VZCZCXRO2342
PP RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHTRO #0289 0980945
ZNY CCCCC ZZH
P 080945Z APR 09
FM AMEMBASSY TRIPOLI
TO RUEHC/SECSTATE WASHDC PRIORITY 4695
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHFR/AMEMBASSY PARIS PRIORITY 0728
RUEHLO/AMEMBASSY LONDON PRIORITY 1042
RUEHRO/AMEMBASSY ROME PRIORITY 0514
RUEHVT/AMEMBASSY VALLETTA PRIORITY 0413
RUEHTRO/AMEMBASSY TRIPOLI 5222

C O N F I D E N T I A L TRIPOLI 000289 
 
SIPDIS 
 
ERICKSON; COMMERCE FOR NATE MASON AND HISHAM ELKOUSTAF; CAIRO 
FOR TREASURY LIAISON ALEX SEVERENS 
 
E.O. 12958: DECL:  4/7/2019 
TAGS: LY ECON EAGR EPET EFIN PGOV ETRD
SUBJECT: CATERPILLAR EDGING CLOSER TO LIFTING OF BAN? REF: A) TRIPOLI 258; B) TRIPOLI 157 CLASSIFIED BY: Gene Cretz, Ambassador, U.S. Embassy Tripoli, U.S. Department of State. REASON: 1.4 (b), (d)

¶1. (C) On April 6, the recently-appointed Secretary of the General People's Committee for Industry, Economy and Trade, Mohammad Ali al-Hweij (minister-equivalent) met with Andrew Sheridan, Caterpillar Distribution Manager for Africa and Middle East Region to discuss the specifics of Libya's total ban on the import of Caterpillar equipment (ref B). Al-Hweij welcomed all U.S. companies to the Libyan market. He explained he was personally meeting with CAT in order to introduce the company to the "behavior of the Libyan market." He raised the same two points he discussed with the Ambassador on March 24 (ref A), i.e., that CAT must have more than one sole agent in Libya, and that the current Libyan company acting as CAT's agent was headed by the sons of government officials. This constituted "corruption" and was illegal. Al-Hweij agreed with Sheridan that if the market was too small to support three dealers, two would be fine.

¶2. (C) Al-Hweij said as soon as he received a letter from CAT stating it had terminated the current dealership agreement, he would have the ban lifted. He understood it would take CAT some time to identify the new dealers and he was adamant the GOL would not make any suggestions as to potential dealers as this would be a "blatant issue of corruption." As for the timing of lifting the ban, it would have to go through the council of ministers and the prime minister, a process al-Hweij said would take around one week. Sheridan said his company was anxious to move forward on having the ban lifted quickly. CAT intended to remove its current dealer and had already begun the process; once it was completed, he promised to notify al-Hweij.

¶3. (C) Post is translating a copy of the relevant law (GPC decision number 315, dated 5/18/2008) and will forwarded via email to NEA/MAG. Separately, the director for international cooperation at the GPC for Industry, Economy and Trade, Dia Hammouda, told Commercial Officer that article 5 of the law addressed the legal issue with CAT, and that any official who runs a public institution or their relative, including spouses, children, and in-laws, was forbidden from selling goods to that institution. Hammouda said that an exclusive agency agreement is not against the law in Libya, as al-Hweij had implied, but rather, the GOL prefers that foreign companies assign multiple agents, dealers, or distributors in Libya. CAT lawyers are also studying the law in order to ensure CAT is compliant.

¶4. (C) Comment: Al-Hweij was very engaging and seemed committed to working with CAT to have the ban lifted. However, it remains to be seen whether he has the political clout to make it happen. His estimate that approval could be obtained in a week is overly optimistic given how the Libyan bureaucracy operates. Al-Hweij's arguments that the ban is proscribed by Libyan law are weak at best after an initial review of the supposed relevant law. What is clear is that the GOL is adamant that CAT terminate its current dealership arrangement. Once it does that, the ban will hopefully be lifted, allowing for equipment already in the pipeline to reach end-users. The next step will be for CAT to find new agents in Libya, which CAT has told us it fully intends to do. We will continue to work with CAT and Al-Hweij to try to find a solution to the ban. End comment. CRETZ