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Cablegate: Israelis Not Upbeat On Prospects for Bilateral

VZCZCXYZ0002
PP RUEHWEB

DE RUEHEG #2312 3511408
ZNY CCCCC ZZH
P 171408Z DEC 09
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC PRIORITY 4471
INFO RUEHTV/AMEMBASSY TEL AVIV PRIORITY 1983
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

C O N F I D E N T I A L CAIRO 002312

SIPDIS

DEPT FOR NEA/ELA

E.O. 12958: DECL: 12/15/2014
TAGS: ECON ETRD EFIN EINV PGOV PREL EG IS
SUBJECT: ISRAELIS NOT UPBEAT ON PROSPECTS FOR BILATERAL
TRADE WITH EGYPT

Classified By: ECPO Minister-Counselor Donald A. Blome for Reasons 1.4 (b) and (d).
1.(C) KEY POINTS -- Both Israel and Egypt are working to expand QIZ exports to the U.S. -- The Israelis appear unsure of the GOE commitment to bilateral trade under the QIZ -- The political friction between Israel and Egypt has spilled over to the commercial relationship, and businessmen from both countries now face difficulties traveling to visit their counterparts.

2.(C) On December 15, Econcouns and Econoff met with Israeli DCM Israel Nitzan and incoming Economic-Commercial Counselor Rania Gibran to discuss the Qualifying Industrial Zones (QIZ) program and Israeli-Egyptian trade. They told us that they are very interested in expanding the QIZ program and are working with the GOE to do so. Gibran told us that in her view, despite their rhetoric to the contrary, the Egyptians do not appear to be genuinely looking to diversify their exports from the QIZ beyond textiles and ready-made garments. (Note: These two categories make up nearly 100% of Egypt's exports under QIZ. End note.)

3.(C) Gibran said that the GOI was interested in working with both the GOE and the USG on conducting surveys to understand the potential for diversifying QIZ exports as well as ways to increase exports from those companies already certified to export under QIZ but who have ceased exporting or have never exported under the program.

4.(C) Nitzan was not optimistic about the prospect of expanding Egyptian-Israeli commercial ties in the current political climate and told us that the Egyptian-Israeli commercial relationship was worse than it has been in some time. According to Nitzan, the GOE's negative public stance towards Israel was spilling over into the private sector, and Nitzan said that Egyptian businessmen who in the past had visited Israel frequently were now hesitant to do so. Rather than economics, "politics has become the most dominant element in the consideration of Egyptian businessmen," according to Nitzan. Gibran added that previously successful bilateral programs in agricultural and health care cooperation had all but stopped.

5.(C) Nitzan said that the deterioration in the non-governmental side of the bilateral relationship was typified by the recent press attacks on the journalist Hala Mustafa for having met with the Israeli Ambassador in Cairo. He also cited a public request by the Egyptian parliament for the Minister of Manpower to provide information on the number of Israelis working in Egypt as evidence of the political and public backlash against those who are perceived as "normalizers." (Note: Nitzan told us that the number the Minister provided to Parliament was half of the actual number. End note.)

6.(C) Nitzan complained that the GOE is actively preventing visits to Egypt by Israelis by delaying and denying visas. He said that this applied both to official GOI travel as well as Israeli businessmen. He suggested that the new and lengthy delays in approving visas for Israelis are causing problems and he is confident that the Egyptian Embassy in Tel Aviv is acting on "instructions from above."

7.(C) COMMENT: Despite bilateral tensions, the GOI is looking to capitalize on the expansion of QIZ exports from Egypt as way to expand bilateral trade. The Israelis appear to be trying to figure out the level of Egyptian commitment to the QIZ and are getting mixed signals from the GOE. The evidence does suggest that over the past year Egyptian businessmen have curtailed travel to and business with Israel out of fear of public backlash. In our view, though not necessarily interested in trumpeting close relations with Israel, the GOE is interested in expanding QIZ production and exports, which directly correlates to more trade with Israel. Scobey

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