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Cablegate: Ambassador's Visit to Bizerte: Economic Resilience

VZCZCXYZ0501
PP RUEHWEB

DE RUEHTU #0020/01 0131727
ZNR UUUUU ZZH
P 131727Z JAN 10
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 7136
INFO RUCNMGH/MAGHREB COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS TUNIS 000020

SENSITIVE
SIPDIS

STATE FOR EEB/IFD/OMA, EEB/EPPD, AND NEA/MAG
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD)
USDOC FOR ITA/MAC/ONE (MASON)
CASABLANCA FOR FCS (KITSON)

E.O. 12958: N/A
TAGS: ECON EFIN EINV ETRD TS
SUBJECT: AMBASSADOR'S VISIT TO BIZERTE: ECONOMIC RESILIENCE
AND OPTIMISM

REF: 09 TUNIS 517

Sensitive but unclassified; please protect accordingly.

-------
Summary
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1. (SBU) The Ambassador paid a courtesy call on an American
auto components manufacturing plant, the president of a
government-run business park, and business leaders in Bizerte
on January 12. The discussions centered on the effects of
the economic crisis, the state of foreign investment, and
perceptions of the United States. Overall, the companies
reported minor setbacks at the beginning of the crisis in
early 2009 and a bounce back and recovery by the end of that
year. In fact, the Parc d'Activites Economiques de Bizerte
(Bizerte Economic Activity Park) reported a significant
increase in foreign investment in 2009. The reasons for this
resilience, according to the private sector representatives,
is that Tunisia has captured business displaced from larger
markets. End summary.

------------------
Visit to ACT/CASCO
------------------

2. (SBU) The Ambassador paid a courtesy call on Automotive
Components Tunisia, a subsidiary of Casco Global, a
U.S.-based mechanical components manufacturer. ACT/Casco is
the world market leader in cigarette lighters, USB ports and
a range of sensors, which they sell to European and American
car manufacturers. Their factory in Tunisia is their largest
worldwide operation, with over 300 employees and over 20
billion euros in revenue for 2009. ACT/Casco has been
operational in Tunisia since 2002 under the offshore,
export-only model. It is located in the Menzel Bourguiba
Bizerte Economic Activity Park, part of the larger Bizerte
Economic Activity Park.

3. (SBU) Beji Beligh, ACT/CASCO Tunisia's General Manager,
noted sales had slumped in February 2009 due to the crisis,
but that they had bounced back robustly and helped the
company achieve overall growth in 2009. The reason for this
was both displaced production from more expensive ACT/Casco
locations in Europe, which were forced to downsize, and an
increase in European government programs designed to promote
car purchases.

--------------------------
A GOT-funded Business Park
--------------------------

4. (SBU) The Ambassador called on Kamel Belkahia, President
of the Parc D'Activites Economiques de Bizerte (Bizerte
Economic Activity Park), the free trade zone where ACT/Casco
and other American offshore companies are operating. The
park, divided into three parcels totaling over 80 hectares of
land, houses mostly manufacturing enterprises and some
service providers and employs over 5,500 people. Near the
port of Bizerte, the park alone is responsible for 2.2
percent of Tunisia's total exports (over $388 million) and 30
percent of the exports for the Governorate of Bizerte.
Belkahia, who is a former mayor of Bizerte and headed its
Chamber of Commerce, told the Ambassador he was moving on
from the Park this year to head up a new Government of
Tunisia (GOT) initiative, an agriculture-focused technopole
which would have 60-80 percent private capital, and include
a research and development (R & D) component and an
entrepreneurship center.

5. (SBU) Belkahia noted the effect of the economic crisis on
the Park, whose economic slump mirrored the national average
of 15-20 percent reduction in exports. Textiles and plastics
had resisted the crisis, he said, but some companies, like an
Italian pleasure boat manufacturer, had taken a harder hit.
Belkahia referenced the GOT's assistance to struggling
companies in 2009, and said it would continue in 2010.
Investment, surprisingly, had actually increased over 2009 )
seven new companies joined the park and created enough
employment to offset crisis-related job losses.

6. (SBU) When the discussion moved to bilateral commercial
relations, Belkahia said the onus was on Tunisia to promote
itself as an investment climate and to seek partners for R &

D initiatives such as the agricultural technopole.
Currently, many of these institutions have linkages with
European counterparts due to geographical proximity, but
Tunisia does not know much about these activities in the
United States. He added that the youth in Bizerte were
dynamic, and had new approach to collaboration with foreign
counterparts, and that both countries should seize upon this.


--------------------------------------------- ----
Business Leaders on Economic and Political Issues
--------------------------------------------- ----

7. (SBU) The Ambassador met with prominent Bizerte business
leaders and heard their opinions on bilateral relations, the
regional business climate, and the effects of the economic
crisis. In attendance were Ali Belakhoua (dual
Tunisian-American citizen, Ruling Constitutional Democratic
Rally (RCD) member, and owner of an electronics component
factory), Imed Ouardi (owner of an IT company and RCD
member), and Jalel Zaghouani (Operations Coordinator for
Pioneer Natural Resources, an American oil company). All
attendees agreed the image of the United States in Tunisia
was quite positive, even a year on from the inauguration of
President Obama. However, they noted most Tunisians did not
look to the U.S. market, especially because of a lack of
outreach and visible U.S. investments in Tunisia.

8. (SBU) Ali Belakhoua told the Ambassador about a trip he
took last year to a meeting of businessmen in the Maghreb,
where the topic of discussion had been Maghreb integration.
Aside from the language barrier at the meeting (which was
conducted in French, prompting criticism from the Libyans),
he described the climate as positive but indicated serious
non-political barriers to trade existed. Belakhoua and
Ouardi agreed that Tunisian businessmen were afraid to go to
Libya and Algeria because of the banking system, and rumors
that companies had gone bankrupt waiting for payment from
Libyan or Algerian counterparts. On the IT sector, Ouardi
said the Tunisian market would remain small despite
liberalization, and that Tunisia needed to reach outwards to
grow. He added that Tunisia's biggest export should be human
capital.

9. (SBU) The economic crisis did not seriously affect
Belakhoua's, Ouardi's, or Zaghouani's companies. In fact,
participants agreed that the average Tunisian had not been
affected by the economic crisis in their day-to-day life. A
bigger crisis, they said, was Tunisia not getting into the
World Cup. Belakhoua, whose name was put forward as a
candidate for the National Soccer Federation (reftel), added
that soccer continues to be an important proxy for politics
in Tunisia, and added he had heard rumors the United States
national team was possibly coming to Tunisia for a friendly
match in the lead up to South Africa. (Note: We checked
with the National Soccer Federation and the rumor is not
true. Rather, the U.S. team was entertaining the idea of
inviting Tunisia to play in the U.S., but the Federation now
believes this posibility is highly unlikely. End note.)

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

10. (SBU) The trip to Bizerte provided an opportunity to
reach out to important business leaders of the region and to
discuss bilateral commercial issues with an
investment-promotion arm of the GOT. Although a large
portion of Bizerte's economy is auto and electrical component
manufacturing (one of the hardest hit export sectors), the
economic crisis's effects are not overtly visible there. New
investment seems to have offset any job loss due to the
nationwide export slump. The GOT is optimistic about growth
for 2010, and if Bizerte's realities in late 2009 have been
any indication, the optimism may be well-founded. End
comment.
GRAY

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