US embassy cable - 05AMMAN5195

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 005195 
 
SIPDIS 
 
E.O. 12958: DECL: 06/07/2015 
TAGS: ECON, EINV, ETRD, PREL, JO 
SUBJECT: WORLD ECONOMIC FORUM: SPECIAL REPRESENTATIVE FOR 
COMMERCIAL AND BUSINESS AFFAIRS HEARS MESSAGES OF REFORM 
 
 
Classified By: A/DCM Haynes Mahoney for Reasons 1.4 (B) and (D). 
 
1. (C)  SUMMARY:  Special Representative for Commercial and 
Business Affairs J. Frank Mermoud and his Senior Advisor Bill 
Behrens held meetings on the margins of the World Economic 
Forum at the Dead Sea (May 20-22) with numerous businessmen 
and Government of Jordan (GOJ) leaders who repeated positive 
messages about changes occurring in the Middle  East.  Mr. 
Mermoud advocated the importance of the Business Dialogue and 
public-private partnerships for the Broader Middle East and 
North Africa (BMENA) initiatives on women, I/CT, and 
Education.  GOJ officials offered a message of reform, 
increasing economic liberalization and more privatization of 
government assets, including in the telecom, energy, and 
transportation sectors.  But strains on the GOJ budget due to 
oil subsidies and tensions between the new reform government 
and parliament were evident.  In official meetings and at a 
private dinner, Mermoud offered encouragement for GOJ reform 
efforts.  The visit reinforced the importance that the USG 
attaches to supporting domestic reform movements in the 
countries of the BMENA.  END SUMMARY. 
 
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Business Community Discusses BMENA 
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2. (C)  Muslim Lakani spoke of the sweeping changes occurring 
across the Muslim world and advocated the need and importance 
of the BMENA Business Dialogue.  He is convinced that Shafik 
Gabr, Chairman of the ABC, and others with strong 
governmental ties will not fully embrace the reform agenda of 
the Business Dialogue.  Lakani also mentioned the need for 
reforms of the Madrassas and revitalization of the 
Organization of Islamic Countries (OIC) and the importance of 
laying out for countries in the Middle East a road map for 
investment. 
 
3. (C)  Other businessmen discussed more industry specific 
reforms and the need for open competition.  The 
representative of Boeing, Lee Monson, Senior Vice President 
of Boeing for Middle East and Africa sales highlighted plans 
for Boeing sales to Egypt and Kenya.  The representative of 
Jordanian Bromine, Mr. Ahmad Khalifeh, discussed his hopes 
from a successful resolution of the investment dispute that 
has prevented the expansion of the largest U.S. investment in 
Jordan (to be reported septel).  He also highlighted the 
company,s commitment to fostering local content and 
transparency in hiring and corporate governance.  In his 
estimation, too many business decisions in the Middle East 
are made in a non-transparent manner and this harms a 
country's foreign investment potential. 
 
4. (C)  Chairman of Consolidated Contractors Company (CCC) 
Mr. Samer Khoury, discussed the need to attract more American 
investors to the region and highlighted privatization in 
Jordan and Saudi Arabia that should be of interest to 
American investors.  Mermoud cautioned that American 
investors, and small and medium enterprises (SMEs) in 
particular, are hesitant to make investments in some 
countries in the Gulf because of restrictions on foreign 
businesses.  Bill Behrens cited the practice in many GCC 
countries of requiring local ownership and local staff (i.e. 
qatarization, kuwaitization, emiratization, etc.) as overly 
restrictive for SMEs.  Nabil Sarraf, Chairman of Palestine 
Real Estate Investment Corporation, highlighted projects his 
company is involved with that aim at jump-starting the Gazan 
economy after disengagement.  For example, the development of 
a reliable electricity supply station and the completion of a 
five-star, 25,000 sq. ft. Movenpick hotel on the beach in 
Gaza.  However, Sarraf questioned what the plans are for 
donor support after disengagement.  His assessment is that 
Gaza disengagement will be the model for a future Israeli 
withdrawal from the West Bank. 
 
5. (C)  Shafik Gabr, Chairman of the Arab Business Council, 
questioned what the future of the business dialogue was for 
the Forum for the Future.  He described the BMENA initiative 
as "not well cooked" because it lacked a secretariat and 
effective business dialogue.  Gabr agreed that there was a 
lack of entrepreneurship in the region, and that BMENA 
initiatives to foster trade and investment could help 
encourage growth.  Mermoud emphasized in his response that 
the business dialogue is critical to the success of the Forum 
for the Future and that the business community needed to 
become more involved in the planning of reform deliverables 
for future events. 
 
6. (C)  Nabil Habayeb, President and CEO of the Middle East 
and Africa for GE and William Wakileh, National Executive for 
Iraq and the Levant, spoke of their disappointment with the 
BMENA Investment Task Force.  Although Mr. Habayeb was 
invited by the Arab Business Council, no further information 
was provided after he arrived in-country and he subsequently 
missed the meeting.  Mermoud apologized and noted that the 
ABC lacked capacity but promised that he would follow-up 
directly with Chairman Gabr and asked for GE,s continued 
commitment to the BMENA business dialogue. 
 
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Public-Private Partnerships 
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7. (C)  Tae Yoo of Cisco Systems was attending the conference 
to discuss the need for public-private partnership programs 
and announce the launch of the  Palestinian Education 
Initiative (PEI).  She thanked Mermoud for the strong support 
of the State Department and U.S. Agency for International 
Development, including for financial backing for the pilot 
project developed in  Jordan.  The initiative seeks to create 
an interactive computer-based math program for students.  The 
drive of the initiative is to cooperate with governments on a 
global level to develop e-learning for students that at the 
same time helps improve computer literacy.  However, Yoo 
highlighted a number of issues that Cisco could not answer 
regarding expanding the initiative to the PA: What happens 
if/when Hamas wins the elections?  How can we work with 
donors in advance of implementation?  What are the 
consequences of starting a project before the elections? 
 
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GOJ Ministers Emphasize Privatization and Reform 
--------------------------------------------- --- 
 
8. (C) Nadia Al-Said, the Minister of I/CT, focused her 
presentation on the changes that have made the Jordanian 
telcom sector more independent.  The new five-person 
independent regulatory commission is based on the US FCC 
model.  Based on her strong message of reform Mermoud 
encouraged her to become an active voice of support for 
reform at the international conference to be held in the 
upcoming year, and to start thinking about what the 
deliverables for I/TC reform in the BMENA region should be. 
 
9. (C)  Newly appointed Minister of Industry and Trade Sharif 
Zu'bi also  highlighted the approach the GOJ focused on 
privatization in all sectors of the economy including energy, 
water, ports, border crossings, and telecom.  However, Zu'bi 
pointed out that "everyone is the world is doing this, so we 
have to do it more quickly."  Mermoud asked about the 
vitality of the QIZs (Qualifying Industrial Zones) with 
Israel, and Zu'bi admitted to concern about the future of 
QIZs.  His staff was focusing on upgrading the value added of 
items produced in the zones and looking for niche markets in 
which Israel and Jordan can find a competitive advantage. 
Zu'bi also highlighted  the fact that in his estimation the 
Egyptian QIZs were administratively easier because they did 
not require an item-by-item product review.  Finally, Zu'bi 
noted that the next day he planned to meet with Israeli 
Minister of Trade Ehud Olmert and tell him that it was, "time 
that he open the West Bank to Jordanian goods."  Zu'bi 
estimated that there was a $3 billion market in the West Bank 
and the Jordanian products would be quite competitive. 
 
10. (C)  Jordanian Minister of Energy, Mr. Azmi Khreisat 
explained the importance of the US-Jordan Free Trade 
Agreement as a pillar of the economic reforms happening in 
Jordan.  He detailed plans for privatization of energy 
distribution systems and the new approach towards 
privatization of Jordan's mineral resources.  In particular, 
Khreisat noted that there is a plan to disband the natural 
resources board within 1-2 months and to revise the law on 
use of natural resources, which dates from 1968. However, on 
the issue of ending subsidies for petrol, the Minister 
claimed that "now is not the right time" because there is a 
new government that is having difficulties with the budget. 
(COMMENT: Khreisat was referring to the immediate period of 
the WEF, up until the new government wins parliament,s vote 
of confidence.  END COMMENT.)  Khreisat said that the GOJ 
needs a plan that will eliminate most subsidies from the Gulf 
states by 2008 while finding a way to target remaining 
subsidies to aid the poorer consumers.  Khreisat also 
mentioned negotiations with the former Israeli Minister of 
Infrastructure where they agreed that it was not the ideal 
time for pushing forward with plans for a cross-border power 
grid.  However, Khreisat envisions a future where Israel, 
Jordan, Syria, and Lebanon will be joined in a power grid 
network. 
 
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Dinner Party: Major Reforms the Theme 
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11.  (C)  Nasser Judeh, former Minister of Information and 
Communications Technology, and Princess Sumaya hosted a 
dinner party for Special Representative Mermoud during the 
week of the WEF.  Several senior policy makers and business 
leaders were present including Sharif Zu,bi, Minister of 
Industry and Trade; Nadia Al-Said, Minister of I/CT;  Alaa 
Batayneh, then SecGen of the Transportation Ministry (now 
Customs Director General) and his wife, Princess Rahma; 
Samer Majali of Royal Jordanian Airlines;  April Foley, 
Vice-Chair of the U.S. Export-Import Bank; and Randi Ayoubi, 
CEO of Rubicon.  The conversation revolved around major 
reforms planned or underway and Mermoud repeated the message 
of support for economic liberalization in Jordan and in the 
region and the opportunities this presents to Jordanian and 
US firms. 
 
12.  (U)  This cable has been cleared by Special 
Representative for Commercial and Business Affairs Mermoud. 
HALE