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PROMOTING U.S. COMMERCE IN THE MIDDLE

EAST AND NORTH AFRICA

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE MIDDLE EAST AND NORTH AFRICA

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

JULY 22, 2015

Serial No. 114–70

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

DANIEL DONOVAN, New York 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND NORTH AFRICA

ILEANA ROS-LEHTINEN, Florida, Chairman 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

DARRELL E. ISSA, California 

RANDY K. WEBER SR., Texas 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

THEODORE E. DEUTCH, Florida 

GERALD E. CONNOLLY, Virginia 

BRIAN HIGGINS, New York 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

BRENDAN F. BOYLE, Pennsylvania 

(III)

C O N T E N T S 

Page

WITNESSES 

Ms. Elizabeth Richard, Deputy Assistant Secretary, Bureau of Near Eastern 

Affairs, U.S. Department of State ...................................................................... 5

Mr. Scott Nathan, Special Representative for Commercial and Business Affairs, Bureau of Economic and Business Affairs, U.S. Department of State .. 13

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Ms. Elizabeth Richard: Prepared statement ......................................................... 7

Mr. Scott Nathan: Prepared statement ................................................................. 15

APPENDIX 

Hearing notice .......................................................................................................... 36

Hearing minutes ...................................................................................................... 37

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 38

(1)

PROMOTING U.S. COMMERCE IN THE MIDDLE 

EAST AND NORTH AFRICA 

WEDNESDAY, JULY 22, 2015

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE MIDDLE EAST AND NORTH AFRICA,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 10 o’clock a.m., in 

room 2172 Rayburn House Office Building, Hon. Ileana RosLehtinen (chairman of the subcommittee) presiding. 

Ms. ROS-LEHTINEN. My opening statement, and I usually never 

start without Mr. Deutch being here, since he’s usually beating me, 

and I’ll ask Mr. Issa for as long as he can to take over, and then 

I’ll be back. 

So, after recognizing myself and Ranking Member Deutch when 

he comes for 5 minutes each for our opening statements, I will then 

recognize any other member seeking recognition for 1 minute. 

We will then hear from our witnesses, and without objection the 

witnesses’ prepared statements will be made a part of the record. 

And members may have 5 days to insert statements and questions 

for the record subject to the length limitations in the rule. 

The chair now recognizes herself for 5 minutes. 

The Middle East and North Africa is a region rife with conflict, 

instability, insecurity, and uncertainty as the events of the Arab 

Spring have shown us, but it also a region with potential. If some 

of those nations take the necessary measures to step out from the 

uncertainty and instability, and institute reforms and develop 

democratic institutions that can bring them back into the global 

economy. 

My deepest apologies, Mr. Deutch. 

The Middle East and North Africa as a region accounts for about 

51⁄2 percent of the world’s total population, a population that is one 

of the fastest growing in the world, but its economic output falls 

short of expectations contributing just over 4 percent of the world’s 

GDP. 

In terms of U.S. Direct Investment, the Middle East and North 

Africa region as a whole accounts for just 1 percent of the nearly 

$5 trillion of outward U.S. foreign Direct Investment. Those numbers are incredibly lopsided, but that means that there’s room to 

grow, and to expand. But it can only be done if many of the countries in the region implement much needed political reforms, economic reforms, rule of law reforms. Local businesses and foreign 

businesses alike run into rampant cronyism, protectionist policies, 

2

corruption, regulatory burdens that stifle economic growth and 

take away the incentive for those seeking to do business in the region. 

This makes it difficult not only for the governments themselves 

to invest in infrastructure and integrate themselves into the global 

economy, but it also makes these countries undesirable for foreign 

Direct Investment, which in turn exacerbates their economic struggles and their inability to reduce their already high unemployment 

numbers, and the cycle continues. 

This is a region that continues to significantly underperform in 

terms of economic output relative to its total population. That 

means they become overly reliant on outside foreign assistance. 

And one of the largest providers of foreign assistance is the United 

States, because these countries are behind in instituting democratic reform. 

In fact, the only democracy in the region is our close friend and 

major strategic partner, the Democratic Jewish State of Israel. It 

is probably no coincidence then that Israel enjoys the economic 

benefits that few countries in the region do, and that is why it is 

a great environment for American businesses to operate and thrive 

in. But Israel is not the only country in the region with whom we 

have strong ties. We have free trade agreements with five countries, including our partners, Israel, as I mentioned, Jordan, and 

Morocco. But there are others which we can continue to seek ways 

to expand our trade and investment opportunities. 

Is our policy too concentrated on security matters and not 

enough on trade and investment opportunities? We need to find 

ways for American businesses to help the economies of the region 

grow. If we can do that, we can gain more leverage, and we can 

help to promote and support democratic reforms. We need to work 

to help foster more hospitable positive environments for American 

and other foreign businesses because it is important that we transition from aid to trade. 

Increased trade with the region will help to strengthen their 

economies. The aim should not only be for American businesses to 

create opportunities and more American jobs, but to do the same 

for other countries in the region and help them become economically sound and less dependent on our economic assistance. 

This has been one of the missing pieces of the puzzle from the 

Arab Spring across the region. We need to find ways to spur privatization, investment, economic growth in these countries through 

democratic reforms. If we can get those countries more involved in 

the global economy, we may have a chance to see more countries 

like Tunisia with a path toward democracy and maybe finally see 

less conflict, and greater stability. 

So, today we’re here to discuss ways in which we can work to 

reach a mutually beneficial position for U.S. businesses and the 

countries of the Middle East and North Africa through increased 

investment and trade. And with that, I will be glad to yield to my 

ranking member, my friend, Mr. Deutch from Florida. And if I 

could ask Mr. Issa to take over. Thank you. 

Mr. DEUTCH. Thanks, Madam Chairman, and thanks to our witnesses for being here today. 

3

Over 4 years have past since the protests started in Tunisia setting off a chain reaction across the Middle East and North Africa. 

With varying results, both positive and negative, the protest led to 

dramatic changes in the region. The Middle East and North Africa 

that we see today are different, in some ways it’s even indistinguishable from before January 2011. 

Over these years, our Government has attempted to position 

itself and to direct our foreign aid in a way that would best promote the democratic principles that we cherish here in the United 

States. 

We often talk about the soft power that we use, commonly 

through civil society groups and NGOs to promote good governance, 

rule of law, equal treatment for women, and respect for religious 

minorities, among many other values. In this hearing, I look forward to hearing our witnesses discuss the role that the U.S. Government plays in promoting a mutually beneficial economic policy 

with our allies in the region. 

An important element for any country strategy for meeting the 

needs of the people including here in the United States is economic 

growth. A country that prioritizes job creation and developing a robust economic infrastructure that encourages innovation, entrepreneurship, foreign investment, and expanded trade relations will 

find support from its population. Simply put, an expanded and 

more widely accessible economy can contribute to a country’s success, and of great importance in the region especially, its stability. 

For these reasons, it’s important the U.S. Government do what 

it can to help countries improve their national economies. That’s 

why our Embassies in the region are staffed with liaisons working 

to improve bilateral commercial ties. Of course, we wouldn’t act unless there was a mutual benefit, a substantial return on our efforts. 

In this case, I think those benefits are clear. Each American private sector firm and business that benefits from this support will 

hopefully return the profits and jobs created to meet the new demands back—to meet those new demands back to the United 

States. In addition, a more prosperous country that offers more economic possibilities for its people will find greater stability. 

For a region experiencing significant population booms reaching 

working age, enticing the youth, many of whom might come from 

difficult regions, enticing them with attainable economic opportunities can help rebuff lures to turn to extremism and join ranks in 

terrorist groups like Ansar al-Sharia or ISIS. And for a region with 

such severe security threats, the United States should invest in 

any options available to us that can contribute to the security and 

the stability of our allies. 

Understandably, destabilizing security threats and attacks discourage trade and investments. This is reflected in our fluctuating 

bilateral trade volume since 2010. In some cases, it has rebounded 

well. For example, U.S. exports to Egypt slipped in the years when 

the country was dealing with political uncertainties. In 2014 it returned to pre-2012 levels. Today our exports to Tunisia have risen 

significantly. Since the revolution, obviously, we pay close attention 

to the results of the recent attacks. But it’s important to remember 

that growing ones economy isn’t simply increasing trade or foreign 

investment. We should not forget that many of the revolutions in 

4

the region were encouraged by large populations who did not feel 

the ripple effect of foreign commerce in their lives. That’s why public trust in the government is also essential. 

If the people of a country don’t see the benefits of expanded and 

more international commerce in their country; for example, if the 

profits and jobs remain solely among a small elite class, then the 

same grievances that we heard so loudly 4 years ago will remain 

unabated. 

A country without the institutional framework for handling expansion into new sectors or increased demand volume for exports 

and imports will not run efficiently, and won’t maximize the positive financial impact on the country. 

The government also needs to insure that they are fostering future generations of educated citizens able to continue the specialized work of modernizing an economy. Without proper worker protections and equal access for women, a modern economy cannot approach full efficiency and maximization of resources. 

These are important considerations for countries amid their political transitions, but we should also be cognizant of best practices 

so that we can be prepared to take on the rebuilding and the 

changes that will come in Syria, in Libya, and in Yemen. 

I look forward to the witnesses’ testimony which I hope to hear 

what steps are being taken to support U.S. commerce in the region, 

while at the same time considering the other factors in play to insure that the expanded commercial ties benefit the entire country 

in all regions from the bottom to the top. 

I thank the chairman, and I yield back. 

Mr. ISSA. I thank the gentleman. And, briefly, the 1 minute I 

would be given by the chair were she still here. t his is an important hearing and it will in many ways go unnoticed. 

Every day ISIS is in the front lines of discussion while, in fact, 

the areas that have fomented so much of this opportunity for extremism sometimes doesn’t get looked at properly. 

Today, our witnesses are, in fact, two individuals who are at the 

front line of dealing with the pre-event portion of it, the diplomatic 

portion. Over the years, whether it was Ambassador Welsh, Ambassador Satterfield, or William Burns, all of Ambassador Burns, 

all of them have had similar jobs, or in some cases the identical 

job you have. Each of them has been a mentor to me, and acutely 

understood what it will take in order to fix the problem. So, as I 

listen to your statements and follow-up with questions, I will be 

asking, and I will be interested to know now that, as Mr. Deutch 

mentioned, now that the Arab Spring has proven that eliminating 

a dictator and replacing them with democracy is not the answer. 

It may, in fact, be an important step in some cases, but the institution of real rule of law, civil rights, and the opportunity in an entrepreneurial, economic way to go from a lack of prosperity to prosperity; in other words, the have nots having the opportunity to 

eventually be the haves, and not to the exclusion of others, the rising tide that in America raises so many out of poverty, or out of 

middle class, or out of the upper middle class and does not exist 

in Africa or most portions of the Middle East, in fact, will be a critical part of what I’ll ask for today. 

5

And with that, it’s my pleasure to introduce our panel of witnesses. First, I’m pleased to introduce Ms. Elizabeth Richard, who 

serves as the Deputy Assistant Secretary of State for the Bureau 

of Near Eastern Affairs. Previously, she served as the DCM or Deputy Chief of Mission in Sana’a. Boy, that was an esoteric place to 

be that you can tell us more about, and the border coordination in 

Islamabad. She also was the Deputy to the Special Ambassador for 

War Crimes and Special Assistant Undersecretary for Political Affairs. Welcome. 

Second, we welcome Mr. Scott Nathan, who is the Special Representative for Commercial and Business Affairs for the Bureau of 

Economic and Business Affairs. In the past, he has worked as the 

Chief Risk Officer in the private sector at the Bob Post Group in 

Boston, and served as the economic advisor to the Governor of Massachusetts, who will remain nameless, but a governor. 

And with that, Ms. Richard, you’re recognized for more or less 5 

minutes. 

STATEMENT OF MS. ELIZABETH RICHARD, DEPUTY ASSISTANT 

SECRETARY, BUREAU OF NEAR EASTERN AFFAIRS, U.S. DEPARTMENT OF STATE 

Ms. RICHARD. Thank you very much, sir. Thank you, thank you, 

Mr. Ranking Member and members of the subcommittee who may 

join us later. Thanks very much for the opportunity to testify here 

today. 

Those of us who work on the Middle East and North Africa are 

all too familiar with the distressing news that routinely comes out 

of the region. But as this subcommittee knows all too well, the region faces deep structural challenges that feed the historic instability that we’re seeing today. 

However, what’s too often overlooked and what seldom gets 

enough publicity is the good news story of the growing economic opportunities for American business in the region. 

Over the past 4 years alone, U.S. trade with the Middle East and 

North Africa has grown on an average by $1 billion a year, and it’s 

reached $197 billion just last year. And U.S. exports to the region 

are at an all time high, and our trade deficit with the region is rapidly shrinking. 

American businesses can and do make an immediate and lasting 

impact on the region. Simply by investing and creating jobs in the 

Middle East and North Africa, American businesses can help make 

the region stronger, and that ultimately strengthens the American 

economy, as well. 

Let me be clear that jobs alone will not solve the problem of violent extremism, but they can provide opportunity and purpose for 

a very large population of at-risk people, including youth. 

Moreover, facilitating U.S. businesses access to markets around 

the region is a crucial part of Secretary Kerry’s economic diplomacy. A central mission of all our Embassies is to fiercely advocate 

on behalf of American enterprises. Ambassadors and our Embassy 

staff frequently sit down with American businesses to advise, 

strategize, and work with them on local business opportunities. 

They’ll meet personally with economic ministers if there’s a public 

solicitation that U.S. business can bid on. 

6

For example, in April, Ambassador Joan Polaschik after numerous talks with Algeria’s Minister of Transportation helped GE finalize a $20-million deal with the state-owned railroad company. 

In Iraq, Ambassador Stuart Jones and the U.S. Embassy team relentlessly advocated with high-ranking officials there, and 2 weeks 

ago finally the grain board of Iraq announced that it would spend 

$37 million to buy 63,000 metric tons of rice grown here in the 

United States is Louisiana, Missouri, Arkansas, and Texas. In 

Egypt, our Embassy in Cairo successfully advocated on behalf of 

the Great Lakes Dredge and Dock Company which has won a $135-

million contract for work in the Suez Canal. And countries in the 

Middle East and North Africa have become some of Boeing’s largest 

markets. Over the past few years, customers there have purchased 

or placed orders with Boeing worth more than $130 billion; 200 777 

Aircraft which include 300 American-made GE engines were ordered just last year alone. 

Ranking Member Deutch, Mr. Congressman, 41 American companies with ties to Florida have foreign subsidiaries in the region, 

and companies from every part of our country do business there. 

Interestingly, and I think this is important, many of them are 

immediately recognizable to people in the region as American. For 

example, Arby’s has opened a franchise in Iraq, and Nestle Tollhouse is poised to begin business there soon. Johnny Rockets, 

ReMax, Pizza Hut and 26 other franchises will open for business 

in Tunisia thanks in large part to the work that the U.S. Embassy 

has done with the Tunisian Government and other stakeholders to 

liberalize franchising laws. 

Obviously, these successes alone will not solve the serious challenges this region faces, but we need to make headway, and we 

need our business community to play a leading role in addressing 

the deep economic problem this region faces. 

So, I thank you very much for the opportunity to testify today, 

and I look forward to your questions. 

[The prepared statement of Ms. Richard follows:]

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Mr. ISSA. Mr. Nathan. 

STATEMENT OF MR. SCOTT NATHAN, SPECIAL REPRESENTATIVE FOR COMMERCIAL AND BUSINESS AFFAIRS, BUREAU 

OF ECONOMIC AND BUSINESS AFFAIRS, U.S. DEPARTMENT 

OF STATE 

Mr. NATHAN. Thank you, Mr. Issa, Mr. Deutch, and other members of the committee. I appreciate the opportunity to testify today. 

Despite the challenges facing this region, there are still many opportunities for business, and my testimony will focus on what the 

State Department is doing to help U.S. firms seize these opportunities. 

The business and investment climate in these countries can be 

difficult, but we are working with the private sector and our partners to try to reverse this trend, create more jobs, and spur inclusive growth. By investing and employing more people, U.S. firms 

play an important role in helping transform the economic landscape of the Middle East and North Africa. Because of their high 

standards and business practices, U.S. firms often set an example 

that helps catalyze broader change. They participate in local American Chambers of Commerce and other business councils helping to 

give important private sector voice to the reform agenda. 

My chief responsibility as the Department’s Special Representative for Commercial and Business Affairs is to help level the playing field for our companies to win more contracts and enter new 

markets. In my 16 months as Special Representative, I visited the 

Middle East and North Africa three times, and I will return to continue our efforts to strengthen commercial linkages next week. 

To assist the economic transitions in the region, we’re taking a 

three-pronged approach that presses for policy reform, support our 

companies in pursuing commercial opportunities, and helps the development of local entrepreneurs and SMEs. 

First, we’re engaging with our Government partners through 

trade agreements and economic policy dialogues to support their 

market-oriented reform agendas, and to facilitate greater business 

ties with the United States. Creating jobs and opportunity through 

private sector-led expansion is critical to the future success of the 

region. 

We push for open trade and investment policies that will promote 

sustainable growth and enable American businesses to have fair 

access to these growing markets. Our two-way trade in the region 

more than doubled over the last 5 years, and around a quarter of 

our exports to the region were sent to our five free trade agreement 

partners; Israel, Morocco, Oman, Bahrain, and Jordan. 

Under the FTA with Israel, for example, bilateral trade reached 

approximately $38 billion in 2014, up from $2.6 billion when the 

agreement began 30 years earlier. In Jordan, our FTA enabled a 

local company, PETRA Engineering, to purchase over $15 million 

worth of equipment from U.S. SMEs just this year alone, and every 

air conditioning unit they produce and export around the globe 

uses components made in the United States. 

Second, we’re hoping to connect our private sector with promising opportunities and we’re doing what we can to position our 

companies to succeed. A high priority for Ambassadors and EmVerDate 0ct 09 2002 16:30 Aug 18, 2015 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 F:\WORK\_MENA\072215\95634 SHIRL
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bassy teams in the MENA region and around the world is to advocate for U.S. companies bidding on foreign government procurements. 

Last year our advocacy efforts contributed to over $45 billion 

worth of sales in the region supporting thousands of jobs in a dozen 

states. For example, Bechtel won a $3.1 billion contract in Saudi 

Arabia last year to design and construct new metro lines in Riyadh 

assisted by advocacy from then Ambassador James Smith and Secretary Kerry. Divida Health Care Partners won a $1.3-billion contract to provide dialysis services after strong mission Saudi Arabia 

support. In 2014, State Department advocacy helped secure Florida-based Blumberg Grain, a contract to provide 93 storage and 

processing sites across Egypt. At the recent Egypt economic development conference, General Electric announced a $1.6-billion deal 

to provide more than 2 gigawatts of power generation equipment, 

most of which is now operating and helping Egyptians meet their 

peak summer demand. 

Third, we’re helping to support local private sector development 

from the ground up through programs that bolster SMEs and entrepreneurs. Just one example, for the last few years, Coca-Cola 

has partnered with the State Department and the Kelly School of 

Business to host a summer entrepreneurship program for 100 college students from across the MENA region. These future business 

and civic society leaders returned to their countries with new skills 

and contacts better enabling them to start businesses and create 

jobs. On a much larger scale, President Obama’s Global Entrepreneurship Summit helps deepen ties between business leaders, 

NGOs, academics, and aspiring entrepreneurs. And GES has been 

twice held in the region. Last year in Morocco, we instituted a day 

devoted to helping youth and women entrepreneurs. 

To conclude, I’ve discussed only a small sample of our economic 

engagement with the Middle East and North Africa. Sustainable 

economic development in this region is integral to defending our 

nation’s interests and insuring the security of all Americans. Our 

private sector plays a key role in this, and we’re there to support 

them. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Nathan follows:]

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Mr. CHABOT. Thank you very much. We appreciate your testimony here this morning, and we’ll now recognize members for 5 

minutes, and I’ll begin with myself. 

The—in May 2011, the President announced the launch of the 

Middle East and North Africa Trade and Investment Partnership 

Initiative with the proposed goals of facilitating regional trade, promoting integration with U.S. and European markets, and helping 

to construct a regional trade agreement. He stated, ‘‘This strategic 

objective was to create an economic force for reform and to assist 

with democratic transitions in the Middle East,’’ yet, very little has 

been said about the partnership since its launch, and there’s no 

mention of it at all in the President’s latest trade policy agenda, 

or either of your testimonies. What is the status of the partnership, 

and why was it not included in the President’s trade policy agenda? 

And I’ll open it either one of you. Mr. Nathan. 

Mr. NATHAN. Sure. Thank you very much, Mr. Chabot. 

In terms of our work with our partners in the region on trade, 

we have numerous bilateral dialogues in which the possibility of 

economic reform to lay the groundwork for a trade agreement is 

underway. Just this year we had economic and strategic dialogues 

with Morocco. We’re doing so with Israel and the UAE, but in order 

to move forward with trade agreements either on a bilateral or a 

multilateral basis, we need to see progress on the reform agenda 

broadly. 

Mr. CHABOT. Thank you. Let me move to another question here. 

Where are we in meeting in the partnership strategic objective, 

and if it’s not yet been that, does the President plan on extending 

the partnership’s mandate? 

Mr. NATHAN. I can’t give you a status report on where we are 

on the objectives. What I would recommend is that we have our experts from our trade area come up and brief you on that, specifically. 

Mr. CHABOT. All right. Well, we would appreciate the administration get back to the committee with answers to that. 

Mr. NATHAN. Absolutely. 

Mr. CHABOT. Many countries in the region are working hard to 

diversify their economies. Which countries have been more successful at this diversification, which need to do more, and how is the 

United States helping in their efforts? Ms. Richard? 

Ms. RICHARD. Sir, I think Israel is a terrific example of a country 

that’s done exactly that. Over the past 30 years, the diversification, 

the investment in the private sector, the investment in technology 

has allowed Israel to play on par with the developed world and 

with the West. There are a couple of others that are starting to 

make progress. I think Tunisia is working very hard in this direction, and we have quite a bit of engagement with the Tunisian 

Government on exactly this point, the need to diversify their economy beyond some of the traditional agricultural products, and some 

progress has been made there. 

Mr. CHABOT. Do you think that the recent terrorist attack in Tunisia will have any impact on their progress in that area? 

Ms. RICHARD. I don’t think it will have any impact on the government’s commitment to diversify, but I think the fact that the tourism industry took such an immediate and significant hit, has only 

25

highlighted the need to further diversify that economy. I think that 

they are completely devoted to continuing to work on that. 

Mr. CHABOT. Thank you. 

The United States has a number of trade investment framework 

agreements with countries in the region. How many of those are 

likely to develop into something more, and are there any countries 

that we consider concluding a free trade agreement with that we 

don’t currently have? 

Mr. NATHAN. So, in terms of countries that we might enter into 

free trade agreements, I can’t specifically comment on what the 

prospects are with an individual country, but what I can say is that 

in all of our dialogue, either formal or informal, with countries in 

the region we’re pressing forward with the reform agenda, providing technical assistance on the change in laws to move toward 

more market-oriented regulations, cutting through bureaucracy, 

protection of intellectual property rights, all the things that lay the 

basis for then taking the next step toward a free trade agreement. 

Mr. CHABOT. Okay, thank you. I think I’ve got time to get one 

more question in here before my time expires. 

While Saudi Arabia is our largest trading partner in the Middle 

East by overall volume, it’s mainly due to U.S. oil imports, of 

course. What’s preventing additional U.S. exports and investment 

in other economic sectors, and what is State doing to encourage additional opportunities for U.S. commerce? 

Mr. NATHAN. So, as I mentioned in my testimony, we’ve been advocating hard. Our Ambassadors and posts on the grounds, as well 

as Washington-based principals to win contracts for American 

countries in Saudi Arabia. I cited a few examples. 

There’s always progress that could be made on transparency and 

openness of procurement processes, and opening up of the business 

and investment climate. But, for example, Saudi Arabia already is 

the third largest importer of automobiles from the United States, 

so it’s a high indication of opportunities to diversify our trade with 

Saudi Arabia. 

Mr. CHABOT. Thank you very much. My time has expired. The 

ranking member, Mr. Deutch, is recognized for 5 minutes. 

Mr. DEUTCH. Thanks, Mr. Chairman. 

Ms. Richard, you spoke about the—you gave us some big picture 

data points on the growth of our economic relationships. And, Mr. 

Nathan, you spoke about individual—you gave some examples of 

individual companies who have benefitted, but if you could—I 

would love to hear you tell us what you’re most excited about. I 

mean, this is what you do every day. What are you most excited 

about in the region and opportunities for American business? 

Ms. RICHARD. Maybe I can start with that, sir. And thank you 

for the question, because there’s a lot to be excited about. And I 

think that’s—we’re very thrilled to be there—to be here today for 

exactly this reason. There is so much bad news coming out in the 

press that you can’t believe anything good is happening, but there 

is a lot. And I think one of the things, we always talk about the 

youth demographics here as a problem, and an obstacle, and a danger, and something that can be exploited by terrorists, and that’s 

all true. But it’s also an incredible opportunity, and I think if you 

look at some of what’s being done on the small and medium enterVerDate 0ct 09 2002 16:30 Aug 18, 2015 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 F:\WORK\_MENA\072215\95634 SHIRL
26

prise scale, particularly as regards technology, there is a lot that’s 

happening, and it’s very exciting. 

It is moving around a little bit some of the moribund economies, 

some of the things that keep these economies from developing like 

lack of transparency, poor regulatory environment and the like. 

And it’s also really opened up an avenue for women to join the 

workforce. Women in the workforce in the Middle East is the lowest level in the world. In Africa, for example, about 63 percent of 

the labor force is women; in the Middle East it’s 21 percent. But 

technology has given an opportunity for women, and especially 

young people to work beyond those obstacles. So, for example, we 

can have women running a business from their home. They can 

employ other women who are also working from their home. And 

we have some really interesting programs to help with this, Tech 

Women, Tech Girls. We bring female entrepreneurs to the United 

States to sit with their counterparts here and learn how to do this. 

So, I think the opportunity side of what’s going on with this huge 

youth population and the opportunity for U.S. business to take advantage of that is huge. 

Mr. DEUTCH. Great, thanks. Mr. Nathan. 

Mr. NATHAN. So, I echo my colleague’s comments about the opportunities in entrepreneurship. There’s just fantastic opportunities 

there for us to make progress, and empowering youth, women, disadvantaged communities by giving them the tools, the ability to 

reach their human potential through starting a business, and helping them navigate through what is often a very challenging environment of bureaucracy. 

But I want to return to what we do on commercial advocacy. It’s 

really in many ways the bread and butter of what my office focuses 

on. There are many parts of the U.S. Government which help support this, the Department of Commerce and elsewhere around the 

interagency, but I’m a competitive guy. I’m a deal guy. I like to 

win, and the idea of helping U.S. companies compete on a level 

playing field and win contracts that not only help on the ground 

in the region bring examples of good business practice, but also 

strengthen our own economy at home and create jobs. That’s a winwin. I know how much our Ambassadors on the ground are committed to this idea. They like to win, and they’re competitive, as 

well. 

Mr. DEUTCH. All right, thanks. 

Can we just get back to something you both just mentioned, 

which was some of the positive aspects on the ground in society. 

Is it too soon for us—well, can you identify positive social trends? 

Is it too soon to describe trends we’ve seen with respect to advancement for women, or more opportunities for young people in countries where we’ve seen increased economic ties with the United 

States? 

Mr. NATHAN. So, I’d say that I think from a statistical point of 

view it’s probably too soon to prove that out. There are plenty of 

anecdotes, however. I mean, one that I’ll just highlight, under the 

Global Entrepreneurship Program that we coordinate out of the Office of Commercial and Business Affairs, we’ve recently signed up 

an entrepreneur in residence, the first regional entrepreneur for 

the Gulf Region. She’s a woman, a star on reality TV in Kuwait, 

27

has a huge social media following, and really serves as in a largescale way a mentor to women throughout the region about the possibility of empowering themselves through business. It’s anecdotes 

like that that I think give me hope for the future. 

Mr. DEUTCH. Ms. Richard. 

Ms. RICHARD. Yes, I would second that. And if I might from my 

own experience in Yemen for the 3 years from the start of the Arab 

Spring and 3 years on, one of the things I saw among the younger 

people is a willingness, and ability, and comfort level to sit with 

each other, to collaborate with each other among the youth, and 

among men and women, which is very, very different. And in quite 

a very conservative country as Yemen is, it was very interesting to 

see this through the Arab Spring protests and through the national 

dialogue process, which ended up with young men and young 

women sitting together to try and create a new constitution for the 

country. 

Mr. DEUTCH. Thanks. And to the extent—this is very helpful to 

the extent that there are American businesses who hearing all of 

the wonderful opportunities you discussed would like to learn more. 

I mean, what’s the best place? Where should members direct them 

to go for the best and central location for this information? 

Mr. NATHAN. Well, there’s a—I mean, the best source of information about opportunities on the ground are our posts, our missions, 

our Embassies, the Ambassadors and their teams. But whether it’s 

the State Department, the Commerce Department, or other parts 

of the Government here in Washington, we have many programs 

through our Web sites that provide that sort of information. 

Mr. DEUTCH. Any in particular, Ms. Richard? Thanks. 

Ms. RICHARD. No, I would agree with that. This is an absolute 

priority for Secretary Kerry. Economic diplomacy is foreign policy, 

and so the State Department is a great place to start. Our colleagues at the Department of Commerce also spend an awful lot of 

their time and energy doing this, and as Mr. Nathan said, our Ambassadors live and breathe to do exactly this. 

Mr. DEUTCH. Let me try it a different way. 

Mr. NATHAN. I can mention one specifically. 

Mr. DEUTCH. Please, yes. 

Mr. NATHAN. So, we have a program called the Direct Line for 

Business. It’s instituted in 2012. It allows SMEs and other businesses here to connect with our posts on the ground to consider 

particular opportunities. The Ambassadors and their teams 

through webinars or conference calls can relate business opportunities. We’ve had 30 of these webinars just in the MENA region 

alone. They’re focused on opportunities like the health care sector 

in Oman, or the security sector in Libya. 

Mr. DEUTCH. Finally, Ms. Richard, that’s helpful if the business 

is not quite at that point, they just want to learn more and they 

went to State.gov, what should they look for? I’m just trying to 

really——

Mr. NATHAN. So, at State.gov, there’s the Commercial and Business Affairs tab, and Business USA. 

Mr. DEUTCH. That’s what I want. 

Mr. NATHAN. Thanks. 

Mr. DEUTCH. Okay, thanks very much. I yield back. 

28

Mr. TROTT. I want to thank the ranking member for holding this 

hearing, and also thank the witnesses for testifying. And I now recognize myself for 5 minutes. 

Either witness, the United States’ decreased reliance on Middle 

Eastern crude oil has caused the price of oil to fall below $50 a barrel. Is that negatively impacting our relationship with countries in 

the region, either witness would be great? 

Ms. RICHARD. Let me start and simply say no, it has not really 

affected our relationships. Our relationships across the region are 

based very, very much more than simply on oil, and I think you 

see that today. What I would say that is the change in the price 

has changed the dynamics in the region a little bit, depending on 

whether you’re a net producer or a net importer. But, fundamentally, we have such a broad range of interests in that region that 

this is only one aspect of it. 

Mr. NATHAN. I would say, I mean, it probably goes without saying, but the effect of lower oil prices on the budgets and economies 

of some of the countries in the region has been detrimental. 

Mr. TROTT. With respect to Egypt, the efforts to privatize stateowned industries has slowed in recent years due to legal challenges. What’s the—how has that impacted U.S. commerce, and 

what are we doing to try and move the privatization process along 

in Egypt? 

Ms. RICHARD. That’s an absolutely excellent question, because 

that is a fundamental problem for that economy. Egypt is a country 

with a moribund economy, with a very small, as in scale private 

sector. The private sector is actually quite closed, and there are 

many, many significant problems. If you look at a recent World 

Bank study, for example, on the constraints to growth, they are 

macroeconomic instability, regulatory instability, political instability, and corruption. And these four elements are present in 

Egypt in a significant way, so we are working very hard with the 

Egyptian Government to help them recognize these key areas that 

need to be worked on, to open up the economy not just for U.S. 

business, but for their own companies to grow. 

Mr. NATHAN. Can I just briefly add to that? 

Mr. TROTT. Please. 

Mr. NATHAN. I had the opportunity to travel with Secretary 

Kerry to Egypt in March for the Egypt Economic Development Conference. It was really an event that highlighted that aspiration to 

move forward with the reform agenda, and to create more opportunities for business. There were many, many American companies 

there. The U.S. Chamber of Commerce hosted a huge event, and 

many deals, whether Coca-Cola, PepsiCo, GE were all announced 

at this event. So, there still are great opportunities in Egypt, and 

we’re working hard at multiple levels to help them with the reform 

agenda to make sure that not only is their economy strengthened, 

but U.S. companies have a chance to compete. 

Mr. TROTT. And how would you assess President Sisi’s efforts to 

deal with the economic problems and attract foreign investment in 

Egypt? 

Mr. NATHAN. So, as I just mentioned, the conference that happened in March was an event that I think was very personally important to President Sisi. Many leaders from around the region, 

29

many businesses from around the globe attended it. He was front 

and center the whole time, and I think really drove the agenda. 

There’s a lot of challenge, as my colleague mentioned, in Egypt, but 

I think there’s no shortage of energy devoted to pushing forward 

with the reform agenda and the economy. 

Mr. TROTT. Okay. In Lebanon, they’re working hard to combat 

corruption and the anti-bribery network, and is it—are they making progress? Is it lending itself to a more commercially reasonable 

environment for folks to do business in Lebanon? 

Ms. RICHARD. They are making some progress. It’s slow, and the 

fact that there hasn’t been a President for a long time, and the government is a little bit stuck is definitely a problem. The other thing 

I’d say is a problem, and the Lebanese economy is incredibly resilient, somehow has posted a very modest gain this year, I think 

about 2 percent, which is really saying something in the environment that exists there now. 

The instability in the region and the overflow from Syria, though, 

is creating serious problems for them, and they affect tourism, the 

tourism sector, they affect investment and the willingness of investors to go into the country. So, these are two areas that are extremely vulnerable right now, and I think that we need to keep 

working on the macroeconomic part of this, the laws, et cetera. But 

the stability issue is also very much an element here. 

Mr. TROTT. With respect to Morocco, I think I have time for one 

more question. It’s the gateway for growing economies in the African Continent, except unemployment is staggeringly high. Is there 

a reason for this disconnect? And, again, are they making progress 

in trying to bring the unemployment down in Morocco? 

Mr. NATHAN. So, I know that they’re very focused on the question. I was there last November. They hosted President Obama’s 

fifth Global Entrepreneurship Summit, and two elements of what 

you mentioned in your question were highlighted by the Government of Morocco through this event. One is their place is a gateway 

to Africa, and I should mention they’re the only country on the 

Continent of Africa with whom we have a free trade agreement. 

And the second point was doing what’s necessary to spark entrepreneurship. In a clear way the bureaucracy changed the attitude 

in the region toward taking a risk and provide the support and 

mentorship necessary to make that possible. It’s through small enterprises, through entrepreneurs that they’ll be able to create the 

jobs to absorb the unemployment problem that you’re talking 

about. And it was clear, 6,000 people attended this event in Marrakesh. It was clear that they had put a lot of effort into that, and 

were putting force behind it. 

Mr. TROTT. All right. Well, my time is expired. I’m not sure if 

there are any other members of the committee that have questions. 

Ranking Member Deutch, please. 

Mr. DEUTCH. Thanks, I appreciate it. Thanks to both of you for 

coming. It’s a very positive story that you’re telling that we don’t 

often get a lot of positive news in this committee, so I appreciate 

that. 

I just wanted to circle back, Mr. Nathan, to the—you both mentioned the Florida companies that are impacted by all this, but 

there’s one in South Florida, in particular, Blumberg Grain. The 

30

suppliers for that project are U.S.-based. They are, as I understand 

it, mostly small and medium-sized businesses. How—on a project 

like that where there are some 93 storage sites I think you said, 

how do you—what role can you play to insure that a company like 

that, when deals like that come along, how do we insure that it can 

be built upon when there are successes that wind up having the 

benefits back home for the suppliers to those companies? 

Mr. NATHAN. So, thanks for the question, because Blumberg 

Grain really is a success story. They attended the conference in 

March that I mentioned, the Egypt Economic Development Conference, and they’ve had good news since the advocacy that I mentioned that got them the first contract for the 93 storage facilities. 

President Sisi has recently announced a tripling of the program 

with this company. It’s not only an example of an innovative solution with U.S. content that is a successful export, it’s also solving 

a problem for Egyptian society and the Government of Egypt, 

which is food security, how to have better storage and processing 

at a cheaper price in a more efficient way throughout Egypt. I 

mean, it’s been a millennial problem in the region, and Blumberg 

Grain is bringing a solution to that. They work closely with our 

post on the ground. They work closely with the U.S. Chamber of 

Commerce and the local U.S.-Egypt, and Egypt-U.S. Business 

Councils. They take full advantage of the opportunities to get in 

front of the Egyptian Government, and push forward the advantage 

of their product, and we’re there to support them. 

Mr. DEUTCH. That’s great. I appreciate that. Thanks very much, 

Mr. Chairman. I yield back. 

Mr. TROTT. Well, I don’t believe any other committee members—

recognize the gentleman from Virginia for 5 minutes. 

Mr. CONNOLLY. Forgive me, Mr. Chairman, I had a markup the 

Oversight and Government Reform Committee, and had a bill to be 

marked up. And welcome to our panel. 

If I could ask maybe some broader geopolitical questions about 

commerce in this region, has commerce effectively stopped in large 

chunks of the region given insurgencies, and instability, and violence? I mean, how has it affected our commerce with Lebanon? Either one. 

Ms. RICHARD. Well, maybe I can start. Absolutely, the instability 

in the region has affected commerce, but it certainly has not 

stopped commerce. And I think the two of us today have mentioned, and also in our written testimony, really a staggering number of success stories that we don’t hear about every day in the 

press. And I know our Ambassador in Egypt, Ambassador Beecroft, 

is currently working on advocacy for I think about $19 billion 

worth of deals right now. 

Mr. CONNOLLY. Of? 

Ms. RICHARD. About $19 billion worth of deals. The Embassy in 

Egypt is advocating right now. Now, that’s a very good news—

that’s very much a good news story, and there’s a lot happening. 

In Lebanon, in particular, I mentioned a moment ago, Lebanese 

companies somehow, and the Lebanese economy is somehow managing to be very resilient in the face of quite a bit of instability on 

its borders, and recently posted about a 2-percent growth. That’s 

modest growth, but that’s growth in a region that’s quite chalVerDate 0ct 09 2002 16:30 Aug 18, 2015 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 F:\WORK\_MENA\072215\95634 SHIRL
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lenged right now. But there’s no doubt that this situation is affecting, as I mentioned, investment, foreign Direct Investment in Lebanon. And it’s affecting the tourism sector, and it’s also affecting 

those sectors that depend on transportation because so many of the 

transport networks throughout the region, intra regional trade depend on going through Syria. 

Mr. CONNOLLY. Sure. I would also—to what extent is personal 

security a barrier, as well? I mean, businessmen and businesswomen, and investors are willing to take risks up to a point, but 

if my own personal security is always at risk where I stay, where 

I eat, when I travel, who I meet with, there are plenty of places 

to invest and do business with that don’t put me in that kind of 

risk. And have my family back home really worried sick about my 

personal security. To what extent is that a serious barrier in encouraging U.S. deals, trade, investment? 

Ms. RICHARD. Let me just have one personal story here. I can tell 

you from having served, a career foreign service officer and my last 

three postings have been Sana’a, Yemen, Islamabad, Pakistan, and 

Kabul, Afghanistan. So, I can tell you——

Mr. CONNOLLY. Somebody loves you at the State Department, obviously, Ms. Richard. 

Ms. RICHARD. I did something right or wrong. 

Mr. CONNOLLY. Yes, you did something——

Ms. RICHARD. But I can tell you, yes, risk is absolutely an issue, 

but one can work in these areas. And I think American companies 

are looking at these markets. Look at Egypt, 90 million people, 

that is a vast market for consumer goods and for all kinds of commerce. So, they’re looking at those, they’re assessing their security, 

of course, and we work very closely through our OSEC councils to 

collaborate with U.S. companies. Our Ambassadors meet with them 

regularly to talk about risk, but there’s a lot of opportunity here. 

And companies, I think, are making smart decisions. 

Mr. CONNOLLY. Mr. Nathan? 

Ms. RICHARD. Mr. Nathan. 

Mr. NATHAN. I really don’t have anything to add to that. I was 

going to mention the role that our posts on the ground through the 

OSECs play in helping businesses. 

I guess what I would say is that we meet with businesses all the 

time that are looking for assistance in pursuing opportunities 

through the region, and the question you raised does not come up. 

I think in———

Mr. CONNOLLY. Does not? 

Mr. NATHAN. Does not come up, and I think the reason is that 

many of these companies have operated in this region and elsewhere around the world for years where there are security challenges. And that doesn’t make it easy, but it means that they’ve 

become to some extent accustomed with how to deal with it. It does 

act as a tax on doing business. This is true in any region where 

there’s instability. But, nonetheless, the opportunities are such that 

they continue to pursue them. 

Mr. CONNOLLY. Well, I’m somewhat—I mean, I worked in the 

private sector for 20 years until I came up here, and I can tell you, 

the two companies I worked for were both international, and we 

did our own assessment of risk. Now, maybe that’s what happens, 

32

we decide we’re not going to play in certain venues and you don’t 

ever meet with us. And, as I said, I mean, I understand that especially in more dicey parts of the world the risk factor is higher, of 

course. But I guess I’m asking to what extent does it become a real 

high barrier for a U.S. presence? I was with some folks who have 

been multiple times, many multiple times to Afghanistan and, candidly, the security situation has just plummeted in the last few 

years, and you can’t do business. I mean, it’s very—I mean, maybe 

you need to stay in the compound. If you stay there, you have to 

hire armed guards. If you’re outside the green zone you’re at risk, 

you could be targeted. You’re very aware of it, and they’re having 

trouble recruiting anybody who wants to frankly work in that kind 

of environment. 

Mr. NATHAN. Yes. 

Mr. CONNOLLY. At any rate, I just—I think it’s good to hear that 

we’re still doing business in the region, and there are deals to be 

had and we haven’t abandoned. But I’d love to get more of a sense 

of—but with rising instability in certain parts of the region, the 

rise of ISIS and, you know, outright warfare, and what’s going on 

in Syria, and dislocations, and refugee populations swelling, and so 

forth, has that appreciably shown itself in data in terms of U.S. 

economic presence to a trade investment and the like? And I’d be 

very interested in following that. Thank you, Mr. Chairman. 

Mr. TROTT. The gentlewoman from New York is recognized for 5 

minutes. 

Ms. MENG. Thank you, Mr. Chairman, Mr. Ranking Member, and 

to our witnesses for being here today. 

I have a question about in general localities in states such as 

California has had water shortage and drought issues. I know that 

in the region, Middle East in general, but particularly Israel has 

had a lot of success in groundbreaking technology and usage of 

techniques in water shortage situations of their own. So, I know 

that there’s been some conversation and some action, but I was 

wondering your thoughts on potentially more areas of collaboration 

between Israel and localities or states, such as California, and 

what more could be done on a Federal level, how we can be more 

helpful? 

Mr. NATHAN. So, I would just mention that our collaboration 

mostly at a private sector to private sector level with Israel could 

not be stronger. If you look at collaboration in research and development and innovation, the relationship between the high-tech 

community in the United States, much of which is in California, 

but spread throughout the country and the high-tech sector in 

Israel is incredibly strong. U.S. firms locate research and development centers in Israel because of the high level of talent. 

After China, there’s no country that has more NASDAQ listed 

companies than Israel, a reflection of the innovation and dynamism 

of their private sector in the high-tech area. So, I think there’s 

some that we can do to provide the backdrop and framework for 

that. We’ve had our very first free trade agreement with any country was with Israel. It’s celebrating its 30th anniversary. There’s 

exchange from a scientific and academic point of view. We have 

policy dialogues, economic policy dialogue with Israel in a very robust way. But I think really, ultimately, it’s the private sector colVerDate 0ct 09 2002 16:30 Aug 18, 2015 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 F:\WORK\_MENA\072215\95634 SHIRL
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laboration and deep linkage between the two countries that’s going 

to produce the type of results you asked about. 

Mr. TROTT. Thank you. Well, I don’t believe there are any other 

members of the committee that are here with questions. So unless 

the ranking member has any other questions, or gentleman from 

Virginia, we thank you for your insight and your testimony this 

morning, and the committee stands adjourned. 

Mr. NATHAN. Thank you very much. 

[Whereupon, at 10:56 a.m., the Committee was adjourned.] 

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