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FM AMEMBASSY CAIRO
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INFO ARAB ISRAELI COLLECTIVE
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RUEHTV/AMEMBASSY TEL AVIV 0009

S E C R E T SECTION 01 OF 05 CAIRO 000249 
 
NOFORN 
SIPDIS 
DEPARTMENT FOR NEA/ELA 
 
E.O. 12958: DECL: 2020/02/25 
TAGS: PGOV PREL KPAL KWBG IS EG
SUBJECT: Development and Peace Key to Resolving North Sinai Problems 
 
REF: 10 CAIRO 177 
 
CLASSIFIED BY: Margaret Scobey, Ambassador; REASON: 1.4(B), (D) 
 
¶1. (S) Key Points: 
 
 
 
-- New North Sinai Governor Mowafi told poloff his top priority was 
to increase economic opportunities.  He plans to increase the size 
of the El Arish port to facilitate an export economy, expand 
agricultural production in the coastal areas, and build heavy 
industries in central Sinai and the industrial zone in El Arish to 
keep a higher percentage of the value chain in Sinai. 
 
 
 
-- Sinai MPs told us that comprehensive economic development is the 
solution to resolving Sinai's problems including providing 
security, eliminating smuggling and controlling terrorism. They 
stressed that the provision of water was needed to facilitate 
development. 
 
 
 
-- Local Sinai leaders questioned the Government of Egypt's (GoE) 
commitment to Sinai's economic development because Cairo's approach 
is oriented toward military control not attracting investment. 
They said Cairo's policies discourage local and foreign involvement 
in favor of "Nile Valley" investors. 
 
 
 
-- Egyptian and Bedouin leaders agreed that problems in Sinai are 
closely linked to problems in Gaza and Israel.  The Governor and 
MPs said that Egypt is unlikely to exercise control over the 
smuggling problem until it has a "partner" on the other side of the 
border. 
 
 
 
-- Islamic NGOs responded quickly to provide assistance to those 
whose homes and property were damaged by recent heavy rains.  The 
GoE has promised compensation, but government assistance was 
"taking time." 
 
 
 
-- MPs and local leaders expressed frustration USAID's Life Sinai 
project had been ineffective.  Some leaders believe that the delay 
is damaging the reputation of the USG in Sinai. 
 
 
 
¶2. (S/NF) Comment: Mowafi was cerebral about Sinai's problems and 
appears willing to listen to and engage with Bedouin leaders.  He 
is focused on creating sustainable economic opportunities for the 
people in North Sinai. However, mutual distrust between Sinai 
Bedouin and GoE officials will make cooperation difficult and 
Mowafi will have to deal with various GoE agencies and historical 
cooperation and commercial problems.  The GoE remains anxious about 
our Sinai contacts; we learned halfway through our meeting with 
local council members that the discussion was being recorded by 
Egyptian State Security (SSIS).  Our contacts from central Sinai 
were met by SSIS prior to our meeting.  However, unlike past 
meetings, SSIS gave them permission to meet with us, but they were 
instructed "not talk about any of their problems."  During our 
February 9-11 trip El Arish residents were excited that President 
Mubarak would visit the city for the first time in his 28-year 
presidency during the week of February 13.  However, Mubarak did 
not make the visit and we have heard of no plans to reschedule. 
 
 
 
New Governor Respected, Represents Hope for Change 
 
 
 
¶3. (C) New North Sinai Governor Mourad Mohamed Ahmed Mowafi told 
poloff during a recent three-day trip to northern Sinai that his 
top priority for North Sinai is to increase economic opportunities. 
He plans to increase the size of the El Arish port to facilitate an 
export economy, expand agricultural production in the coastal 
areas, build heavy (sand glass, marble and limestone) industries in 
central Sinai and the industrial zone in El Arish to process the 
raw materials and keep a higher percentage of the value chain in 
 
CAIRO 00000249  002 OF 005 
 
 
Sinai. El Arish MP XXXXXXXXXXXX (protect) and XXXXXXXXXXXX (protect), of the Bedouin Desert Association, said Governor Mowafi is educated on the Sinai Bedouin and wants to engage with them unlike the previous Governor, whom they described as fixated on military control. 
 
 
 
Local Leaders Question Cairo's Commitment 
 
 
 
¶4. (S/NF) MP El Kassas and Dr. Reda Abu Hatab, sociological advisor 
to the past six North Sinai Governors, told us Cairo is "ignorant 
of Bedouin culture" and its use of the Egyptian police and military 
to "control the population" rather than engaging in dialogue with 
the Bedouin sheikhs is counterproductive. MP Abu Harb said the 
extreme security measures used to control Sinai makes people feel 
like they are "under siege." He said the people in Sinai want 
security, but the tactics of Egyptian security only make them angry 
and dissatisfied. 
 
 
 
Economic Development to Resolve Sinai's Problems 
 
 
 
¶5. (C) Bedouin MPs XXXXXXXXXXXX (protect), XXXXXXXXXXXX (protect) and XXXXXXXXXXXX (protect) told us that comprehensive economic 
development is the solution to resolving Sinai's problems including 
providing security, eliminating smuggling and controlling 
terrorism. XXXXXXXXXXXX and XXXXXXXXXXXX said the inability to attract capital to the Sinai/Gaza/Israel border area limits growth in 
Sheikh Zoweid and Rafah.  (Note: Sheikh Zoweid and Rafah have 
predominately Bedouin and Palestinian populations and are the 
location for many of the tunnels that supply Gaza. End Note). MP XXXXXXXXXXXX and El Arish local councilman XXXXXXXXXXXX (protect) said economic development efforts should target the youth because they are the most affected by unemployment and the most prone to anger and violence.  XXXXXXXXXXXX believes "economic investment will bring 
security." 
 
 
 
¶6. (C) XXXXXXXXXXXX and XXXXXXXXXXXX told us the northern coastal areas of Bir El Abd, El Arish, Shaykh Zoweid and Rafah produce olives, 
tomatoes and fruits, but need processing plants to convert these 
products into higher end oils, sauces and juices for export. 
Abdallah Qandil, a local councilman from Bir Hasana in central 
Sinai supports the idea of an industrial zone and expanded seaport 
because central Sinai's mineral resources are currently either sent 
to Cairo for processing or exported as raw materials so much of 
their potential value to Sinai is lost. 
 
 
 
Water Needed to Sustain Agriculture Development 
 
 
 
¶7. (C) MP Al Roqei told us that that sustainable development should 
focus on a "community and family approach" to agriculture and 
animal husbandry since most Sinai Bedouin are either farmers or 
herders. He said water is needed for both industries to succeed. Al 
Roqei also encouraged the development of the handicraft industry as 
a way for Sinai Bedouin women to contribute to the family income. 
Hamid and Hassan Al Qardouh, a local councilman from Nekhl in 
central Sinai said projects in animal husbandry such as raising 
rabbits to sell in Egyptian markets could create livelihoods for 
central Sinai Bedouin women and youth. 
 
 
 
¶8. (C) Rafah local councilman XXXXXXXXXXXX (protect) said the 
youth in Rafah know how to farm, and we confirmed that he presented 
a plan to USAID's Life Sinai program for the digging and pumping of 
wells to create livelihoods. (Note: Life Sinai is a USD 9 million 
project to help develop Central Sinai. El Alayan's proposed wells 
are in the northern coastal area and are of medium depth (between 
60-90 meters) unlike wells in central Sinai, which are around 1,000 
meters deep.  End Note). XXXXXXXXXXXX suggested the creation of a 
"youth villages" where 1,000 young, poor families would be given a 
 
CAIRO 00000249  003 OF 005 
 
 
house and 6 feddans to farm. The three Bedouin MPs also support the 
extension of the Salam canal from Bir El Abd because it could 
provide 300,000 more feddans for farming, but Wael Salim, a local 
councilman for El Arish said Egypt and its development partners 
should consider the desalination of Mediterranean Sea water coupled 
with drip irrigation as an alternative to extending the Salam 
Canal. (Note: USAID believes that extending the canal would 
actually cost a multiple of USD 50 million and yield questionable 
economic value. End Note). 
 
 
 
Unfavorable Investment Climate 
 
 
 
¶9. (S/NF) El Kassas told us that three local Bedouin investors, 
some of whom are MPs, recently had their proposal to construct a 
cement factory denied by Cairo because "there was no supporting 
infrastructure for the plant."  However, according to El Kassas, 
the two existing cement plants, owned by Nile Valley businessman 
Hasan Rateb, are allowed to bring in 2000 cubic meters of water a 
day from a desalination facility in Rafah to aid in operations, and 
the Egyptian military was granted permission to build a similar 
cement factory.  XXXXXXXXXXXX (protect), a local councilman from El 
Arish told us he believed that the Bedouin cement factory proposal 
was rejected after pressure from Rateb who is a friend of President 
Mubarak. He said this decision had a "discouraging effect" on the 
local population because even MPs are not allowed to "participate" 
in economic growth areas.  MP Kharafeen added that Cairo always has 
good words on economic development, but there are never any 
commensurate actions.  As an example,  MP El Kassas told us that 
the Ministry of Tourism has a long-standing plan to establish 
tourist resorts along the 200 kilometers of shoreline in North 
Sinai, but has yet to open an official tourism promotion office in 
the Governorate. 
 
 
 
¶10. (C) El Kassas and Atta said Egyptian laws prohibiting foreign 
ownership of land and requiring foreigners to have an Egyptian 
partner are a deterrent to investors.  Atta stated that the 
inability to own land is a significant factor dissuading foreign 
investment because investors fear the land can be expropriated at 
any time as a result of the GoE's imminent domain.  (Note: Foreign 
ownership of agricultural land is prohibited, but Egyptian law does 
allow 100 percent ownership of investment projects, with limited 
exceptions.  Given Sinai's status as a military zone, the the 
foreign ownership law may not apply.  End Note). 
 
 
 
¶11. (C) MP El Kassas stated that investors are afraid to put money 
into North Sinai because of its close proximity to Gaza. He stated 
that internal Palestinian issues need to be solved before North 
Sinai can "begin to grow its economy and provide real security for 
the people." El Kassas believes that if there were a solution to 
Gaza and borders were opened for trade that the area would 
experience an "economic renaissance." 
 
 
 
Gaza Solution Vital to North Sinai's Security and Development 
 
 
 
¶12. (S) Atta and El Kassas were happy about Egypt's construction of 
 the underground steel barrier along the border because it is needed 
 to "protect the Egyptian homeland." Despite Atta's support, he told 
 us that the North Sinai local council believes it will increase 
 tensions on both sides of the border and could lead to violence in 
 North Sinai as displaced smugglers look for other ways to make 
 money.  He said the international community needs to consider 
 opening the borders to allow for the legal supply of food and 
 medicine into Gaza and help with security in North Sinai. 
  
  
  
 ¶13. (C) Governor Mowafi said smuggling in Sinai is a "national 
 security issue" because weapons from Israel are making their way 
 into North Sinai.  He stated that smuggling will not stop until 
 Egypt "has a partner on the other side of the border in Gaza." 
 Mowafi said HAMAS has "an anti-Egypt agenda", which has put 
 regional and local pressure on the GoE and exacerbated problems 
  
 CAIRO 00000249  004 OF 005 
  
  
 with the North Sinai population and the Muslim Brotherhood. He 
 believes that Israel should either support the reconciliation of 
 HAMAS and the Palestinian Authority, or return to the Philadelphi 
 corridor to help control smuggling.  He noted that Sinai tribes 
 such as the Suwarka, Tayaha and Tarabeen have members living in 
 Gaza and Israel and this renders Egypt's unilateral attempts to 
 control illegal activities nearly impossible. 
  
  
  
 ¶14. (S/NF) MPs Al Roqei and El Kassas agree that the smugglers are 
 filling a void created by Israel's policy of denying basic 
 shipments to Gaza. Al Roqei said Bedouin do not think in terms of 
 nationalist identity, but are only focused on making money. El 
 Kassas stated that Israel should act responsibly and allow food and 
 medical supplies in to Gaza, which would greatly reduce the demand 
 for smuggling, but noted that Egyptian soldiers aid smugglers in 
 exchange for cash payments.  Additionally, Egyptian subsidies make 
 smuggling of oil products profitable. El Kassas told us that low 
 octane fuels and diesel can be purchased in Egypt for around 2 New 
 Israeli Shekels (NIS)/liter (USD 0.53) and sold in Gaza for 7.5 
 NIS/liter (USD 2). 
  
  
  
 Rains Flood El Arish; Benefit Central Sinai 
  
  
  
 ¶15. (SBU) Mowafi told us that North Sinai received four times its 
 average rainfall during January and the first half of February. 
 This water coupled with run off from Israel created havoc in El 
 Arish's wadi (riverbed) and surrounding neighborhoods (reftel).  He 
 said "construction violations" in the wadi were all destroyed by 
 January floods as were the roads linking West and East El Arish. 
 (Note: The North Sinai Governorate allowed people to build houses 
 in the wadi, facilitated the construction of a bus terminal and the 
 open market in the area, and the Egyptian Ministry of Youth built 
 its Olympic Village there. All were destroyed during the floods. 
 End Note). However, Mowafi and central Sinai Bedouin leaders said 
 the rains had benefitted central Sinai by increasing the 
 groundwater and creating agricultural opportunities. However, Hamid 
 said the lack of tractors will mean that 60 percent of the land 
 will still go uncultivated. (Note: USAID's Life Sinai project is to 
 provide five tractors for central Sinai agricultural sector 
 development, but they will not be delivered until sometime between 
 April-June 2010.  End Note). 
  
  
  
 Islamic Organizations Provide Assistance, GoE Slow to Respond 
  
  
  
 ¶16. (SBU) Atta told us that local NGOs played the biggest role in 
 helping people in El Arish that were affected by the floods. He 
 said the Shabbat Muslimat (Young Muslim Women's Association) was 
 the most organized NGO and the first to respond to flood victims by 
 providing emergency assistance.  Atta told us that the Muslim 
 Brotherhood also provided immediate medical care for those injured 
 in the floods.  Soheir Gelbana, President of Shabbat Muslimat, told 
 us the organization organized NGO volunteer efforts to assist those 
 displaced by the flood. Local volunteers packaged and delivered 
 emergency kits that included blankets and clothing for men, women 
 and children as well as basic food kits with oil, sugar, rice, 
 beans and lentils. 
  
  
  
 ¶17. (SBU) Dr. Abu Hatab praised the efforts of the local NGOs and 
 Sinai University for providing cash, emergency aid and medical 
 services for those who were injured or lost their homes in the 
 floods.  He said the GoE promised restitution for lost homes, but 
 this was "taking time." (Note: President Mubarak promised LE 50,000 
 (USD 9,090) for families that lost homes during the flood.  End 
 Note).  Abu Rateb stated that the GoE-NGO cooperation was needed, 
 but was not taking place due to government mistrust of the NGOs. 
  
  
  
 Growing Frustration with U.S. Assistance 
  
 CAIRO 00000249  005 OF 005 
  
  
 ¶18. (C) All the MPs and local councilmen praised USAID's past 
 efforts in working with the North Sinai Businessmen's Association 
 (NSBA) to build a microcredit industry, but they expressed 
 frustration USAID's current Life Sinai project had "not implemented 
 any projects in two years." (Note: USAID and its contractor lack 
 unfettered access to many of the project sites in central Sinai. 
 End Note).  The MPs and central Sinai councilmen asked why buses 
 purchased to take Sinai children to school have sat in the 
 Governorate parking lot since September.  MP El Kassas said the 
 locals were keenly aware that the USAID-purchased buses were used 
 during the recent visits of PM Nazif and First Lady Suzanne 
 Mubarak, but were not being used to take children to school as 
 intended. NSBA Chairman Mahmoud Al Refai acknowledged his 
 organization had great success in working with USAID on the 
 microcredit project, but said the decision to turn Life Sinai's 
 implementation over to "an Egyptian liaison" was damaging the 
 reputation of the USG in Sinai. (Note: NSBA was involved the Life 
 Sinai bus transportation project for which it spent 35,000 Egyptian 
 pounds (USD 6,400).  However, a dispute between NSBA, the North 
 Sinai Governorate and USAID's contractor over financing has left 
 the buses sitting in the Governorate's parking lot for the past 5 
 months. End Note).  (Comment: USAID is working with the North Sinai 
 Governorate to resolve project implementation and access problems. 
 End Comment). 
 SCOBEY