November 16, 2000 The U.S. ambassador to Morocco, Edward Gabriel, said the U.S. policy of promoting U.S. trade and investment in a unified market in North Africa holds enormous economic potential for all parties involved. Gabriel was a featured participant in a two-day conference in Washington November 15-16 organized by the U.S. Trade and Development Agency [TDA] to promote the U.S.-North African economic partnership, commonly known as the Eizenstat initiative. The partnership is named in honor of Stuart Eizenstat, currently deputy U.S. treasury secretary. Eizenstat enunciated the policy a year and a half ago when he was a senior official in the State Department. The TDA conference brought dozens of businessmen from Morocco, Algeria and Tunisia, collectively known as the Maghreb, to Washington to meet with potential U.S. investment and trade partners to talk about nearly 40 investment projects worth $1,000's of millions of dollars. Gabriel said an integrated Maghreb market of 70 million people using transparent business practices would be a strong magnet for foreign investment capital. Gabriel spoke about the implications of the Eizenstat initiative in an interview November 16 with Washington File staff writer Phillip Kurata. Following is a transcript of the interview: Note: in transcript, "billion" means 1,000 million. (Begin transcript) Q: What is the significance of this conference? Gabriel: The conference is a concrete example of the many projects that are now part of the U.S.-North Africa economic partnership, commonly referred to as the Eizenstat initiative. There are two parts to the Eizenstat initiative. One is promoting private sector trade and investment between North Africa and America. The other is creating the right environment for economic development, commercial enterprise, investment and trade. Today's conference is the culmination of over a year of work on bringing together real projects with real U.S. investors. The Maghreb countries have put together nearly 40 projects for presentation. At least half of those are from Morocco. They're involved in the energy, infrastructure, tourism, manufacturing, and information technology areas. It's a pretty significant conference. The value of projects amounts to several billion dollars. It's a very hopeful first step on investment. Q: Are American businessmen at a disadvantage compared with the French and other Europeans in doing business in the Maghreb because of linguistic, cultural or geographical reasons? Gabriel: Not really. Obviously, there has been a francophone bias in the sense of the language and familiarity with North Africa. But what's interesting about Tunisia, Algeria and Morocco is that they have a very strong desire to diversify their investment portfolio to the United States. It's a super opportunity right now for U.S. companies. The second thing that works in the favor of U.S. businesses is
the growing transparency in the North African economies. We
heard examples today [November 16]. In a transparent bidding
process, U.S. companies have won contracts for projects worth three
or four billion dollars. One is the Jorf Lasfar energy project
with CMS Energy -- a $1.5 billion project. CMS Energy was
chosen over a French bidder. November 15, Boeing Aircraft was
awarded a contract for 22 new all-Boeing jets ordered by Royal Air
Maroc. Boeing won this contract despite a very strong French
lobby. So, this is a great time for American investment in
North Africa. Gabriel: North Africa is making a decision, Morocco in particular, to go transparent. They have seen the benefit of transparency. They offered a cellular telephone license on a negotiation in which they were offered $40 million. When they transparently bid it, they got $1.1 billion. So, this is a real example of transparency. Transparency creates real technical and economic competition. We think the United States has a super advantage in telecommunications, energy, infrastructure and even tourism development. Q: What do the North African countries have to do to capitalize on the Eizenstat initiative? Gabriel: Two things. One, they have to have an "America strategy" to seek out U.S. trade and investment. Related to that, they have to create a common market for the Maghreb region. For American businesses, a market of 80 or 90 million people is more interesting than a market of just 10 million in Tunisia, or 30 million in Algeria or Morocco. They need to have an "America strategy" for building a common market for North Africa. Secondly, they have to create a business environment that U.S. businesses and investors will find attractive. The North African countries have to be able to make decisions quickly, offer good rates of return and offer consistency in their judicial process. The Eizenstat is helping address those concerns with its dual focus on structural reform and promotion of trade and investment. Today [November 16] is a culmination of the tremendous strides that have happened in the 18 months since the Eizenstat initiative was enunciated. It's very exciting. Q: Where is the financing for these several billion dollars worth of infrastructure projects advertised at this conference going to come from? The United States is reducing its foreign aid. Developing countries don't have a lot of money to spend. Is the money going to come from the World Bank and other international financial institutions? Gabriel: These projects are all market-oriented projects, not government grant assistance projects. The Eizenstat initiative does provide a little bit of resources in the form of technical assistance to help countries move toward a market orientation. The projects themselves will be financed by the private and public sector institutions, such as Bank of America, the U.S. Export-Import Bank, the U.S. Overseas Private Investment Corporation and other multilateral banking institutions, which are offering tremendous opportunities. We saw two examples. One, a $1.5 billion energy project; another, a cellular telephone project worth $1.8 billion. Both were financed by consortia of private banking and multilateral banking institutions. The Ex-Im Bank, in particular, said it has $2.9 billion in existing loans, $2.9 billion in potential loans and that's not good enough. The bank said it has much more money to loan. Q: Could you elaborate on how the U.S. government is helping the Maghreb countries develop an integrated market so they can participate in the global economy? Gabriel: Under the Eizenstat initiative, the U.S. government is pursuing three objectives. One, bringing the private sectors in the United States and the three North African countries together. We are helping them look at the United States strategically for investment through investment promotion programs and other opportunities. Two, we're providing advice and technical assistance for structural reforms to make the Maghreb more attractive for investment capital. Remember, the Maghreb, because of its Free Trade Agreements with Europe and other countries in Africa and the Middle East, can potentially become a platform for U.S. industry going into Europe, the Middle East and Africa. So, it's not just a market for 70 million people in the Maghreb, but rather a market of nearly 500 million people. Three, the Eizenstat initiative seeks to encourage intra-regional trade. The borders must come down to facilitate trade with each other and they must become more integrated because they'll be more powerful in terms of what they have to offer and attract from the United States. Q: What is happening in terms of Maghreb integration? Gabriel: Right now, there are a number of business discussions, the most exciting of which is electrical transmission. Algeria and Morocco are cooperating to take advantage of European markets. There is an existing gas pipeline where there's cooperation. We think the fields of telecommunications and information technology hold opportunities for the three countries to cooperate. Q: Is democratic reform a key element of globalization or can it occur under authoritarian governments? Gabriel: That's a good point. With regard to Morocco, we're very excited about its democratic experiment. We in the U.S. State Department believe that Morocco probably is the best democratic experiment that currently is going on in the Middle East. In that sense, we're focused on helping Morocco in several areas. Morocco's number one strength is its civil society. We're looking to support the government's effort to strengthen civil society in terms of delivery of services and, more importantly, helping the government become more accountable. The second reason we're excited about Morocco is because the King is very strongly advocating decentralization, which is another key to democracy -- going to the lowest level of government for decision-making so that the people are empowered through the electoral process. The third area is rule of law. We have a very good program going on there. Morocco has a strong justice minister committed to change. We've seen the issues of transparency, anti-corruption addressed very quickly. The court system has improved and this has a lot to do with our technical assistance there. The fourth area is helping women become more empowered in society. We're approaching that issue from an economic empowerment angle. Q: How about corruption and bribe paying? Can countries become integrated into the global economy while practicing corruption? Gabriel: Historically, that has been a charge against
Morocco. But, in the last three years, during the last year of
the reign of King Hassan and now during the new reign of His Majesty
King Mohammad VI and the new government, we've seen a complete
turnaround. I can give two great examples. The cellular
telephone license was bid so transparently it ended up getting the
second largest per capita license fee in the world. It's just
money in the bank. The second is the Boeing aircraft deal
November 15. The French had a tremendous lobby going on.
Everyone assumed that the French had an inside track. But
Royal Air Maroc made a decision that was in the best interest of its
customers, its financial base, and it went with all-Boeing
fleet. (End transcript)
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