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### Viewing cable 07PARIS3193, PRESIDENT SARKOZY'S TRIP TO LIBYA SETS HIGH HOPES FOR

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07PARIS3193 | 2007-07-26 16:04 | 2011-03-24 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Paris

`

    VZCZCXRO3412
    RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
    DE RUEHFR #3193/01 2071647
    ZNR UUUUU ZZH
    R 261647Z JUL 07
    FM AMEMBASSY PARIS
    TO RUEHC/SECSTATE WASHDC 9164
    RUCPDOC/DEPARTMENT OF COMMERCE WASHDC
    RUCNMEM/EU MEMBER STATES

` `

    UNCLAS SECTION 01 OF 02 PARIS 003193

    SIPDIS

    SENSITIVE
    SIPDIS

    STATE ALSO FOR E, EB, EB/TPP, EUR/ERA, AND EUR/WE
    COMMERCE FOR ITA

    E.O. 12958: N/A
    TAGS: ETRD ECON FR
    SUBJECT: PRESIDENT SARKOZY'S TRIP TO LIBYA SETS HIGH HOPES FOR
    LUCRATIVE CONTRACTS

    NOT FOR INTERNET DISTRIBUTION

    ¶1. (SBU) Summary: Having achieved the desired political effect of
    burnishing his image as a man who can help resolve intractable
    issues, French President Nicolas Sarkozy used his July 25 visit to
    Libya following the release of five Bulgarian nurses and a
    Palestinian doctor to boost economic and trade relations with that
    country. A number of framework agreements were signed during the
    visit, including a memorandum of understanding to build a Libyan
    nuclear reactor for water desalination. French nuclear giant Areva
    expects to benefit from the warmer relations, as does oil group
    Total and engineering group Alstom. Sarkozy's effort to derive real
    commercial gain from his newfound relationship with Libyan leader
    Qadhafi is partly intended to make up ground believed lost to the
    United States and others since Libya's rehabilitation in late 2003.
    He likely expects that his efforts will yield more benefits than
    former President Chirac obtained following his 2004 visit to
    Tripoli, though French businesses may still find Libya a daunting
    place to do business. End Summary.

    Building on past efforts
    ------------------------
    ¶2. (U) Franco-Libyan relations have been steadily improving since
    a 2004 accord on a Libyan compensation deal for the victims of a
    French DC-10 airliner bombing over Niger, which killed 170 people,
    including 54 French, in 1989. The deal paved the way for a November
    2004 visit by then-President Jacques Chirac and a large delegation
    of French businessmen hoping for a bonanza of new contracts. The
    two countries resumed defense cooperation in February 2005 and
    struck an accord on civilian nuclear research in March 2006. French
    aerospace manufacturer Dassault also signed an agreement to service
    12 Libyan Mirage F1 jets.

    ¶3. (U) French exports to Libya have doubled since Chirac's trip,
    reaching 433.6 million euros (600 million dollars) last year.
    France imported 1.9 billion euros worth of goods from Libya over the
    same period, almost exclusively hydrocarbons (representing three
    percent of all French oil supplies). However, France remains a
    modest trading partner and French firms never achieved the success
    they hoped for following Chirac's visit. France is currently
    Libya's sixth supplier, far behind Italy and Germany, with Libya
    accounting for just 0.1 percent of French exports and 0.45 percent
    of imports.

    New ambitions
    -------------
    ¶4. (U) "We can do a lot more and a lot better with Libya," Elysee
    Spokesman David Martinon said on the eve of Sarkozy's official
    visit. In Tripoli French Foreign Minister Bernard Kouchner signed a
    memorandum of understanding to furnish Libya with a nuclear reactor
    for water desalination. Sarkozy noted that the project could take
    months, if not years, to complete and indicated that French nuclear
    company Areva would be involved. Prior to Sarkozy's visit, Areva
    confirmed that it had been approached to build nuclear plants,
    adding that talks which had begun last year were still at a
    preliminary stage. France and Libya also signed a global framework
    agreement reinforcing bilateral cooperation in many sectors,
    including health, education, scientific research, technology,
    combating terrorism and organized crime, defense and security as
    well as economic and financial cooperation.

    ¶5. (U) Other French groups are expected to take advantage of the
    improved bilateral relationship. French oil giant Total intends to
    take part in the recently-launched tender process for the
    exploration of 41 gas blocks. The French heavy engineering group
    Alstom, which makes high-speed trains and energy turbines, said
    meanwhile that any warming in Franco-Libyan ties would likely
    constitute a positive signal for its commercial development. In the
    banking sector French group BNP Paribas won a tender for the
    privatization of 19 percent of the capital of the Sahara Bank at a
    cost of 145 million euros. Libya has also shown interest in the
    Rafale, the Dassault fighter that has not yet been sold outside
    France.

    Comment
    -------
    ¶6. (SBU) President Sarkozy clearly hopes that his visit, and
    France's role in the nurses' release, will reap dividends in terms
    of new contracts and commercial relationships. French companies
    have the political signal they were waiting for to move aggressively
    in seeking out opportunities in Libya. The French business
    community is aware, however, that with the exception of Total, it
    lags behind the United States and many EU partners in its efforts
    there. Sarkozy, who has publicly eschewed the notion that he
    intends to link France's bilateral relationships to his personal
    relationships with foreign leaders, probably hopes nevertheless to
    derive some gain from his current honeymoon with Qadhafi. As French

    PARIS 00003193 002 OF 002

    businessmen found after Chirac's visit, however, a good relationship
    at the highest level is no guarantor of commercial success.

    STAPLETON

    VZCZCXRO3412
    RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
    DE RUEHFR #3193/01 2071647
    ZNR UUUUU ZZH
    R 261647Z JUL 07
    FM AMEMBASSY PARIS
    TO RUEHC/SECSTATE WASHDC 9164
    RUCPDOC/DEPARTMENT OF COMMERCE WASHDC
    RUCNMEM/EU MEMBER STATES

`