US embassy cable - 05CAIRO2487

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 002487 
 
SIPDIS 
 
E.O. 12958: DECL: 09/18/2015 
TAGS: OREP, ETRD, PREL, KIRF, EG, Visits 
SUBJECT: CODEL SMITH MARCH 21-24 VISIT TO CAIRO:  MEETING 
WITH PRIME MINISTER NAZIF 
 
Classified by Acting DCM Michael Corbin for reasons 1.4 (b) 
and (d). 
 
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Summary 
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1. (C) In a cordial March 23 meeting, Senator Smith and 
Egyptian Prime Minister Nazif discussed political reform, 
bilateral trade, religious freedom, and Iraq.  The Senator 
welcomed President Mubarak's move to open the field for 
competitive presidential elections, congratulated Egypt on 
the QIZ agreement, and urged further economic reform that 
could build toward an eventual free trade agreement with the 
U.S.  Smith regretted the tenuous status of the Church of 
Jesus Christ of Latter Day Saints (LDS) in Egypt and 
cautioned that issues such as religious freedom could impact 
bilateral progress on other fronts.  Nazif endeavored to look 
into the LDS issue and affirmed that the GOE would continue 
to press forward with political and economic reforms.  End 
summary. 
 
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Political Reform 
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2. (C) Senator Smith praised the steps President Mubarak had 
taken in calling for multi-candidate presidential elections, 
noting that Egypt was the center of the Arab world and 
Mubarak,s steps would have a big effect throughout the 
region.  Mubarak would likely be re-elected, and be even more 
powerful as a result of winning a real election, Smith 
opined.  He noted that legitimacy comes from a hard fought 
election campaign and victory.  Nazif agreed and said that 
Egypt took seriously President Bush,s comments in the State 
of the Union address.  Egypt was now leading the way on 
political reform in the Middle East, just as it had led the 
way on peace.  Egypt,s last parliamentary elections were the 
best in its history, free and fair, as certified by 
international observers.  He believed that holding a 
multi-candidate presidential election this year would foster 
further political development throughout the region and help 
Mubarak be seen as a wise leader.  According to Nazif, 
Mubarak saw eye to eye with President Bush that political 
reform was key to overall development and the fight against 
terrorism.  He noted that democratic development takes time 
and that a major challenge would be getting eligible voters 
to the polls. 
 
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Trade 
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3. (C) Senator Smith congratulated Nazif on signing the QIZ 
agreement.  Nazif replied that signing the agreement was not 
an easy step for his government, as relations with Israel 
were not ideal.  He believed that taking steps such as 
signing the QIZ agreement could move the relationship with 
Israel toward closer ties.  He pointed to other steps Egypt 
had taken to advance the peace process, such as returning its 
ambassador to Israel and sponsoring the Sharm el Sheikh 
conference.  The Sharm conference would help the Palestinians 
see the benefits of making peace with Israel.  The meeting of 
Palestinian factions in Cairo the prior week and the London 
conference were also important components of this 
multileveled approach to the peace process.  The London 
conference was particularly important, he said, as funding 
was needed for development. 
 
4. (C) On the issue of a Free Trade Agreement (FTA), Nazif 
affirmed that the U.S. was an important economic partner for 
Egypt, just as Egypt was an important partner for the U.S. 
He thanked Smith for U.S. assistance on economic reform, 
noting that Egypt wanted to move from aid to trade.  Egypt,s 
economy was diversified and had a great deal of capacity, but 
further development was needed.  An FTA would be a key 
component in fostering further economic development.  Nazif 
noted that the Minister of Foreign Trade had just returned 
from the U.S., and Nazif said he would be visiting the U.S. 
himself in May.  He added that he hoped FTA negotiations 
could be opened soon. 
 
5. (C) Smith replied that he was on the Senate Finance 
Committee and was in a good position to support an FTA with 
Egypt.  He agreed that trade was important for development, 
especially growth of the middle class.  Nazif agreed and 
noted that Egypt still faced challenges, such as high 
unemployment and religious extremism.  Despite extremism, he 
believed that religion was, in general, a positive force for 
the country. 
 
6. (C) Smith said that he wanted to keep Egypt and the U.S. 
working together on the whole range of issues facing the two 
countries.  Nazif agreed and said he was optimistic about the 
future of the bilateral relationship.  He noted that not 
everyone in Egypt was behind the reforms his government had 
taken.  He joked that recent tariff and tax cuts had caused 
his administration to be seen as Republicans, and the effect 
of those cuts was a large decrease in revenue.  Smith replied 
that reducing taxes and tariffs ultimately increases revenues 
and pointed to the example of Europe,s economy, which had 
high tariffs and taxes, yet was running a higher deficit than 
the U.S. 
 
7. (C) Smith observed that Europeans wanted to increase the 
efficiency of their economy and were now using the U.S. as a 
model.  He noted that people, not corporations, ultimately 
pay taxes.  Corporations were just conduits for people, who 
would lose jobs if corporations had to pay high taxes.  Nazif 
said that although his government,s reforms were beginning 
to work, it would take 18-20 months for the economy to turn 
around.  History was also against his government,s reform 
efforts.  Egypt had always had a big government and it was 
difficult now, with high unemployment, to cut back on 
government.  A social safety net was still needed.  Smith 
noted that despite stereotypes, Republicans, as well as 
Democrats, understand the need for a social safety net. 
 
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Iraq 
---- 
 
8. (C) Turning to Iraq, Smith shared insights from his recent 
trip to Baghdad and Kirkuk, and noted that Iraqis with whom 
he met did not want the U.S. to leave.  He said that the U.S. 
would only leave Iraq after ensuring that the Iraqi security 
forces could maintain stability.  The U.S. would, however, 
pull back in the next year and a half, in order not to be 
perceived as occupiers.  He stated that the U.S. would also 
put the necessary funds behind rebuilding Iraq. 
 
9. (C) Nazif agreed that building Iraq,s political 
infrastructure was the most important objective, and that all 
factions in Iraq needed to have a stake in the political 
process.  He agreed that the U.S. should not pull out until 
the job was finished.  He noted that Egypt had its own battle 
with terrorists starting in the 1990s.  Despite its success 
in combating terrorism since 1997, the risk of new incidents, 
such as the Taba bombing in October 2004, was always present. 
 
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Religious Freedom 
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10. (C) Turning to a matter of personal interest to the 
Senator, Smith expressed to Nazif concern about the status of 
the LDS Church in Egypt, which is allowed to operate but not 
legally recognized.  Smith advised Nazif that the LDS Church 
in Cairo has been forced to turn away Egyptians who wanted to 
participate in services, out of concerns that allowing 
Egyptians to participate would prompt intervention by 
Egyptian State Security.  Nazif replied that the Egyptian 
constitution ensured religious freedom and said he would look 
into it.  Smith noted that when things like FTA legislation 
come before the Senate, seemingly small issues like this one 
could be brought up and impede the process.  He said he did 
not want that to happen to an FTA with Egypt and noted that 
he would ask the same favor for any religious group.  Nazif 
said that he had visited Utah, which not a lot of Egyptians 
had done. 
 
11. (C) Also on the theme of religion, Smith noted that he 
had met with religious leaders at Al Azhar, and was impressed 
with their views, which he saw as the true face of Islam. 
Nazif agreed with this assessment, but pointed out that Al 
Azhar needed to work on its public relations.  Smith noted 
the U.S. also has more work to do in the area of public 
diplomacy. 
 
12. (U) CODEL Smith did not have an opportunity to clear this 
message before departing Egypt. 
 
 
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GRAY