Washington - Stuart Eizenstat, undersecretary of State for economic, business and agricultural affairs, discussed the relationship between the United States and North Africa in a Worldnet "Dialogue" June 8 with Casablanca, Algiers and Tunis.

MS. MCMILLON: Hello, I'm Doris McMillon, and welcome to Worldnet's "Dialogue." Today our program will look at economic initiatives in the Maghreb and North Africa. Our guest from the Department of State is Mr. Stuart Eizenstat. Mr. Eizenstat is undersecretary of state for economics, business and agricultural affairs. Mr. Eizenstat, welcome to Worldnet's "Dialogue."

MR. EIZENSTAT: Thank you, it's a pleasure to be here.

MS. MCMILLON: Before we go to our posts overseas, perhaps you could help set the stage a bit by giving our international audience a brief outline of the economic initiatives in the region.

MR. EIZENSTAT: Thank you very much. Last summer I visited the region and came away with the conviction that we needed a closer relationship between the United States and the countries of the Maghreb. With the cooperation of the governments of Morocco, Algeria and Tunisia, we launched an historic initiative called the U.S.-North Africa Economic Partnership. This is intended to accomplish two purposes. The first is to link the United States and the three countries of North Africa much closer together in terms of trade and investment, to encourage more trade between our countries, to encourage more U.S. companies to invest in the region and create good-paying jobs. And, second, to encourage the reduction in internal barriers among and between the countries of North Africa which has impeded the normal trade flows between those countries. Indeed, these three countries ought to be natural trading partners, and yet the percentage of trade which each does with the other is very tiny.

On our side we have been hard at work getting this organized. We've worked with a whole range of U.S. government agencies, more than half a dozen. And on April 30th, to add concreteness to this initiative, for the first time senior U.S. government officials met with senior officials from the region who came to Washington to really launch this initiative. It is the first time that we really systematically looked at ways to build these kinds of linkages, and done so in a partnership atmosphere.

The emphasis of this program is not on increased aid program, because each of the three countries, although we have some aid programs in the region, are increasingly able to stand on their own feet. The real driving force of the initiative will be private sector trade and private sector investment. And we are on our side working very closely with the private sector to encourage just that happening. Indeed the day before our April 30th meeting we had a business association meeting with representatives from North Africa in New York, and in May, following the April 30th meeting, we sent out a delegation to encourage U.S. companies to take an interest in the area.

One of the concrete steps that we are doing to encourage more U.S. investment in the Maghreb is to work with our Overseas Private Investment Corporation, OPIC, which has now identified $2 billion worth of projects that it can insure, which helps provides assurance to U.S. firms that their investments will be protected. That's $1.5 billion in Algeria, over $250 million in Tunisia, and many millions of dollars in Morocco. This would provide high-paying jobs and technology transfer to each of the countries.

Now, the fact is that there have been very positive changes in the policies of these countries. Morocco is opening up its power and telecommunications sectors; Algeria its energy and pharmaceutical industries; Tunisia its power and tourism sectors to foreign investment, and that will lead to more U.S. companies coming in.

We have also encouraged the three countries to recognize that the size of a market is important. Individually each of the three countries is a relatively small market; but together they represent a market of between 70 and 80 million people.

Let me give you a concrete example to close my opening remarks on what we are trying to accomplish. I was approached by a big American industrial firm that expressed an interest in investing in one of the three countries in our economic partnership, and we of course encouraged that strongly. Instead, however, they ended up investing in Marseilles in France, and the reason was the frustration that the market barriers among and between the three countries are so severe that they couldn't freely export their products among and between the countries, and this therefore deterred their investment. We can do our part, and we are dedicated to do our part to encourage more U.S. investment. But in the end it will depend on the three countries to open up their economies even more and to provide the kind of investment climate through deregulation, through privatization, through transparent procurement rules, through protecting intellectual property, that will enable us to encourage successfully U.S. companies to invest.

So this is an exciting initiative, and what is important about it is that it is a real partnership. We have to do our part, and also Tunisia, Morocco and Algeria have to do theirs. But the fact that we are working together is exciting and very promising. Thank you very much, and I look forward to your questions.

MS. MCMILLON: Sir, thank you so much for those comments. We are going to go now to our participants overseas in Tunis, Algiers and in Casablanca. We will begin with our first question in Casablanca. Please go ahead. Casablanca, we will take your question. Well, we are apparently having a little technical difficulty. Mr. Secretary, you said that these countries are already doing well, so it's not a matter of aid. What is your expectation from them in terms of this initiative?

MR. EIZENSTAT: Well, we do have a modest aid program for Morocco now. But our key to encouraging growth and job creation in the Maghreb countries is to encourage more private investment, to encourage our U.S. companies--high tech companies, pharmaceutical companies, manufacturing companies--to invest and create high-paying jobs and transfer managerial know-how and technical capacity. We also hope for freer trade so that we can over time open our respective markets to each other's products to a greater degree.

MS. MCMILLON: We will now take a question from Casablanca. Please go ahead, Casablanca. Casablanca, we will take your question. Well, while we are waiting, sir, I will ask you another question. Would it be safe to say in this case that prosperity and democracy go hand in hand?

MR. EIZENSTAT: Very much so. To the extent that the countries can continue their progress toward democracy, to the extent that they develop what we call the rule of law--that is, clear rules, transparent rules, open rules of investment--to that extent there will be much greater interest.

Now, when we had our trade mission in May, there were several companies that went, but not as many as we hoped. And one of the reasons we believe was both the barriers, tariff and non-tariff barriers among and between the three countries, so that instead of being a natural economic unit they maintain very high trade barriers. Also because there need to be improvements in some of the legal infrastructure. One of the things, however, that we are very encouraged about is the fact that the countries themselves recognize this and that there is a real effort to reinvigorate the Maghreb Arab Union. We strongly support that. We think that that is one of the most important ways to achieve the kind of regional integration that will help the countries trade with each other, but also to make it a more attractive area for U.S. investment.

MS. MCMILLON: All right, at this time we will take a question from Casablanca. Please go ahead.

Q: A lot has been said, and you met with top officials from the region. In fact, Mr. Eizenstat, what has happened in--I am Hashem el-Bara (ph), TV reporter from Moroccan International Television. Mr. Eizenstat, a year ago the United States launched the very famous initiative. What has been said? And you met with top officials from the region. In fact what is happening now is Maghreb Arab countries are expressing deep concerns over the future of the initiative now that you are assuming new responsibility.

MR. EIZENSTAT: Well, thank you very much. This was not just a personal initiative on my part. It is something that is supported at the most senior levels of the State Department, including Secretary Albright. My successor will take a personal interest in it, and I want to ensure all the countries and all the governments and people of the countries that I've met with that I will continue to take a very direct interest in this in my new post if the Senate confirms me as deputy secretary of the Treasury. So you needn't have any concern that this initiative will drift. It will be driven by people at the State Department who share my enthusiasm for it, and I have already talked to the leadership of this department and said that I want to be involved in any way they will include me, so that I continue to show my personal interest in this as well.

Q: (Inaudible)--from Maghreb Arabe Presse Agence. Economic integration of the Maghreb has been stalled for years by political problems, particularly this hard question: Does the U.S. intend to play an instructive role in finding a solution to the central Maghreb conflicts? Thank you.

MR. EIZENSTAT: We realize quite frankly that some of the political difficulties, including the fact that there are borders that are closed among and between some of the Maghreb countries has impeded trade and investment, and obviously complicates the achievement of the economic goals that we set for our new partnership, we certainly will encourage countries in the region to solve and settle their problems.

At the same time, we are encouraged at the fact that our partnership itself may help do that--at least indirectly. For one thing, we got senior ministers of the three countries in Washington in the same room at the same time talking with us.

Second, since we launched this initiative, and indeed just really in the last couple of months, there's been a reinvigorated interest in trying to make the Arab Maghreb Union work. Senior ministers have met just within the last few weeks again to accomplish that. While this will take time, we also see this as a very positive way of solving some of the political problems.

But again, you are quite right, we realize the political problems have to be dealt with, but we believe that both our partnership will indirectly encouraged that and greater cooperation in the Arab Maghreb Union hopefully will stimulate that as well.

MS. MCMILLON: Thank you very much, Casablanca, for your questions. We will now move on to Algiers. Please go ahead, Algiers.

Q: The U.S. initiative regarding the Maghreb economic state is a very interesting one. Our problem in Algeria though is that the Americans feel that Algeria is a risk country with the travelers' warnings. So how do you think this impinges on the initiative? Could you comment on that? Thank you.

MR. EIZENSTAT: I found it a very encouraging fact to read just this morning that one of the major groups that has been fighting this civil conflict has indicated a willingness to end it, and we hope that continued progress will be made in that respect.

We also believe that it will be important for Algeria to pursue more liberalized political as well as economic efforts, to employ the rule of law, to open up their political system and that this will instill confidence.

We also believe, however, that notwithstanding some of the problems that Algeria has made significant progress in beginning to open its economy in a number of areas. And of the $2 billion in OPIC potential projects which will be insured for U.S. investors, a very significant percentage, indeed more than 50 percent, would be for investments in Algeria. So these are actual applications by U.S. companies who have asked OPIC to insure their projects. With the tremendous natural resources Algeria has, its very substantial human resources, we believe that Algeria will be a very significant and very positive environment in which to invest.

Q: Hello, Mr. Eizenstat. I am from the--(inaudible)--newspaper. You visited twice--once in June and once in October last--but you omitted Algeria. You asked the Algerian authorities to go to Tunisia. This omission makes us want to ask you whether there is any plan for you to visit Algeria at any time now or in the future.

MR. EIZENSTAT: You are quite right, and this is something I wish I had been able to fit in. I had hoped to be able to see all three countries and I frankly ran out of time. It is a significant priority of mine on my next trip to the Middle East to try to go to Algeria. I hope that that may be accomplished, and it is somewhat complicated by the fact that I will be moving over to the Treasury Department and I will have some additional responsibilities. But I will try to make sure that either myself or my successor here goes to Algeria at the first instance that they possibly can. I want to rectify that problem. I want to make it clear that Algeria is a critical member of this partnership. We reached out in very meaningful ways to Algeria in terms of my meetings here. But I do believe that it is important for senior people to go there. We are encouraging that. Hopefully it will be accomplished by either myself or my successor here or both as soon as possible.

MS. MCMILLON: Algiers, thank you for your question. Let us return now to Casablanca. Please go ahead, Casablanca.

MR. EIZENSTAT: (Inaudible)--weekly newspaper La Economic. Mr. Eizenstat, geographically and historically the Maghreb has been closer to the European Union. What does the United States propose to (lessen the European actions ?), given that the Maghreb is linked by economical financial agreements to Europe?

MR. EIZENSTAT: I am very pleased you asked that question, because for two and a half years I was the U.S. ambassador to the European Union, and I was in Brussels at the time that the historic initiative by Europe, the Euro- Mediterranean initiative, was launched.

Let me say a few things about this, and I will be very candid. First of all, we don't think that the Maghreb region in North Africa is the private preserve of any country, whether it's the U.S. or any set of countries in Europe or elsewhere. It is important that we have positive trading relations with North Africa, and it's important that Europe have it.

Second, I believe that the Euro-Mediterranean initiative is a very important and very positive initiative. It is something that we believe is compatible with our own goals. It can encourage the liberalization of the economies of the region, it can encourage more regional integration, it can lower barriers to trade. We would hope that that is accomplished in ways that don't discriminate against U.S. companies, and that as tariff and non-tariff barriers are reduced between Europe and the Maghreb countries they will be commensurately reduced between the United States and the Maghreb countries so our companies are not put at a disadvantage.

But I see our initiative as being fully compatible. And I think the kinds of issues we are working on--deregulation, rule of law--encouraging more projects in terms of technology transfer--all of these things are quite compatible with the European Union's initiative. So I frankly don't see these as competitive. I think that no one area should see North Africa as their private preserve, and that this will be to the benefit of North African countries to have both more European and more American trade and investment.

MS. MCMILLON: Let's continue our questioning now from Tunis. Please go ahead, Tunis. Tunis, we'll take your questions. Please go ahead.

Casablanca, we'll take another question from you, and then we'll return to Tunis. Please go ahead, Casablanca.

Q: Mr. Eizenstat, I have two questions. My first question: You met with finance ministers of the region, and it has been said that an American delegation is expected to pay a visit to the region. Do you have (currently ?) an agenda and what are your priorities?

My second question: In the initiative you exclude Libya, despite the fact that it is already part of the Maghreb Union. Isn't that embarrassing for the other countries? And can we expect Libya to join the initiative now that the Lockerbie issue is almost over?

MR. EIZENSTAT: Thank you for both of those questions. Our basic goals for the initiative and what we will continue to pursue with great vigor and diligence is to encourage more U.S. companies to invest in the region, to encourage more trade to the United States, and indeed on going both ways between the United States and the Maghreb countries, reducing our barriers to our mutual exports, to have more technology transfer and management know-how transfer when U.S. companies invest; in other words, to use the private sector as the real engine of delivery, to use institutions like our OPIC to insure those investments, and to encourage more sub-regional and regional integration through the Arab Maghreb Union initiative.

Now, in terms of Libya--and while we are on Libya I want to talk please about Mauritania as well. Bringing Libya into the partnership at this time would be premature. While we welcome the surrender of the suspects in the Pan Am 103 case--and we have no hidden agenda--we hope Libya one day can join--we do have remaining concerns about Libyan policies that need to be addressed before we can modify our unilateral economic sanctions. And until those are addressed - - and we hope they will be one day--it would be premature to add Libya.

Now, in terms of Mauritania, we may invite Mauritania to join the partnership once it's better established, if the Mauritanian government and private sectors in the United States and Mauritania are interested.

So we hope that one day the vision will be that all of these countries of the region will be able to participate, but there are certain conditions that are required for their participation now. The turning over of the suspects was a positive step, but it was only one step. There is also the question of compliance with other U.N. resolutions which are outstanding. There are three specific resolutions which have to be addressed in terms of cooperation with the trial, assuming responsibility in terms of indicating that terrorism will not be supported as a policy, the issue of weapons of mass destruction, and a whole range of policies which need to be addressed. We hope they will be addressed. At this point they haven't yet been, so it would be premature to add Libya to the partnership.

MS. MCMILLON: Let's continue our questioning now from Tunis. Please go ahead, Tunis.

Q: I am Salim Garuge (ph). My first question is the following. We know that the economic policies in the Maghreb countries are sometimes widely divergent. How are you going to have a single strategy toward all of these countries?

Second question: The exclusion of Libya from the initiative, taken together with the Barcelona treaty, the European approach, don't you think this is going to create rather poor political conditions allowing for real development?

MR. EIZENSTAT: First, with respect to Libya, I answered that question when it was asked from a different post, but permit me to respond now. We hope over time that Libya can become a part of this partnership, but it is Libya which is keeping itself out and its own policies not the United States. It certainly was a step forward that the two suspects in the Pan Am 103 case have been turned over. But the U.N. itself has three outstanding resolutions with which Libya still must comply. These deal with foreswearing the use of terrorism, cooperating in the trial, assuming responsibility for the bombings themselves in terms of senior levels of government. And there are also unilateral concerns that we have in terms of other Libyan policies. It would be premature to add Libya until those are satisfied.

With respect to Mauritania on the other hand, we are looking actively at the issue of whether to add Mauritania once the partnership is better established, and if the private sectors on both sides and the Mauritanian government would be interested.

You also ask the question of whether there can be one strategy when you have three countries that are at different levels of development. That's a very good question. I'd like to answer it in two ways. First, there are some policies which can be employed that are common to all three countries; that is, for example, encouraging a reduction of trade barriers and investment barriers among and between the countries, regardless of their stage of development, encouraging the rule of law and privatization and deregulation. And all of the countries--all need to do that.

The second level, however, is we have never seen the partnership as excluding our bilateral relations with any of the three countries. Quite the contrary, we see it as strengthening the bilateral relations, because it will give us more occasion for more engagement, more visits, more participation by both the private sector and the government. And in our bilateral relations there will be some differentiation. For example, some of the countries already have trade and investment framework agreements--others don't. Some may have bilateral investment treaties; others don't. So we will tailor our bilateral relations, as we always have, to the particular needs of the country and of the United States. But that doesn't foreclose working on things which are systemic in nature and which can benefit all the countries and their relationship with the United States and ours with them.

Q: Good morning, I am Janette Bakala (ph). I am a journalist. And my question is why the partnership relations between the United States and Maghrebian countries within the framework of the so-called Eizenstat initiative, why are they based on trade and investment relations, whereas as you know the EU-Maghreb relationship has culture and political subjects as well as economic ones?

MR. EIZENSTAT: That's a very good question, and I frankly hope that as we begin to work on the economic dimension that we also work on the cultural dimension as well. This was raised in our April 30th meeting with the senior ministers from Morocco, Tunisia and Algeria. And I think it's a very important and very constructive suggestion that they made, and it relates to your question.

I was frankly one of the architects of the new transatlantic agenda between the U.S. and Europe and the European Union, and we have found that one pillar of that, which we call the people pillar, which has brought our business communities, our academics together, our non-governmental organizations together, environmental organizations and others, is a very--and business organizations--a very important component. So I do hope that we can add a cultural feature to this--more student exchanges, more exchanges by academic experts, more business exchanges, more exchanges with NGOs. I think this would be an exciting addition.

Now, we still have an awful lot to do just to launch the economic side of this, and I think we need to focus our attention initially on that. But I do hope that we will be challenged to find ways to also increase the cultural dimension as you suggest.

Q: I am Mr. Lamar (ph). I am the publisher of the newspaper--(inaudible)--and I have three questions. The only question that I am going to ask to start with: Are you only for a partnership to sell your products in Tunisia, or do you want durable development of trade? Because the trade relationship between our two countries is very imbalanced--you sell us ten times more than you buy from us. What do you intend to do to bring about a better balance? And thank you in advance for your response.

MR. EIZENSTAT: It's a very good question, and I want to make it clear that this is not an initiative and a partnership that is a one-way street which we simply hope to sell more of our products to Tunisia or Algeria or Morocco. It wouldn't survive if that were the case.

We want to accomplish two basic things in the economic real. The first is we want to increase for all of the countries more two-way trade. We want to encourage more trade between Tunisia and the United States, more exports from your countries, and also Morocco of course and Algeria to the United States, through freer and freer and more open trade. Now, that in turn frankly depends on two things. We need to look at our trade barriers, just as you need to look at yours to ours; but you also have to make your products more competitive. And I am being quite frank about that. The United States is the most open market in the world. Everyone agrees, even the Europeans, to that. It is a remarkably open market to products American people want. We are willing to work with Tunisia and Morocco and Algeria to help you develop products that will be saleable. But they have to be of world-class quality in order to sell in this market.

The second feature is more investment by U.S. companies in Tunisia, Morocco and Algeria. And here again this is a win-win situation. If it were only a benefit to the United States, this whole partnership would never have been launched, would never have been accepted by the governments. It's a win-win situation because it's good for our companies to have worldwide markets to invest in. But it is at least if not better for your countries, because they will be the recipients of new plants and equipment, of technology transfer, of job-creating facilities, of high value-added jobs, of the transfer of world- class management know-how. It will encourage more joint ventures between our companies and yours, so it will invigorate your whole private sector.

In short, what we want from this partnership is sustainable economic growth and development in the Maghreb countries. That is our goal. And if that is accomplished, that will make this partnership a success.

Q: I am from el-Hayat (ph) Newspaper. Mr. Eizenstat, everyone agrees with you when you talk about the need for dismantling trade barriers among the Maghreb countries so that your initiative will be a success. But don't you think that the very deep political divergencies among the Maghreb countries is a real handicap to this customs union among the Maghreb countries?

MR. EIZENSTAT: There is no question but that the political differences are a barrier, and one would be naive to ignore it. At the same time, we are encouraged by the fact that there seems to be a real effort on the part of the Maghreb countries to reenergize the Arab Maghreb Union. This can encourage the solution of political as well as economic problems. And indeed the mere fact that in Washington on April 30th we had senior ministers from the three Maghreb countries meeting in the same room with the United States. We were able to talk candidly about these kinds of issues, itself we hope will be a stimulant to reduce some of these barriers. We know that there are tensions between some of the countries, and indeed even a closed border. This obviously is an impediment.

But I think the countries increasingly recognize it, and let me be very direct--when we talk about encouraging more U.S. investment--job-creating investment--each of the countries individually is a relatively small market--good markets, but still relatively small. Together, however, they represent an 80-million-strong market. And so a company will invest in any one of the three knowing if you reduce your internal barriers that its product can be sold easily across those borders. That makes that investment much more attractive. And then frankly this is where the European side comes in: to the extent that they can then launch products into Europe because of the Euro-Mediterranean initiative, it makes that U.S. investment even more attractive, because it's not just got an 80-million market, it's got a market throughout the European Union.

So in that way the Euro-Mediterranean initiative can mesh very well with the U.S.-North Africa Economic Partnership. And rather than being competitive, they can act to boost economic growth and job creation in the Maghreb countries, working in compatible ways, so long as the EU-Mediterranean initiative is not done at the expense of U.S. companies; that is, that while reducing trade barriers between and among European countries and Mediterranean countries it is not at the same time keeping higher trade barriers for U.S. companies.

MS. MCMILLON: Thank you. We'll return to Algiers. Please go ahead, Algiers.

Q: We would like to know your position on Algerian foreign debt, which is very large. It is for Morocco too. Do you have any ideas about how we can get out of this debt crisis? Might there be a Marshall Plan for the Maghreb, or might it just be your initiative directed towards business?

MR. EIZENSTAT: It's very critical that all the countries of the Maghreb retain and enhance their access to capital markets. When I was in the region last summer, I was very encouraged by the fact that what we now call the Asian flu contagion, the Asian financial crisis, which is Russia and Latin America, largely escaped North Africa. And I think Morocco and Tunisia and Algeria deserve a great deal of credit for having the kind of strong macroeconomic policies in place so that they were not subject to that kind of contagion.

At the same time, we understand that there is an interest in debt relief. We backed debt relief for Morocco and Algeria in the Paris Club only a few years ago. When countries fall into special difficulty there are mechanisms through the Paris Club which can be used to help them. Fortunately all of the North African countries now have much more manageable debt burdens, and so on a country-by-country basis we are certainly willing to look at this. We think that the debt burdens now are more manageable than they were, in part because of the rescheduling that occurred only a few years ago through the Paris Club.

We also have launched through President Clinton an expanded debt relief program which will be announced in the middle of June at Cologne, heavily indebted poor countries. If the president's initiative is accepted, and we hope that it will be, it will lead to a relief of some $70 billion in debt for those eligible countries. Now, it's unlikely that the Maghreb countries would fit into this category, because they are not that poor and they are not quite as burdened by debt as those countries that would be eligible. Nevertheless, it does indicate a sensitivity on the part of the United States to the issue of debt in developing countries, and again we hope that that debt initiative for poorer countries will be successfully and will be launched at Cologne.

Q: Except for the energy sector we think that the United States is really absent from Algeria. Where do you think that the United States could participate more, particularly because there are a lot of opportunities in Algeria which countries like South Korea for example have taken advantage or are taking advantage? Thank you.

MR. EIZENSTAT: There are a whole range of areas--power projects, tourism, telecommunications, light industry--in which there would be investment opportunities in addition to oil and gas. Also, in the oil and gas area countries are increasingly trying to integrate on a vertical basis, and this provides up and down the chain in terms of refineries and LNG and the like; it provides greater opportunities even in that sector. So we see enormous opportunities in Algeria. We think it's important that there be progress toward the rule of law and more democratization, and it is important obviously the political problems and the civil conflict and terrorist activities be mitigated. But Algeria does have tremendous potential. It's a large country with enormous resources, and we think that U.S. companies will be involved.

Let me say another thing. We can't simply wish for U.S. investment in any of these countries, including Algeria. We can encourage, and we are and we will encourage much more strenuously U.S. companies to invest. They have to see an investment climate. They have to know that there will be transparency and openness and procurement. They have to know that there will be an effort to fight corruption. They have to know that their intellectual property rights will be protected, their patents, their trademarks, their copyrights. They have to know that if there are contract disputes that there independent courts and judicial systems that they can go to for a fair hearing. All of these things have to be in place.

So it's true--again, it's a partnership. We have to do our part to encourage foreign investment. Our Overseas Private Investment Corporation already has applications for $1.5 billion of projects in Algeria, and a total of $2 billion in the three countries. But just as we have to do our job, the other part of this partnership is that the countries of the Maghreb have to do theirs to provide a conducive environment for investment.

Q: Mr. Eizenstat, what are the means of financing and guarantee that you intend to establish through this new initiative?

MR. EIZENSTAT: We have worked with our Trade and Development Agency, which provides funds for feasibility studies. And our TDA is actively looking at the three countries for projects, for feasibility studies, which then lead to actual projects themselves. Second, I personally talked not only to the head of TDA, Joe Grandmaison (ph), but I've also talked to Jim Harmon, the head of our Ex-Im Bank, and we try to encourage our Export-Import Bank to become more active in supporting exports to this region. Third, I am actually on the OPIC board, the Overseas Private Investment Corporation board. I have met with and talked with chairman of OPIC, and OPIC will provide insurance against convertibility risks, against violence, against political violence to U.S. companies willing to invest in Morocco, Algeria and Tunisia, and now has together $2 billion in applications from U.S. companies for that insurance. Now, that's a very important factor, because it indicates that there are $2 billion in potential projects that U.S. companies are willing to look at if they get that kind of insurance.

Now, will those projects happen? They'll happen if you do your part in making an investment environment conducive to those projects in ways I've already described: more openness, more transparency, protection of intellectual property rights.

MS. MCMILLON: Thank you, Algiers. Let's continuing our questioning from Casablanca. Please go ahead, Casablanca.

Q: (Inaudible)--from Maghreb Arabe Presse Agence. Like Tunisia and Algeria, Morocco expects a lot from the United States, an opening of the United States markets, reinforcements with the flow of U.S. investment to Morocco and a resolution of the debt problem. How does the (U.S. explain these ?) expectations at a moment when Morocco is undertaking a unique political experience where for the first time the political position is participating in the government? Thank you.

MR. EIZENSTAT: With respect to Morocco, Morocco is in many ways our oldest, longest-standing friend and partner. Morocco was one of the very first countries, if not the first, to sign a treaty of friendship and cooperation with the United States over 230 years ago when this country was first born. So we have a very long-standing relationship and friendship.

I had the privilege of meeting with His Majesty last summer, and there are real reforms occurring in Morocco. Your growth rates are showing that. You are beginning to open your economy to more investment in tourism and telecommunications and the power sector, and this is all to be encouraged.

We also are supportive of the U.N. initiative and the initiative of former Secretary of State Baker in the Western Sahara, and we hope that will mitigate some of the tensions internally.

Morocco is a very, very important partner of ours. It will take a great deal of our interest, and it is a key member of the U.S.-North Africa Economic Partnership.

We also hope that some of the tensions between Morocco and its neighbors in particular with respect to Algeria, over time will be mitigated and reduced. And this is necessary to help make the economic partnership more successful.

Q: (Inaudible.) Doesn't such an initiative ensure the integration of Maghreb countries in NATO?

MR. EIZENSTAT: (I wouldn't ?) necessarily assume that this economic partnership with North Africa would include NATO participation by the countries. There is a Partnership for Peace program which the countries might look at. NATO tends to be more European in its orientation in any event. But certainly we have very close military ties with a number of the Maghreb countries, and we have IMET programs, in which our military is doing training. We have military sales programs, military training programs, and our militaries are very closely working with a number of the countries in the Maghreb region.

We have some limitations on the military-to-military relationship in some areas, but again we do have close relations in others.

MS. MCMILLON: We have time for one last brief question and answer. Casablanca, please go ahead.

Q: I am--(inaudible)--from Moroccan International Television. Mr. Eizenstat, the spirit of the partnership is based upon the notion of economic development of the region and establishing strong ties between the private sectors in these countries, which requires assistance of the United States. But there are different approaches between the countries with regard to the role of the private sector. I will give you just one figure. The level of exchanges between the United States and Morocco is 200 billion U.S. dollars, while the investors were coming Morocco invested with more than 1 billion U.S. dollars. Is that enough?

MR. EIZENSTAT: Well, we think there is a great opportunity for additional investment in Morocco, and OPIC has already identified many millions of dollars of projects for which U.S. companies have indicated an interest in investing. The amount you mentioned is important, but it is not enough. We want more U.S. investment in Morocco, just as we do in Algeria and Tunisia. And there are two ways to accomplish that.

First, on our side we want to encourage our Trade and Development Agency and OPIC, as well as Ex-Im Bank, to become more engaged. Second, we will encourage our companies through the kind of effort we had at the end of April in New York, and through the mission that we sent in May, bring in U.S. companies. We hope to have reverse mission in which companies from the region come to the United States to make partnerships. But there also has to be a compatible effort on the part of Morocco and your neighbors; that is, an effort to make your investment environment more conducive to that kind of investment--more protection of intellectual property, more open and transparent processes for government procurement, clear rules of law for contract disputes. All of these are the infrastructure, if I can put it that way, that will make Morocco and your neighboring countries more attractive to U.S. investment.

We are intent on doing our part to encourage that, and we believe that you are intent on doing your part as well. And that again is what makes this a real partnership. It is not a one-way street. It is a two-way street, and it is a win-win situation. And we see this whole U.S.-North Africa Partnership as being an historic win-win situation for all the countries on both sides.

MS. MCMILLON: Thank you. And unfortunately we have run out of time for today. I would like to thank our guest, Undersecretary of State Stuart Eizenstat, for joining us today. Thank you, sir.

MR. EIZENSTAT: Thank you.

MS. MCMILLON: Also thanks to all of our participants in Tunis, Algiers and Casablanca. For Worldnet's "Dialogue," I'm Doris McMillon.

Release Date: June 14, 1999