US embassy cable - 03AMMAN6945

UNCLAS AMMAN 006945 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR NED SAUMS 
TREASURY FOR ABIGAIL DEMOPULOUS 
 
E.O. 12958: N/A 
TAGS: EINV, JO 
SUBJECT: JORDAN: LEADING U.S. INVESTOR RUNS INTO MORE 
PROBLEMS 
 
 
Sensitive but Unclassified. 
 
1.  (SBU)  Summary.  The largest U.S. investor in Jordan, the 
Albemarle Company of Richmond, Virginia, is "heartbroken" by 
the GOJ's October 15 sale of 50% of its stake in the Arab 
Potash Company -- Albemarle's joint venture partner in the 
Jordan Bromine Company -- to the Potash Corporation of 
Saskatchewan.  Albemarle believes that the Canadian company's 
interests are in conflict with those of Jordan Bromine, and 
that its Jordanian partners did not address Albemarle's 
concerns in moving forward with the partial privatization. 
The company argues that this reflects poorly on Jordan's 
investment climate and is developing a strategy to engage the 
Jordanian government at senior levels.  End Summary. 
 
2.  (SBU)  Scott Sutton, the Tokyo-based Albemarle official 
directly responsible for the company's $90 million investment 
in the Jordan Bromine Company (JBC), called ECON/C October 27 
to register his company's dismay at the Jordanian 
government's sale of 50% of its interest in APC to the Potash 
Corporation of Saskatchewan (PCS).  (APC is Albemarle's 50% 
percent partner in JBC.  The GOJ sold half of its 52% 
interest in APC to PCS, giving PCS a 26% stake in APC and, 
derivatively, a 13% share in JBC.  In addition to its 
ownership interest, PCS will control APC management.)  The 
sale alarms Albemarle because it makes PCS, a major global 
competitor, effectively its unwelcome partner in JBC. 
Heightening Albemarle's concern about conflicting business 
interests, PCS owns 9% of JBC's main competitor in the 
bromine business, Dead Sea Bromine of Israel. 
 
3.  (SBU)  Sutton called this an "unfriendly takeover" and a 
change in the rules of the game that was "any investor's 
nightmare."  He said JBC would now need PCS's approval before 
undertaking any expansion or new investment projects in 
Jordan.  For example of how PCS could stand in the way, 
Sutton observed that PCS would have little or no financial 
interest in agreeing to a JBC expansion plan that came at the 
expense of Dead Sea Bromine. 
 
4.  (SBU)  Albemarle's efforts to raise its concerns with the 
Jordanian government before the transaction with PCS was 
completed on October 15 fell on deaf ears.  Sutton said 
Deputy Prime Minister Halaiqah -- who had been Albemarle's 
local champion -- was unresponsive and that Executive 
Privatization Commission chief Adel Kodah did not return 
phone calls.  Albemarle is now formulating a strategy on how 
to address its concerns with the GOJ.  Since Albemarle thinks 
it is important that the GOJ maintain an ownership interest 
in JBC's success, a preferred solution would be for APC to 
sell its interest in JBC to a GOJ entity like the Social 
Security Commission. 
 
5.  (SBU)  Sutton said Albemarle had viewed its investment in 
JBC as a model of U.S. investment in Jordan.  Unfortunately, 
"what everybody fears when investing in a developing country" 
had now come to pass.  He noted how the Jordanian government 
had touted Albemarle's investment as a success story for 
foreign investors -- including at an October 16 conference in 
Washington that was attended by senior Albemarle executives 
-- and yet seemed indifferent to the investor's concerns. 
 
6.  (SBU)  Comment:  Many competing factors were at stake in 
the GOJ decision to sell part of its APC stake to PCS, not 
least the $173 million in privatization income the government 
will earn and its desire to make progress on the 
privatization process.  The concerns of Albemarle, which has 
had a convoluted relationship with the GOJ, do not seem to 
have figured in the decision process.  This is not the first 
time Albemarle has had serious issues with the GOJ.  Earlier 
this year, Albemarle, APC and the GOJ had a long and 
difficult re-negotiation of their joint venture agreement to 
address Albemarle's need to retain more cash for investment. 
The GOJ, rather than seeing Albemarle's success as one to be 
cultivated as a model for foreign investment (the project, on 
plan and on target, began exporting bromine earlier this 
year), has tended to address Albemarle's concerns reluctantly 
and only under high-level pressure from the company.  More of 
that pressure may now be in store, and Albemarle can be 
expected to ask the U.S. government to help. 
GNEHM