US embassy cable - 05CAIRO7041

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 007041 
 
SIPDIS 
 
STATE FOR NEA/ELA, NEA/RA, EB/IDF AND EB/TPP 
STATE PLEASE PASS TO USTR NSAUMS 
NSC FOR POUNDS/ABRAMS 
 
E.O. 12958: DECL: 09/11/2015 
TAGS: EFIN, ETRD, PGOV, PREL, EG 
SUBJECT: AMBASSADOR RICCIARDONE'S SEPTEMBER 8 MEETING WITH 
EGYPTIAN MINISTER OF FINANCE 
 
Classified by Ambassador Francis Ricciardone for reasons 1.4 
(b) and (d). 
 
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Summary 
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1.  (C) Ambassador Ricciardone had an introductory meeting on 
September 8 with Egyptian Minister of Finance Youssef Boutros 
Ghali (YBG).  YBG asked how the GOE could "package" the 
elections for U.S. audiences.  YBG explained that he had not 
yet signed the Loan Guarantee Commitment Agreement (LGCA) 
because he had not had time to review the document in detail. 
 He praised his colleagues in the Nazif Cabinet, noting that 
the Minister of Foreign Trade and Industry had recently 
returned from Washington where he set the stage for expansion 
of Egypt's Qualifying Industrial Zones (QIZ), and noted the 
GOE interest in opening FTA negotiations.  The Ambassador 
responded that we remain interested in opening FTA 
negotiations, possibly early in the new year, provided Egypt 
continues its course of economic and political reforms - 
which would be essential to making the case for an FTA in 
Congress.  The Ambassador also raised the delays in payment 
from the Egyptian General Petroleum Corporation (EGPC) to the 
U.S. firm Apache Oil.  YBG promised to look into Apache's 
concerns.  End summary. 
 
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Elections 
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2.  (C) Ambassador Ricciardone, accompanied by the DCM, had 
an introductory meeting with Egyptian Minister of Finance YBG 
on September 8.  YBG began the discussion by asking the 
Ambassador how to "package" the previous day's elections for 
U.S. audiences.  The Ambassador replied that there was no 
need to "package" the elections, but rather to open them up. 
The USG had pressed for international election observers 
specifically so that the international community could see 
for itself that the elections were a positive step in Egypt's 
democratic reform process.  Washington was awaiting the 
results of the election and would respond with its assessment 
at the appropriate moment. 
 
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Loan Guarantees 
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3.  (SBU) Turning to loan guarantees, YBG said that he still 
had to review the LGCA in detail before signing it, and 
explained that he was also waiting for a legal opinion on the 
sovereign bond issuance from the State Council (Note:  His 
staff has since assured us that YBG would sign on September 
11).  The opinion was expected by September 11.  Once the 
LGCA was signed, he said the Ministry of Finance (MOF) would 
move quickly on the next steps for issuance of the guaranteed 
bond.  YBG noted that he would be in Washington later this 
month for the IMF meetings and asked with which USG officials 
he should meet.  Amb. Ricciardone replied that he should 
request meetings with Deputy Secretary Zoellick, USTR 
Portman, NSC Abrams and USAID Administrator Natsios. 
 
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FTA 
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4.  (C) YBG noted that he used to be the sole voice for 
reform in the GOE, but that several reform-minded ministers 
had joined him now in the Cabinet.  The Nazif administration 
had approached economic reform with greater commitment than 
had past administrations.  This had succeeded not only in 
turning around the economy, but in convincing skeptics within 
the GOE that reform could work.  YBG praised his colleague, 
Rachid Rachid, Minister of Foreign Trade and Industry, who 
had just returned from a visit to Washington, where he had 
set the stage for expansion of Egypt's QIZs.  Amb. 
Ricciardone agreed that QIZ expansion was moving forward, as 
the Israelis and Egyptians together had requested, and that 
the QIZs enjoyed Congressional support.  YBG cited GOE 
interest in moving on to commence FTA negotiations.  The U.S. 
Administration was moving cautiously on trade issues right 
now the Ambassador responded, but we might hope to open 
negotiations as early as 2006 if economic and political 
reform in Egypt continued apace.  He reminded YBG that FTA 
negotiations require congressional notification and that 
Congress would look at Egypt's record in both political and 
economic reform. 
 
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Late payments to Apache 
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5.  (C) The Ambassador raised the issue of encouraging 
foreign direct investment, particularly U.S. investment, in 
Egypt.  He pointed out that potential investors were most 
encouraged when they heard positive reports from investors 
already operating in the market.  In that light, it would be 
beneficial for the GOE to pay Apache Corporation, the largest 
U.S. investor in Egypt.  Apache was not receiving timely 
payments from EGPC of what it is owed; back payment now 
amounted to $124 million.  YBG replied that he believed EGPC 
did not have a competent cash flow management system.  He 
noted that MOF had requested an audit of EGPC and promised 
that he would look into Apache's concerns.  Continuing on the 
topic of foreign investment, YBG noted that MOF was working 
to streamline customs procedures.  USAID was supporting this 
effort, but was not providing the support as quickly as MOF 
would like.  He asked if "shortcuts" could be found to speed 
up the assistance.  Amb. Ricciardone undertook to inform 
USAID and to look into the matter. 
 
 
Visit Embassy Cairo's Classified Website: 
http://www.state.sgov.gov/p/nea/cairo 
 
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RICCIARDONE