGH/MAGHREB COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 03 TUNIS 000783

SENSITIVE
SIPDIS

DEPARTMENT PLEASE PASS USTR AND PEACE CORPS
COMMERCE FOR ITA/NATE MASON

E.O. 12958: N/A
TAGS: ETRD EINV ECON EAIR PREL TS
SUBJECT: TUNISIAN MINISTER OF DEVELOPMENT WANTS TO REVIVE
TIFA TALKS, CLAIMS OPEN SKIES ARE ON THE HORIZON, DISCUSSES
ECONOMIC TRANSFORMATION AND CHALLENGES

REF: A. 08 TUNIS 296
B. 08 TUNIS 293

Sensitive but unclassified. Please protect accordingly.

-------
Summary
-------

1. (SBU) During an October 19 introductory call, Minister of
Development and International Cooperation Mohammed Jouini
told the Ambassador he lamented the loss of momentum in the
bilateral economic dialogue since the promising TIFA Council
meetings in March of 2008 and hoped to see the process
reinvigorated. Jouini also claimed President Ben Ali had
taken a decision that would pave the way for conclusion of
open skies agreements with the U.S. and other countries in
the near future. Jouini also discussed GOT efforts to
advance structural transformation, noting Tunisia was making
progress in liberalizing its services sector - a key aspect
of its strategy to combat unemployment. End summary.

------------
Restart TIFA
------------

2. (SBU) Welcoming the Ambassador to Tunis, Jouini said he
hoped the coming years would see a reinvigoration and upgrade
of the bilateral economic dialogue. Jouini specifically
regretted the loss of momentum follwing a promising set of
TIFA Council meetings in March 2008. Working groups
established to focus on several sectors petered out and the
process became ad-hoc, the Minister claimed. Both sides
gradually lost sight of the framework envisioned in March of
2008, and the process faded away. Now is the time to revive
it, Jouini asserted. (Comment: In fact, after a promising
start at the TIFA Council talks, the GOT rather abruptly
reverted to radio silence, largely unbroken until this
meeting. End comment.)

3. (SBU) The Ambassador underlined that the USG would like to
move forward with the framework discussed in March of 2008
and was ready to reengage and reinvigorate the TIFA process.
As in many other aspects of our bilateral cooperation, the
amount of progress we can make will be proportional to the
quality of our working-level contacts. The early November
visit by the Tunisia desk officer would provide a good
opportunity for the U.S. side to sit down with Tunisian
counterparts and identify means to get the TIFA process up
and running again. Jouini welcomed the idea, said he hoped
the two sides could develop a work plan for 2010, and
designated his Director-General for Bilateral Cooperation and
a Director charged with handling cooperation with the U.S. as
points of contact.

----------
Open Skies
----------

4. (SBU) Shifting gears, the Ambassador noted that the U.S.
was interested in concluding an open skies agreement with
Tunisia and had forwarded for consideration a revised draft
agreement to the Ministry of Foreign Affairs on September 14.
Jouini indicated that he supported such an agreement and
predicted that it would come to fruition within two years.
The Minister pointed to October 11 remarks made by President
Ben Ali as he launched his reelection campaign, in which he
pledged to promote liberalization of the civil aviation
sector. The Ambassador said this was good news and looked
forward to hearing specific Tunisian reactions to the draft
agreement the U.S. had presented.


----------------
Financial Crisis
----------------

5. (SBU) Jouini devoted much of the meeting to outlining his
view of Tunisia's economic challenges and its efforts to
transform and modernize the economy. The impact of the
Global financial crisis has been relatively mild in Tunisia,
but, with up to 1/3 of the economy directly linked to foreign
trade, the country was not immune to such global shocks.
Tourism receipts had not grown in 2008-09, but neither had
the fallen, putting the country on a better footing than
tourism-dependent neighbors such as Egypt and Morocco.

TUNIS 00000783 002.2 OF 003

------------
Unemployment
------------

6. (SBU) Tunisia needs to maintain high GDP growth so that
the job market can keep pace with new job seekers in the
population (growing at 1 percent annually), Jouini noted,
hoping the country would reattain 6 percent growth in 2010.
The unemployment challenge, while difficult, is not as bleak
as some believe, Jouini observed. 63-65 percent of new job
market entrants find work within one year, he noted, and 80
percent are employed within two years. The GOT is also
"putting mechanisms in place" to assist the remainder o
long-term unemployed youth, Jouini added.

7. (SBU) Investments in education were key to retaining
Tunisia's comparative advantage in human capital and
increasing the country's potential as a destination for
foreign direct investment, Jouini underlined. The education
system was itself strained by exploding demand - there are
about 400 thousand Tunisians enrolled in universities today
as opposed to 120 thousand just ten years ago, he noted. The
growth of student enrollment is attributable both to
population growth and to a policy of relaxation of admissions
standards in order to extend educational opportunities as
widely as possible, Jouini said.

-------------------------
Structural Transformation
-------------------------


8. (SBU) The Ambassador mentioned new bilateral cooperation
programs currently in development by the U.S. Department of
Commerce's Commercial Law Development Program that would
increase exchanges between U.S. and Tunisian scientists and
engineers, and a program that would offer technical
assistance as the GOT implements its new law on franchises,
as well as a MEPI grant to promote entrepreneurship being
designed by the U.S. Small Business Administration. Jouini
welcomed all of these initiatives, noting they fit in with
Tunisia's objective of overhauling and restructuring its
service sector.

9. (SBU) Tunisia has a long and proud tradition of vibrant
small businesses, Jouini noted, a constituency that has long
resisted efforts to liberalize the service sector. Such
opposition paralleled resistance a decade earlier to
liberalization of manufacturing, Jouini observed, while today
no one disputes that this was the only rational course.
There is today growing acceptance of liberalization of
services as well, Jouini believed, and there is great
potential for growth in the areas of transportation, finance,
health care, and retailing.

-----------
Peace Corps
-----------

10. (SBU) Toward the meeting's close, the Ambassador asked
Jouini for his sense of whether the GOT might be receptive to
reestablishing a Peace Corps program in Tunisia. Tunisia had
"graduated" from the Peace Corps and USAID programs in the
1990s, but some today believe ending the Peace Corps program
in Tunisia was short sighted. Jouini regretted that the U.S.
had in the 1990s disengaged from many useful bilateral
assistance activities and many opportunities had been lost in
the process. Jouni said he was unable to offer a definitive
GOT view on a potential return of the Peace Corps but
suggested that the idea be broached in the context of a
broader cooperative framework rather than as a stand alone
proposal.

-------
Comment
-------

11. (SBU) The GOT's abrupt and mainly unilateral
disengagement from the TIFA process following the promising
2008 TIFA Council meetings remains mysterious to us and leads
us to take with a grain of salt Jouini's comments about
reinvigorating the process. We will nonetheless test the
GOT's seriousness in the coming weeks and keep Washington
agencies advised of developments. End comment.


TUNIS 00000783 003 OF 003


GRAY

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