CI VIEW: Tunisia’s Essebsi wins personal support of President Obama and Penny Pritzker for economic Renaissance

WASHINGTON/TUNIS (CI MENA) — Tunisian President Beji Caid Essebsi succeeded in winning the personal support of US President Barack Obama and US Commerce Secretary Penny Pritzker to make Tunisia —  the Arab world and Africa’s first pluralistic democracy — the model of how economic prosperity can defeat ISIS/Al Qaeda during his state visit to Washington on May 20-21, 2015.

[President Barack Obama and Tunisian President Beji Caid Essebsi Oval Office filmed by Capitol Intelligence/Tunisia’s Express FM using CI Glass (Google Glass) at Oval Office. May 21, 2015. Express FM Chef de Service Khadija Sfar operated the CI Glass during Oval Office meeting.]

The terrorist attack that killed 38 tourists at the Tunisian beach resort of Sousse on June 26 and the attack at Bardo museum in Tunis killing 22 people were sophisticated operations aimed at crippling the Tunisian economy and at the same time attacking the United States for its support of the nascent North African democracy.

US Commerce Secretary Penny Pritzker, the scion of the billionaire Pritzker family of Chicago, used her personal contacts to arrange a Business Round table for President Essebsi at Blair House on May 20 attended by George Soros, Washington, DC-based Hilton Worldwide CEO Christopher J. Nassetta and listed US private giant KKR & Co (NYSE: KKR) principal General David Petreaus George Soros attended the Round Table in his capacity as the owner of Soros Fund Management and not as the head of numerous philanthropic organizations. 

President Essebsi, accompanied with Finance Minister Slim Chaker and Tourism Minister Salma Elloumi Rekik among others, managed to leave Washington following his meeting with President Obama in the Oval Office with the status of United States’ major non-NATO ally; USD 134m in economic aid and USD 500m in new loan guarantees for economic reforms; and assorted military aid to combat terrorism.

During his speech at a luncheon hosted by the National US-Arab of Chamber of Commerce (NUSACC), Finance Minister Chaker said Tunisia has already completed five important economic reforms such as new banking law; taxation reform: and a new framework for public private partnerships (PPPs). Minister Chaker also said that by the end of the year, Tunisia will institute important reforms regarding the country’s investment regime; antitrust and competition; and an overhaul of the country’s bankruptcy code.

[Tunisian Finance Minister Slim Chaker speaks with Capitol Intelligence/CI MENA using CI Glass at National US-Arab of Chamber of Commerce Luncheon. Willard Hotel, Washington DC. May 21, 2015]

An almost immediate game changer for the Tunisian economy will be the upcoming “recapitalization” of the country’s three state-owned banks Societe Tunisiene de Banque (STB),  Banque Nationale Agricole en Tunisie (BNA), and Banque du L’ Habitat.

In an interview with Capitol Intelligence/CI MENA, Minister Chaker said that the recapitalization of the three banks will happen hand-in-hand with a overhaul of the country’s banking sector that still lags behind African banking giant Morocco and is only now beginning to attract serious attention from the Mediterranean’s financial capital, Milan.

Financial sources in Tunisia said the government would be open to privatizing one or more of the state-owned banks, the government is hesitant to announce such a move for fear of needlessly antagonizing the country’s unionized public sector bank employees. The two most likely foreign banking group who would look at acquiring a Tunisian based bank would be Italy’s Intesa Sanpaolo which successfully acquired Egypt’s Bank of Alexandria in 2006 and France’s BNP Paribas.

[Intesa San Paolo Executive Vice Chairman Marcello Sala speaks with Capitol Intelligence/MENA using CI Glass at Italia ed Egitto forum in Milan. Feb, 27, 2015.]

Another great potential acquirer of one of the Tunisian banks would be New York-based Citigroup (NYSE: C) that is already operating a universal bank in Tunisia.

Citigroup sources said that the Tunisian banks would a good fit for Citigroup, which has recently headquarted its European investment banking business out of Milan, but that Secretary Pritzker would need to personally pitch Citigroup CEO Michael Corbat due to the relatively small deal size.

Commerce Secretary Pritzker personally showed her support and interest for Tunisia by keynoting Investment & Entrepreneurship Conference held in Tunis on March 5. Pritzker was the first official visit by a US cabinet secretary following the murder of US Ambassador Christopher Stevens in Benghazi and the attack on the US Embassy in Tunis in September 2012.

The timing of Pritzker’s visit was also fortunate as it occurred only two weeks prior to the murder of 23 tourists at the capital’s Bardo museum. The terrorist attack on Sousse also occurred two weeks following the Tunisia Investment Forum on June 11-12, leaving experts to believe that the relatively unprepared ISIS is working with sophisticated behind the scene allies.

The conference — organized the American Chamber of Commerce in Tunisia and moderated by former Secretary of State and owner of the USD 750m plus Albright Capital Management  emerging market private equity fund Madeleine Albright — was meant to showcase continued American commitment to Tunisia as demonstrated by investments of US Fortune 500 groups such as Honeywell International Inc (NYSE:HON), General Electric (NYSE:GE), Microsoft Corporation (NASDAQ: MSFT), Delphi Automotive (NYSE: DLPH), Caterpillar INC (NYSE: CAT) and even dynamic US oil and gas groups such as Anadarko Petroleum (NYSE: APC).

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[US Commerce Secretary Penny Pritzker answers question from Capitol Intelligence/MENA using Google Glass during Amcham Tunisia Investment & Entrepreneurship Conference in Tunis, Tunisia. March 5, 2015]

Secretary Pritzker’s keynote was to show US President Barack Obama’s personal support and commitment for the Arab world’s and Africa’s first representative democracy and the new government headed Prime Minister Habib Essid that includes pro-sharing with the pro-business Islamist party Ennadha.

But more importantly, Secretary Pritzker’s visit went along way to undo and repair serous damaged created by than Secretary of State Hillary Clinton’s panicked decision to close the US Embassy in Tunisia following riots and issue severe travel bans when the Embassy only suffered superficial damage.

The State Department only lifted its travel restrictions to Tunisia a few days ahead of the April 4, 2014 Oval Office meeting between President Obama and caretaker Prime Minister Medhi Jomaa.

“Secretary Pritzker’s visit was an attempt by the President to reset the relationship and at the same time mitigate the great economic and political damage Secretary Clinton caused by shutting down our Embassy,” a veteran US diplomat said.

Tunisian business and official sources said they are seriously worried that US Secretary of State John Kerry may repeat the policy errors of his predecessor and not view the horrific attack in Sousse and Bardo as part of a broader ISIS strategy of attacking the United States and Europe through its ally, Tunisia.

It is economic stagnation and not ideology that is the breeding grounds for those who carried out the attack on Bardo/Sousse and that investment and job growth is the best and only real tool to combat terrorists.

The terrorist attack seems to have caused Bethesda, Maryland-based Marriott International (NASDAQ:MAR) to reconsider their planned opening of a 129 room Ritz-Carlton in Carthage and the takeover of the 220 rooms Nejma hotel in Sousse.

Marriott International  refused to respond to repeated queries from Capitol Intelligence for comment from Marriott International Chairman J.W. Marriott, Jr whether Marrriott remains committed to the Tunisian market.

In fact, Overseas Private Investment Corporation (OPIC) which is providing financing for the new developments have not heard back from Marriott management regarding their planned commitments to Tunisia. 

Former Tunisian Finance Minister and Tunisia’s official candidate for the presidency of the African Development Bank, Jaloul Ayed, said he was continuing in his efforts to diversify the flow of direct foreign investment in Tunisia and making the country attractive not only to European markets such as France, Italy and Germany but also the United States and major Asian economies.

[African Development Bank President Candidate Jaloul Ayed speaks to Capitol Intelligence/Africa using CI Glass during the US-Tunisia Investment & Entrepreneurship Conference in Tunis, Tunisia. March 5, 2015]

While Ayed failed to win the presidency of the African Development Bank, he is the front-runner to become the next governor of Central Bank of Tunisia.

As the new governor of the Tunisian Central Bank, Ayed would play a key role in reforming the country’s banking sector to make it competitive with Morocco that already originates about 60 percent of bank loans in Africa.

Tunisia is also a top priority for the US government’s Overseas Private Investment Corporation (OPIC) which can provide up to USD 250m in project finance or political risk guarantees for projects with at least 25% US direct or indirect participation.

OPIC President Elizabeth Littlefield accompanied Secretary Pritzker at the investment summit. Tunisia is already a top priority for the European Bank for Reconstruction and Development (EBRD) and the fund already mobilized a team in Tunis and soon Sfax to help build up Tunisia’s vibrant private sector and strategic infrastructure projects such as a deep sea port at Enfidha.

[European Bank for Reconstruction and Development Managing Director for Southern and Eastern Mediterranean Hildegard Gacek speaks with Capitol Intelligence/CI MENA using CI Glass at Tunisia Investment Forum. June 11, 2015]

The EBRD, with its long and effective history of transforming private sector companies in Eastern Europe and the former Soviet Union, is arguably the multilateral organization that can be most help to Tunisia with its investment banking type approach to development.

A critical voice regarding how some in the United States government treat Tunisia is Franco-Tunisia media and banking magnate Tarak Ben Ammar.  While the the United States had promised billions of dollar in direct investment into the Tunisian economy, the US has only really carried through with its investments in Egypt, Ben Ammar said.

[Nessma owner Tarak Ben Ammar speaks with Capitol Intelligence/MENA using Google Glass during Amcham Tunisia’s Investment & Entrepreneurship Conference in Tunis, Tunisia. March 5, 2015]

To add injury to insult, the only financial deal announced at the conference was a USD 37.5m franchising lending facility by OPIC, a facility delayed by nearly three years due to tardiness on the part of Middle East Invest Initiative (MEII) which represented OPIC during the lengthy State Department enforced travel ban.

MEII is already in the center of controversy as intimately connected to the controversial Clinton Global Initiative (CGI) founded by now presidential candidate Hillary Clinton and former US President Bill Clinton.

The CGI has been accused of selling access to the US government by accepting donations from countries such as Algeria, Saudi Arabia, Qatar and controversial businessmen such as Ukrainian oligarch Victor Pinchuk.

Ben Ammar said Europe should consider Tunisia more important than Greece and noted that Tunisia is in fact closer to the heart of Europe than the Balkans.

As the owner of North Africa’s largest private television network Nessma and  board member of Telecom Italia; France’s Vivendi  and Milan-based investment bank Mediobanca — Ben Ammar is already playing a key role in bringing together US, European and Gulf-based investors to his native Tunisia.

Ben Ammar is close friendship to the United States stems from having produced George Lucas’ Star Wars and Steven Spielberg‘s Raiders of the Lost Arc in Tunisia in the 1980s and having been the first Tunisian graduate of Georgetown University.

A good example of a Tunisian financial success story is the recent Tunis Stock Exchange listing of automotive parts supplier One-Tech and the USD 1.1bn automotive parts multinational Coficab owned by Hichem Elloumi and whose sister currently serves as the critically important minister of tourism,  Salma Elloumi Rekik.

In a previous interview with Capitol Intelligence/CI MENA during Tunisian Prime Minister Mehdi Jomaa’s meeting with President Obama in April 2014, One-Tech owner and general manager Hedi Sellami said the group with annual turnover of USD 350mn is experiencing double-digit sales and profit growth.

[One-Tech GM Hedi Sellami speaks to Capitol Intelligence using CI Glass during PM Mehdi Jomaa Oval office meeting with President Obama, April 4, 2014.]

One-Tech had initially sought out a US private equity investor to join the International Finance Corporation as a company shareholder, but is now talking instead to European investment banks for a dual listing on a major European market such as London, Paris, Milan and even Warsaw.

Both Elloumi’s Coficab and Sellami’s One-Tech are already important US auto part suppliers such as Troy, Michigan-based Delphi and Southfield, Michigan-based Lear Corporation (NYSE: LEA).

[Coficab founder and Chief Executive Hichem Elloumi speaks to Capitol Intelligence/CI MENA using CI Glass at Tunisia Investment Forum #TIF]

Speaking with Capitol Intelligence at the Tunisia Investment Forum held in Tunis on June 11-12, Elloumi said Coficab continues to expand into new markets such as Mexico, United States and Eastern Europe through mainly organic growth. He said the company is on track to double its current sales of about USD 1.1bn in 2020, an incredible feat considering that much of its expansion does not involve M&A acquisitions.

Notwithstanding Elloumi’s modesty, Tunisia has rapidly become the Detroit of the Mediterranean with Germany’s giant Volkswagen (XETRA:vow3) looking to build a USD 1bn OEM manufacturing plant in the country and the announcement by India’s TATA Group that they will  begin assembling Xenon pick-up trucks and light commercial vehicles in partnership with Tunisia’s ICAR.

Another Tunisian company destined from dynamic growth is high-end gourmet food food producer Sopraco which is already distributing its products at upscale Monrovia, California-based Traders Joe’s and is currently holding talks with US retail giant Walmart (NYSE: WMT), Sopraco Chairman Sami El Ouni said.

[Sopraco Chairman Sami El Ouni speaks with Capitol Intelligence/MENA using Google Glass during US Commerce Secretary Penny Pritzker visit to Tunisia. March 4, 2015]

Sopraco’s El Ouni said see his company growing to about EUR 76m in 2010 from current annual sales of about EUR 8m this year through added production capacity and the roll-out of a gourmet line in the United States and Europe.

Prior to Secretary Pritzker’s visit to Tunisia, El Ouni said he was seeking growth finance from Saudi Arabia-backed private equity firm Swicorp but has now opened direct talks with OPIC thanks to Pritzker’s visit.

Ironically, the Russian sanctions against EU agriculture produce — in retaliation to EU sanctions against Russia — has led to a boom in Tunisian agriculture exports to Russia and a visible recovery in vital and labor extensive sector of its economy.

One potential major US new investor for Tunisia is Fedex Corporation (NYSE:FDX) which is reviewing whether to use the Enfidha airport located just south of Tunis as its regional logistic hub for the North Africa and the entire African continent. In previous comments to Capitol Intelligence, Fedex chief executive Fred Smith said he has asked his management team to study the option.

Enfidha airport, which now only serves only a handful of flights a day, is a USD 200m plus green-field airport financed by the African Development Bank (AfDB) and operated by Turkey’s TAV Group. The government of Tunisia is planning a deep water port in Enfidha and has been working closely with the European Bank for Reconstruction and Development (EBRD).

Finance Minister Chaker, in his interview with Capitol Intelligence/CI MENA, said he would welcome Fedex interest in Enfidha and the government is currently in talks to reach agreement with TAV and other stakeholders on Enfidha’s future.

Notwithstanding the interest of Fedex and founder Fred Smith and openness of such a deal by Minister Chaker, Fedex managers have not been in aggressive in their approach to pursue the concession agreement or are even aware of the high-level interest in creating an African regional cargo hub.

Another major US investor in Tunisia is GE (NYSE: GE). In November 2013, GE Global Operations head Shane Fitzsimons made a high level visit to Tunisia to confirm the company’s commitment to the country as Tunisia remains an investment priority for GE CEO Jeff Immelt.

During the visit, Fitzsimons signed MoUs for major projects in priority sectors for Tunisia such as road and rail infrastructure, renewable energy, water desalination and health.

GE’s commitment to North Africa is set only to increase following its USD 17bn bid for the Power and Grid business of French industrial giant and North African market leader Alstom SA (EPA:ALO).

Sofiane Ben Tounes, GE President and CEO for North East Africa, said GE is currently bidding to build two 750 megawatt electrical power plants near Tunis as well as building out GE’s healthcare business in the country’s burgeoning private and public hospital and clinic market.

Mohamed Raed Hergl, the head of GE government affairs for North Africa, said the Tunisian government still has much work to do in reforming its public private partnership laws to make major infrastructure investments attractive to major foreign players.

[Tunisia Minister of Industry and Mining Zakaria H’mad speaks to Capitol Intelligence/CI MENA using CI Glass at Tunisia Invest Forum! Tunis; June 11, 2015]

Tunisian Industry and Mining Minister Zakaria H’mad said the government is currently working hard to propose a new law on public private partnerships that will satisfy all stakeholders in question.

Caterpillar, the Peoria,Illinois-based construction machinery and power group, is also set to make a major return to Tunisia in the near future.

Caterpillar had created its first foreign subsidiary in Tunisia in 1926 and Tunisia represents an important growth market for the company suffering from serious self made set-backs in China.

Speaking with Capitol Intelligence/CI MENA at the US Export-Import Bank Annual Conference in Washington, DC, Caterpillar Chief Executive Doug Oberhelman said the company is looking for further expansion opportunities both in North Africa and sub-Saharan Africa.

[Caterpillar Chief Executive Doug Oberhelman speaks to Capitol Intelligence/CI MENA using CI Glass at Export-Import Bank of the United States Annual Conference. Washington, DC. April 24, 2015]

Apart from important sales of its construction and agriculture equipment sales, Tunisia and North Africa represents a strategic and growing markets for its important Power System division that builds micro-grid power stations that are critical to power small to medium businesses and critical infrastructure such hospitals in an area known for its unreliable electricity grid.

Tunisia’s location next to major oil producing countries of Libya and Algeria has led Citigroup to significantly increase its investment banking operations in Tunisia and in the region.

Speaking with Capitol IntelligenceHoneywell International Inc (NYSE:HON) chief executive Dave Cote said Tunisia and the greater North Africa and western African region offers interesting opportunities for the US multinational.

In fact, Cote gave a huge vote of confidence to the Tunisian economy when he went to Tunis — the first-time that a Honeywell CEO has visited Africa — in October 2012 and met with than Tunisian Prime Minister Hamadi Jebali.

[Honeywell CEO Dave Cote speaks with Capitol Intelligence using CI Glass at US House Financial Service Committee. March 25, 2014]

Cote’s visit occurred a little over a month after US Ambassador Chris Stevens and three American diplomats were killed in Benghazi and the US Embassy in Tunis was attacked.

Cote’s visit had marked the opening of Honeywell’s operations in Tunis in April 2012.  The office has been experiencing double digit sales increases in its markets of Tunisia, Algeria, Libya and western Africa, according to Honeywell’s regional manager in Tunis, Farouk Cherif.

Secretary Pritzker, who comes from the wealthy Pritzker family that owns the Hyatt Hotel Corporation along with numerous companies in healthcare and financial services, will also help Tunisia overcome the common misconception promoted by NGOs and non-profits of being an underdeveloped market.

One important outcome from Secretary Pritzker visit to Tunisia was her announcement that she has placed a designated officer from the Commerce Department to be permanently based in Tunis to help Tunisia carry out important economic reforms while at the same time becoming the direct link for US companies looking to invest in the country.

[Tunisian Prime Minister HE Habib Essid greet Capitol Intelligence/MENA using CI Glass at Amcham Tunisia Investment & Entrepreneurship Conference in Tunis, Tunisia. March 5, 2015]

Tunisia’s strategic position as a stable and developed economy neighboring the often volatile, but important markets of Algeria and Libya and ideal access point for West Africa — makes Tunisia attractive for  major corporations in the United States, Europe and Asia seeking to tap a growth market of over 350m consumers.

The US and international interest in Tunisia will also be seen at the upcoming Tunisia Investment Forum to be held June 11-12, 2015 in Tunis and an upcoming international investment conference led by Gulf Cooperating Council countries led by United Arab Emirates, Qatar and Oman in November.

Tunisia prides itself as a market open to everyone and this year’s Tunisia Investment Forum was marked by the presence of a high-level representative of Russia’s regions, Association of Regional Investment Agencies President Linar Yakupov.

[Russia’s Association of Regional Investment Agencies President and and KazanSummit founder Linar Yakupov speaks to Capitol Intelligence/CI Greater Central Asia using CI Glass at Tunisia Investment Fund. Tunis. June 11, 2015]

Yakupov, who comes from the economically dynamic Russian autonomous region of Tatarstan, said Tunisia and Russia can work very well together in strategic sectors of agriculture, automotive, manufacturing, tourism and energy.

There is already talks to build a truck assembly plant in Tunisia for Tatarstan-based truck manufacturer Kamaz and aviation facilities for the Russian-Italian regional jet joint venture, Sukhoi, Tunisia Ambassador to Russia, Ali Goutali, said in an interview with Kremlin news service, Sputnik. 

Kamaz and Sukhoi could win project financing support from either the EBRD and/or the European Investment Bank (EIB) with the help of Kamaz’ minority shareholder Daimler AG (EXTRA: DAI) and Sukhoi’s partner, Italian listed conglomerate Finmeccanica subsidiary Alenia.

Tunisia, the home of the great Carthaginian empire and the first country to sign a trade agreement with the United States in 1799,  will soon join the list of countries such as Poland, Austria and Switzerland in transforming themselves from once poor agrarian societies into new global economic powerhouses.

There is nothing stopping Tunisia — considering the high education of its citizens and its close economic and cultural ties to Europe — from becoming a full member of the European Union in five years time.

It now time that President Obama and Secretary Pritzker use their “bully pulpits” to ensure that Tunisia will become the model of the Arab world and Africa and speak directly to US business leaders so that the Tunisian economic Renaissance will become the model for the rest of the world.

By PK Semler in Washington and Tunis. CI Glass production in Oval Office by Express FM Chef de Service News Khadija SFAR.  For more information please call +1-202-549-3399 or email pks@capitolintelgroup.com Copyright of Capitol Intelligence Group – Turning Swords into Equity®.