09.15.11

Cablegate: Government Site in Egypt Launched by Bill Gates

Posted in Africa, Bill Gates, Cablegate, Microsoft at 4:58 pm by Dr. Roy Schestowitz

Summary: A good demonstration of how Microsoft and Gates manage to manage governments by proxy

According to the following Cablegate cable, the Ministry of Investment (MOI) in Egypt is not quite working on its own. “On behalf of MOI,” says ¶6, “Microsoft Chairman Bill Gates launched a website, www.investment.gov.eg in January 2005, to serve as Egypt’s investment portal.”

Since when does Bill govern Egypt or run its economy? There is a lot of other interesting stuff in the cables below, but it is probably of most interest to Egyptians who wish to understand how Mubarak’s regime has harmed them by giving control to imperialists who export weapons (at taxpayers’ expense).

UNCLAS SECTION 01 OF 03 CAIRO 005350 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR NEA/ELA, NEA/RA, AND EB/IDF 
USAID FOR ANE/MEA MCCLOUD 
USTR FOR SAUMS 
TREASURY FOR MILLS/NUGENT/PETERS 
COMMERCE FOR 4520/ITA/ANESA/TALAAT 
 
E.O.  12958: N/A 
TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], 
ETRD [Foreign Trade], EINV [Foreign Investments], EG [Egypt] 
SUBJECT: UPDATE ON EGYPT'S PRIVATIZATION PROGRAM 
 
REF:  A.  CAIRO 4374 
      B.  CAIRO 1329 
 
Sensitive but Unclassified.  Please protect accordingly. 
 
------- 
Summary 
------- 
 
¶1. (SBU) Since taking office in July 2004, Prime Minister 
Nazif's administration has reinvigorated the GOE's program 
to privatize state-owned industries.  Under the leadership 
of the new Ministry of Investment, the revitalized program 
aims to speed up privatizations by making public enterprises 
more efficient - and thus more attractive to potential 
investors - while also introducing good corporate governance 
principles.  The effort has paid off for the GOE, which 
completed a total of 19 privatizations from July 2004 to 
March 2005, generating LE 2.9 billion ($500 million) 
compared with five transactions generating LE 81 million 
($14 million) in the period July 2003-March 2004.  The GOE 
has promised even bolder steps in the near future for 
divestiture of formerly "strategic" industries.  Labor 
issues remain a concern, but the GOE has indicated that it 
will deal with workers' concerns on a case-by-case basis as 
public companies are privatized.  It is doubtful, however, 
that the GOE would approve any deals that would result in 
massive layoffs, particularly in an election year.  End 
summary. 
 
------------------------- 
Privatization revitalized 
------------------------- 
 
¶2.  (SBU) The GOE privatization program has undergone a 
complete makeover in concept and implementation in the last 
year under the Nazif administration's new Ministry of 
Investment (MOI).  Minister of Investment Mahmoud Mohieldin 
has been the driving force behind revitalization of the 
program, which he refers to as "asset management." 
Mohieldin has used his political weight, as a key member of 
the NDP economic policy apparatus, to garner support for 
broadening the scope of the program to include all public 
enterprises, the more competitive companies as well as those 
with large workforces that could be negatively affected by 
privatization.  He has made privatization a focal point of 
the macroeconomic reform effort led by the Minister of 
Finance, the Minister of Foreign Trade and Industry and 
Nazif himself, all of whom agree on the goals of stimulating 
private sector-driven growth and "marketing Egypt" as a 
destination for foreign investment. 
 
------------------------------------------- 
Pre-Nazif: Privatization in fits and starts 
------------------------------------------- 
 
¶3.  (U) The GOE has two categories of public enterprises: 
wholly state-owned companies regulated by Law 203 of 1991, 
and joint venture companies (including banks) with a public- 
private ownership mix, regulated by Law 159 of 1981.  When 
the privatization program began, the 314 wholly state-owned 
companies were grouped according to the type of economic 
activity they conducted and put under the supervision of 
holding companies (HCs).  The HCs managed the privatization 
of their affiliate companies, eventually dissolving when all 
of their affiliates had been privatized.  This process 
created a conflict of interest, especially for the HC 
chairmen.  Working efficiently to privatize all of their 
affiliates meant that the HC chairmen worked themselves out 
of a job.  Privatization was therefore a slow, sporadic 
process and after more than a decade of fits and starts, 
liquidations and restructuring, there were still seven HCs 
with 139 affiliate companies. 
 
¶4. (U) In 1999, after a cabinet change, the GOE decided to 
include the sale of public shares in joint venture companies 
under the rubric of the privatization program.  The Ministry 
of Economy and Foreign Trade (now the Ministry of Foreign 
Trade and Industry) began an inventory of joint ventures and 
their shareholder structure.  After a lengthy research 
process, the number of joint venture companies and banks was 
found to exceed 600, all with different percentages of 
public ownership.  In early 2000, the entire privatization 
program, including wholly state owned companies and joint 
ventures, was consolidated under the Ministry of Public 
Enterprises, where it remain until being subsumed by the new 
MOI in the July 2004 cabinet change. 
 
------------------------- 
Privatization under Nazif 
------------------------- 
 
¶5.  (U) Soon after MOI took over managing the privatization 
program, a three-pronged effort was undertaken to remake 
public enterprises by:  1) restructuring and re-engineering 
public companies to make them more efficient, and ultimately 
more attractive to potential purchasers; 2) implementing 
good corporate governance principles in all public 
companies; and 3) aggressively pursuing the advertisement 
and sale of public companies.  As part of the effort to 
introduce corporate governance principles, MOI published an 
OECD-based code of conduct for corporate governance and 
disclosure in public companies and began publishing the 
minutes of companies' general assembly meetings to increase 
transparency.  MOI also created a ministerial committee to 
assist investors in resolving disputes arising from 
privatization transactions.  The committee has already 
reportedly resolved 18 disputes, including several long- 
standing disputes from privatizations that occurred in the 
pre-Nazif era. 
 
¶6.  (U) MOI also began a campaign to advertise the newly 
revamped privatization program.  The thrust of the ad 
campaign was that the GOE was committed to removing 
obstacles that had blocked or slowed privatizations in the 
past.  Labor and debt issues would be dealt with on a case- 
by-case basis, foreign private sector interest was 
encouraged rather than feared as it had been under previous 
administrations, and no sectors were off-limits or 
"strategic" as in the past.  On behalf of MOI, Microsoft 
Chairman Bill Gates launched a website, 
www.investment.gov.eg in January 2005, to serve as Egypt's 
investment portal.  The GOE then took its investment 
campaign to the May 2005 World Economic Forum in an effort 
to drum up more foreign investment. 
 
¶7.  (U) The result of MOI's efforts has been a rekindling of 
interest among foreign investors.  A list of 41 local and 
international financial institutions, including Citibank, 
Goldman Sachs and Merrill Lynch, are now working with MOI as 
advisors/consultants on privatization.  A number of 
prominent foreign companies - such as Ciments Francais, La 
Farge Titan and Michelin - concluded multi-million dollar 
deals to purchase public companies such as Suez Cement (ref 
B).  From July 2004 to March 2005, the GOE completed 19 
privatizations, generating LE 2.9 billion in revenue, 
compared with only five transactions that generated LE 81 
million in the period July 2003-March 2004.  MOI expects the 
total value of privatizations in fiscal year 2004/2005 to 
exceed LE 3 billion, almost double the aggregate value of 
sales for the period 2001 through June 2004.  The budget for 
fiscal year 2005/2006 (July 2005-June 2006) projects 
revenues from privatization will reach LE 5 billion (ref A). 
 
---------------------- 
Privatization expanded 
---------------------- 
 
¶8.  (U) As noted above, MOI has included in the 
privatization program companies that were not previously 
slated for sale.  Prior administrations considered certain 
companies "cash cows" that were too valuable for the GOE to 
sell.  Likewise, certain sectors, such as petrochemicals and 
telecoms, were considered "strategic" and therefore off 
limits to private ownership, especially foreign private 
ownership.  In June MOI sold 20% of the GOE's stake in Sidi 
Krir petrochemical company on the Cairo and Alexandria Stock 
Exchange (CASE) for LE 70/share.  The company's shares have 
dominated trading by volume and value on the CASE in the 
last several weeks and recently closed at LE 105/share.  A 
number of other high profile companies are also in the 
pipeline, including petroleum company AMOC and Eastern 
Tobacco Company (one of the GOE's "cash cows").  MOI has 
also indicated it will offer a significant stake in Telecom 
Egypt by the end of 2005.  Shares of several public 
companies, possibly including Telecom Egypt, will also soon 
be registered on the New York Stock Exchange to further open 
channels for foreign investment.  (Note:  An update on 
privatization in the banking sector will be sent septel. 
End note). 
 
------------ 
Labor issues 
------------ 
¶10.  (SBU) One of the difficult issues for the GOE as it 
divests its public assets is the reaction of labor.  The GOE 
deals with excess labor in companies to be privatized by 
offering early retirement packages, which are largely funded 
by proceeds from privatization.  Senior GOE officials 
continue to provide public reassurances that labor issues 
will be resolved amicably and a safety net will be provided 
for workers affected by privatization, in keeping with the 
GOE's general policy of protection of low-income earners. 
The MOI is working on a new early retirement system designed 
to more closely address workers' concerns and improve the 
financial management of privatization proceeds that will be 
used to fund the early retirements. 
 
¶11.  (SBU) Nevertheless, in state-owned enterprises, 
particularly those burdened with surplus manpower like 
textiles, iron, and steel, concerned workers have expressed 
opposition to privatization through their representatives in 
parliament, through strikes and in the opposition press. 
The proposed sale of shares in Suez and Torah Cement 
Companies late last year triggered strikes that were 
resolved only after MOI obtained the purchaser's commitment 
not to lay off workers for three years (ref B).  Mohamed 
Hassouna, Advisor to the Minister on Privatization Affairs, 
told Econoff that MOI is "keeping channels open to workers," 
and cooperating with the Egyptian Trade Union Federation 
(ETUF) on a case-by-case basis to resolve potential problems 
with privatization deals.  It would be surprising, however, 
for the GOE to conclude any deals that risk large-scale 
layoffs from labor-intensive industries prior to Egypt's 
October elections. 
CORBIN

Also see the following Cablegate cable in which ¶9 speaks of Kamel holding a “meeting with USG [US Government] officials and on the Hill, and [how he] also met with Microsoft Chairman Bill Gates and executives from Intel, Cisco, and Oracle.”

UNCLAS SECTION 01 OF 04 CAIRO 005344 
 
SIPDIS 
 
STATE FOR NEA/ELA, NEA/RA, AND EB/IDF 
USAID FOR ANE/MEA MCCLOUD 
USTR FOR SAUMS 
TREASURY FOR MILLS/NUGENT/PETERS 
COMMERCE FOR 4520/ITA/ANESA/TALAAT 
 
E.O.  12958: N/A 
TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], 
ETRD [Foreign Trade], EINV [Foreign Investments], ENRG [Energy and Power], 
EWWT [Waterborne Transportation], EG [Egypt] 
SUBJECT: EGYPT MONTHLY ECONOMIC REPORT: MAY-JUNE 2005 
 
 
------- 
Summary 
------- 
 
¶1.  In this edition:  More Egyptian companies make it into 
international emerging market stock indices and the GOE 
signs an S&T agreement with the EU.  The Ministry of 
Communication and Information Technology announces a third 
mobile phone license will be issued and minister Tarek Kamel 
visits the U.S.  Orascom Telecom purchases an Italian 
telecom.  President Mubarak inaugurates a new liquid natural 
gas facility, the Ministry of Petroleum announces new oil 
and gas deals as well as new oil discoveries, and Egypt and 
Israel sign an MOU on gas exports.  Air traffic controls go 
on a "go-slow" strike and Suez Canal revenues increase 18% 
over last fiscal year.  End summary. 
 
-------------------------- 
Macroeconomic Developments 
-------------------------- 
 
¶2.  In mid-May Morgan Stanley International (MSI) announced 
the addition of seven Egyptian companies to its emerging 
markets indices, bring the total number of Egyptian 
companies on MSI indices to seventeen.  MSI increased 
Egypt's weight in its indices, which cover all emerging 
markets, from 0.77% to 0.78%.  The change raises Egypt's 
market capitalization in the MSI indices to $1.22 billion. 
The seven new companies included are EFG-Hermes Holding, 
Egyptian American Bank, Egyptian Financial and Industrial 
Co., Ezz Rebars, Egypt Beni Souef Cement, Olympic Group and 
Sinai Cement.  The companies were chosen based on largest 
private sector ownership, market capitalization and trading 
activity in the Egyptian market.  Other Egyptian companies 
included in the MSI indices include domestic blue chips like 
Commercial International Bank, AlWatany Egyptian Bank, 
Eastern Tobacco, Media Production, EIPICO, Mobinil, Nasr 
City Construction, Misr International Bank, Orascom 
Construction and Orascom Telecom Holding. 
 
---------------------- 
Science and Technology 
---------------------- 
 
¶3.  S&T Conference:  On May 28, PM Nazif opened the First 
National Conference for Scientific Research in Egypt.  About 
4,000 Egyptian scientists and researchers, including 
Egyptian expatriate scientists, and various Cabinet 
ministers attended the two-day event.  The conference 
focused on soliciting feedback from the S&T community on 
development of a new strategy for promoting scientific 
research, services and technology in Egypt.  For the first 
time in recent memory, ministers fielded direct questions 
from working-level Egyptian scientists and listened to their 
opinions on S&T issues.  Minister of Foreign Trade and 
Industry Rashid discussed plans to increase private sector 
funding of R&D projects and Minister of Higher Education and 
Scientific Research Salama noted that his ministry would 
establish a fund to support R&D. 
 
¶4.  The conference produced a series of recommendations to 
shape a new national S&T strategy for Egypt.  The most 
significant decision was to increase the GOE budget 
allocation for scientific research by 10-50%.  The increase 
would include salaries and administrative costs for 
scientific institutions.  The conference action plan will be 
published at the end of July.  (Comment:  PM Nazif's 
commitment to increasing the S&T budget and the presence at 
the conference of reform-minded ministers such as Rashid 
indicates that the GOE is serious about reform in the field 
of scientific research.  Private sector involvement will be 
key, however, and the GOE's ability to attract foreign 
investment in S&T will depend on continued commitment to 
macroeconomic reform.  End comment). 
 
¶5.  EU-Egypt S&T Agreement:  On June 21, PM Nazif attended 
the signing of a new S&T agreement between Egypt and the EU. 
According to Fawzi El Refaei, President of the Egyptian 
Academy of Scientific Research and Technology, the agreement 
aims to expand S&T cooperation and provides for Euro 11 
million in funding for S&T projects.  The agreement allows 
Egyptian scientists and research institutions to apply for 
funding of specific R&R projects from EU sources.  El Refaei 
indicated that funding from this agreement would be 
channelled into areas of development identified in Egypt's 
new S&T strategy. 
 
-------------------------------- 
Telecommunications and Info Tech 
-------------------------------- 
 
¶6.  In mid-May, Minister of Communication and Information 
Technology (MCIT) Tarek Kamel announced that the GOE would 
soon issue a license for a third mobile phone operator.  The 
RFP would be issued in 3-4 months and proposals would be 
reviewed by early 2006, with the goal of getting the third 
operator in place by mid-2007.  Kamel indicated that MCIT 
anticipated LE 2.5 billion in licensing fees from the new 
operator.  The coming RFP would be "technology neutral," 
i.e., either GSM or CDMA.  According to a study by the 
National Telecommunications Regulatory Authority (NTRA), 
Egypt's mobile market growth rate is currently 12%, but is 
expected to reach 25% within five years. 
 
¶7.  In late May, the Information Technology Industry 
Development Authority (ITIDA) invited Egyptian and 
international firms to apply for e-signature licenses under 
Law 15 of 2004, which regulates e-signatures.  According to 
ITIDA, use of e-signature technology will encourage new 
investment in e-commerce and e-business projects and 
facilitate access to global e-business sectors.  Details of 
the licensing requirements can be found at 
www.itida.gov.eg/csp. 
 
¶8.  Also in late May, Orascom Telecom (OT) announced the 
$130 million sale of its controlling stake in Libertis, a 
GSM company in the Democratic Republic of Congo, and 
Libertis' operator Oasis Telecom.  Also in late May, Naguib 
Sawiris, CEO of OT, announced the purchase of Wind, the 
telecom subsidiary of Italian conglomerate Enel, by the 
newly established "Weather Investments."  Sawiris owns 73.9% 
of Weather Investments and Enel owns the remaining shares. 
OT plans to eventually transfer 51% of its shares to Weather 
Investments.  The total cost of the purchase was Euro 17.2 
billion. 
 
¶9.  MCIT Minister Kamel made his first official visit to the 
U.S. June 18-28.  The delegation included the Chairman of 
NTRA, the President of Telecom Egypt and representatives 
from approximately 20 Egyptian IT firms.  Kamel held meeting 
with USG officials and on the Hill, and also met with 
Microsoft Chairman Bill Gates and executives from Intel, 
Cisco, and Oracle.  The visit led to establishment of a U.S.- 
Egypt IT consultative council.  Kamel also witnessed the 
signing of several business deals, including a $5 million 
agreement between Egypt's QuickTel and Qualcom to service 
wireless networks in Egypt.  The minister also announced 
that NTRA would soon issue licensing terms for Voice-over 
Internet Protocol (VoIP) service in Egypt. 
 
------ 
Energy 
------ 
 
¶10.  On May 30, President Mubarak inaugurated the liquefied 
natural gas (LNG) plant at the Mediterranean Gas Complex in 
Damietta.  The LNG facility is owned and operated by the 
Spanish Egyptian Gas Company (SEGAS), which is 80% owned by 
Union Fenosa Gas (50% Union Fenosa of Spain and 50% ENI of 
Italy), and 20% owned by Egyptian State Holding Companies. 
The $1.3 billion facility was built by a joint venture of 
Halliburton KBR, JGC Corporation of Japan, and Tecnicas 
Reunidas of Spain.  The output of the facility, 5.5 mt/yr, 
has already been committed for the next 25 years.  The 
Mediterranean Gas Complex near Damietta is a joint 
investment between the Italian AGIP and British Petroleum. 
 
¶11.  In mid-June, Petroleum Minister Fahmi announced that 
the GOE had signed 36 new oil and gas exploration agreements 
over the last year for a total investment of $250 million. 
The agreements will result in the drilling of 55 new wells 
in the Western Desert, the Nile Delta, and off the 
Mediterranean coast and Gulf of Suez.  Foreign investors in 
the agreements include British Gas, Malaysian Petronas, 
International Egyptian Oil Company (an Italian subsidiary of 
AGIP) and Apache.  Announcement of the new exploration 
agreements was followed by three new oil discoveries in late 
June.  The largest was at Ras Gharib-Amr, a 50-year-old oil 
field in the Gulf of Suez, 2 km offshore.  The discovery was 
the first at Ras Gharib-Amr in the last 40 years.  The 
second discovery was at El Tamad, approximately 90 km 
northeast of Cairo.  This was the first on-shore oil 
discovery in the northern Nile Delta region.  The third 
discovery was at El Diyur in Egypt's Western Desert.  Total 
reserves from the new discovery were estimated at 70 million 
barrels of crude oil. 
 
¶12.  Egypt-Israel Gas Agreement:  On June 30, Fahmi signed 
an MOU with Israeli National Infrastructures Minister 
Binyamin Ben-Eliezer, clearing the way for a long-awaited 
$2.5 billion commercial gas deal between Eastern 
Mediterranean Gas (EMG) and the Israeli state-owned 
Electrical Company (IEC).  While the commercial details 
remain to be determined, EMG will export approximately 25 
billion cubic meters of gas over 15 years from the Egyptian 
port of El Arish to the port of Askalon in Israel.  EMG is 
an Egyptian-registered company 25% owned by Israel's Merhav 
Group.  Egyptian businessman Hussein Salem owns another 65% 
of EMG and the Egyptian Gas Holding Company owns the 
remaining 10%. 
 
¶13.  The MOU provides a "political umbrella" for the 
commercial agreement, and commits the GOE to providing gas 
to EMG and the GOI to providing tax exemptions for equipment 
and materials.  Completion of the project is expected to 
take two years.  Announcement of the MOU was coordinated 
with announcement of cooperation between the GOE and the 
Palestinian Authority on gas exports.  Headlines of some 
opposition papers tried to portray the MOU as an attempt to 
appease the USG and deflect pressure for further political 
and democratic reform. 
 
-------- 
Aviation 
-------- 
 
¶14.  In early May, Egyptian air traffic controllers went on 
a "go-slow" strike, their second in the span of two months, 
to protest the Ministry of Civil Aviation's penalization of 
8 air traffic controllers for delays at Sharm El Sheikh 
airport.  The Association of Egyptian Air Traffic 
Controllers threatened to bring air traffic to a total halt 
if the penalties were not lifted.  Controllers also demanded 
a doubling of salaries over three years, better health 
insurance and better promotion opportunities.  The strike 
ended after Minister of Civil Aviation Shafik promised to 
look into the strikers' demands for better pay and 
conditions.  Aviation officials indicated that the 
controllers conducted the go-slow in line with International 
Civil Aviation Organization standards, but failed to 
announce the go-slow to the airlines in advance.  Unofficial 
reports indicated that losses from the go-slow amounted to 
$31 million. 
 
--------------------------------- 
Suez Canal and Maritime Transport 
--------------------------------- 
 
¶15.  In early May, the Suez Canal Authority indicated that 
revenues from Suez Canal tolls during FY 2004/2005 would 
exceed $3.2 billion, compared to $2.82 billion during FY 
2003/2004.  During the first 9 months of FY 2004/2005 (July 
2004- March 2005), revenues increased by $369 million to 
$2.446 million, up 18% from the previous year.  A recent 
study by the Ministry of Transportation indicated that total 
revenue from port facilities, excluding customs, duties and 
taxes, increased in 2004 by 25% to L.E. 2.24 billion. 
 
------------------- 
Economic Statistics 
------------------- 
 
¶16. 
 
Exchange Rate: 
                              (05/31/05)        (06/30/05) 
Egyptian Pounds/$             Buying Selling Buying Selling 
Avg. Bank/Bureau Rate         578.79 581.22  578.24 580.84 
 
Capital Market: 
                               (05/31/05)       (06/30/05) 
Capital Markets Authority Index 1644             1789 
Hermes Financial Index          36344            41772 
EFG Index                       19599            22692 
 
Interest Rates: 
(percent, monthly comparison) 
 
Interbank Overnight              9.49            9.55 
T-bills (182 days)               9.88            8.39 
T-Bond (maturing 01/06)          4.15            4.15 
T-Bond (maturing 04/09)          5.50            5.50 
 
Foreign Reserves: 
(US $ billion, official gov't figures) 
 
 (04/2005)      (05/2005) 
  18.470    18.712

Egyptian companies would be better off integrating Free/open source packages that not only help create jobs in Egypt but also give the country more control of its own. █

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