US embassy cable - 05CAIRO8917

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 008917 
 
SIPDIS 
 
NSC FOR ABRAMS AND SINGH 
USTR FOR SAUMS 
USDOC FOR 4520/ITA/MAC/SAMS, TALAAT AND JACOBS/WIEHAGEN 
USDA FOR FAS/SHEIKH/BERNSTEIN 
 
E.O. 12958: DECL: 11/28/2015 
TAGS: PREL, PGOV, ETRD, ECON, EG, Parliamentary elections 
SUBJECT: EGYPTIAN PRIME MINISTER URGES FTA ANNOUNCEMENT TO 
BOLSTER REFORM 
 
 
Classified by Ambassador Ricciardone for reasons 1.4 (b) and 
(d). 
 
1.  (C) Summary.  Prime Minister Nazif convoked the 
Ambassador on November 27 to make a strong plea for an FTA 
announcement during this week's TIFA Council meeting in 
Washington.  Citing President Bush's promise to take 
"positive steps" by the end of the year, Nazif stressed that 
the GOE has demonstrated its readiness and commitment to 
negotiate an FTA by undertaking difficult economic reforms, 
and needs an FTA to bolster the reformers and the reform 
process at a critical political juncture.  The Ambassador 
pressed Nazif hard on the disappointing conduct of the 
elections by the GOE, emphasizing that the larger political 
context does matter in the U.S. decision whether and when to 
begin negotiations on an FTA.  Nazif affirmed that despite 
the election violence and electoral resurgence of the Muslim 
Brotherhood (MB), President Mubarak remained committed to 
both economic and democratic political reform as his 
"legacy."  The Prime Minister cautioned, however, that the 
reform process is complex, and linking an FTA to specific 
additional reform steps could prove counterproductive.  Still 
vulnerable, the reformers see the FTA announcement as a 
powerful impetus to their economic reform agenda and a way to 
strengthen their credibility and chances of being returned to 
office, bolstered both in spirit and in numbers.  End summary. 
 
2.  (C) The Prime Minister opened the meeting by recounting 
President Bush's promise to him last spring for positive 
steps on an FTA before the end of 2005.  Nazif expressed his 
hope that the TIFA Council meeting, being held in Washington 
on November 30, will result in an FTA announcement.  He said 
that an FTA is needed to make the bilateral economic 
relationship more proactive and to align the countries' trade 
policies.  The reformers have achieved much of their agenda, 
but have much more to accomplish urgently, and are moving 
forward on the remaining goals.  This remarkable success so 
far demonstrates the GOE's ability and commitment to reform, 
he said. 
 
3.  (C) The Ambassador responded that the election thuggery 
had damaged the confidence and trust of foreigners as well as 
Egyptians in their Government.  Had the GOE accepted 
international election monitors, they might have deterred 
miscreants from intimidating voters, and have given more 
accurate public reporting on the big picture (Nazif had 
claimed that current CNN reporting on democracy in Egypt was 
harsh and unfair).  Nazif replied that "even if we accept all 
media reports as true," the ongoing parliamentary elections, 
as flawed as may be, represent a significant advance for 
democracy in Egypt -- "yet another result that we could not 
have imagined a year ago."  The process had allowed MB 
candidates not only to run, but also to win what could prove 
to be as many as 100 seats in the 454-seat parliament.  That 
fact alone, unwelcome as it was to the Government and most 
Egyptians, shows that unprecedented political change is 
happening.  Though it should be a long term process of "10 or 
15 years," Nazif argued that Mubarak is committed to pressing 
reforms quickly, aiming to turn over a civilian, democratic 
government to the people of Egypt within his remaining 
tenure. 
 
4.  (C) Nazif cautioned that transforming a state from one 
type of government to another is a long-term process, 
illustrated by the fact that even the first reform steps had 
not guaranteed wide voter participation (only 25% of voters 
turned out in the last round, and those voters belonged to 
narrowly defined groups).  Suggesting that the reform process 
would have to be fine-tuned along the way, he argued that 
conditioning an FTA on specific political reform steps could 
be very tricky and ultimately counterproductive.  The Prime 
Minister added that if the reformers ever judged that Mubarak 
was not committed to pressing the "transformation," "then we 
would all find something else to do." 
 
5.  (C) Minister Rachid stressed that the timing of the FTA 
announcement was critical.  He expected that the large number 
of the MB in opposition in the new Parliament would 
negatively impact on all the GOE's reform efforts.  Delaying 
an FTA announcement would likely reduce the support and 
momentum for an FTA within government and could shake 
investor confidence in the Egyptian economy.  FTA 
negotiations would force the MB to expose its true colors on 
the FTA's gamut of tough policy issues involving job creation 
and economic reform. 
 
6.  (C) The Prime Minister concurred with Rachid, noting that 
the MB bloc in the next Parliament will likely pander to 
anti-American sentiment by opposing closer relations with the 
U.S., including the negotiation of an FTA.  More broadly, 
Nazif stated that the MB is seeking sufficient electoral 
representation to field a presidential candidate in 2011. 
With their rise, the only hope for quick political reform, 
the Prime Minister asserted, was to use the strength of the 
current presidential system to put a better system in place 
over the next two to three years.  It is important for 
Washington to understand the danger facing the secular state 
of Egypt, he said. 
 
7.  (C) The Ambassador replied that the USG frankly did not 
accept the false choice that some in the NDP and even the GOE 
seemed to be holding forth:  either a slow-to-reform GOE, or 
a slide toward a fanatical Islamic state.  We continue to 
believe that serious democratic reform, at a bolder and 
faster pace, offers the best way for the political change for 
which Egyptians are clearly impatient.  Washington was 
looking for GOE willingness to allow a liberal, democratic, 
free-market opposition, and for statements to this effect 
made at the highest levels.  The Ambassador recommended that 
Nazif (leaving for the European-Mediterranean summit in 
Barcelona that day) or Mubarak himself should publicly and 
soon re-affirm such a commitment to hasten democratic 
political as well as economic reforms. 
 
8.  (C) Nazif responded that in his November 25 interview 
with the Financial Times he had in fact expressed the 
government's intention to allow "secular opposition parties 
to show their face" in the next phase of political reform. 
Meanwhile, the reforms that Mubarak had promised to complete 
this term, such as better balance of parties and greater 
representation of women in the parliament, are underway.  The 
silver lining of the large vote for MB candidates is that it 
showed how much the population wants change.  It also 
demonstrates that change has begun, though not in the way 
that either the USG or the GOE might have preferred. 
Nonetheless, given Egypt's low socio-economic indicators ("we 
are not eastern Europe"), Nazif doubted that change could 
have occurred any differently or faster.  In any case, he 
argued that if political reform were required for an FTA, 
then neither Jordan nor Bahrain should have been accorded the 
opportunity to negotiate one with the U.S. 
 
9.  (C) Comment.  As the current cabinet nears the end of its 
term, the reformers are determined to lock in their 
hard-fought gains and press for more if they survive.  Having 
delivered on their promise to implement real and difficult 
reforms in just 16 months, they view an FTA announcement not 
only as a tool to ensure reform beyond their tenure, but also 
as an expression of U.S. confidence in the Mubarak/Nazif 
government.  The reformers are still a vulnerable minority 
within the NDP, and their credibility inside and outside of 
government and possible shelf-life beyond the current 
government depends upon getting results.  With President 
Mubarak gearing up to appoint a new cabinet after the 
parliamentary elections, the reformers are looking for an FTA 
announcement as U.S. validation of their program, and hope 
that it will result in Mubarak returning them to office, 
bolstered both in spirit and in numbers.  End comment. 
 
 
RICCIARDONE