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Cablegate: Scenesetter for a/S Wayne Visit to Abu Dhabi

Diana T Fritz 03/15/2007 03:20:35 PM From DB/Inbox: Search Results



TELEGRAM February 26, 2004

To: No Action Addressee

Action: Unknown



Captions: None


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DE RUEHAD #0503/01 0571240
O 261240Z FEB 04

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E.O. 12958: N/A


1. (SBU) Assistant Secretary Wayne: We look forward to
welcoming you back to the UAE for your February 28- 29
visit. In addition to the donor's conference, we have
scheduled bilateral meetings for you with Minister of
State for Finance and Industry, Dr. Mohamed Khalfan
bin Khirbash, MFA Assistant Under Secretary for
Political Affairs, Abdullah Rashid Al-Noaimi, and
Central Bank Governor Sultan Nasser Al-Suwaidi. In
addition, it would be our pleasure to invite you to a
reception that the Ambassador is hosting the evening
of February 28 to mark your visit, the visit of
Commerce Under Secretary Kenneth Juster, and an OPIC
delegation. We will schedule a press availability for
you with local media at which you can discuss the U.S.
role in Iraq reconstruction and the excellent
bilateral relationship.

2. (U) The UAE has the third largest economy in the
Arab world. It also possesses between 9% and 10% of
the world's proven oil reserves and the 4th largest
reserves of natural gas. The overwhelming majority of
these reserves are in the Emirate of Abu Dhabi.
Despite this mineral wealth, the UAE has succeeded in
diversifying its economy away from oil to a large
degree. Only about a third of the GDP comes from
crude oil. Unusually for countries in this region,
the UAE has never completely nationalized its upstream
oil industry. The individual emirates have majority
control of the oil industry in each emirate, but
international oil majors (including Exxon Mobil) are
minority shareholders and bring their expertise to the
table. The Emirate of Dubai has responded to its
dwindling oil supplies to push for diversified growth
and is the home of the largest and most successful
free zone in the world, the Jebel Ali Free Zone. Abu
Dhabi, in contrast, is still more dependent on oil for
its economic growth, but is the only emirate in the
UAE that has privatized its power and water sectors.


3. (SBU) You will be meeting with the following

-- H.E. Dr. Mohammed Khalfan bin Khirbash, Minister of
State for Finance and Industry. He is an American-
educated technocrat (BU and Harvard) and has been the
UAEG's point person on a number of high-profile
issues, including the IMF/WB Annual Meetings in Dubai
and on the UAE-USG TIFA negotiations. He will lead
the delegation to the U.S. and sign the TIFA agreement
with the U.S. He will be looking for an idea about a
date for a TIFA signing (currently proposed for March
12 or 15) and will likely be interested in how quickly
the UAE can move to FTA negotiations. You will want
to let him know that UAE agency laws and labor laws
are likely topics for TIFA meetings and that the UAE
should be prepared to discuss them. (We believe that
they will be the most difficult issues to resolve and
are much less concerned about IPR where the UAE's
record is excellent.) In addition, you will want to
reinforce the message that the UAE will need to meet
with key actors on Capital Hill, in the
administration, and in the private sector in order to
build support for a FTA.

-- H.E. Ambassador Abdullah Rashid Al-Noaimi,
Assistant Under Secretary for Political Affairs at the
Ministry of Foreign Affairs. He is another friend of
the U.S. and one of the Embassy's main interlocutors
on bilateral and multilateral political issues. As
the MFA has taken the lead on a number of donor
coordination issues, he is a regular participant in
the weekly Iraq donors' calls. He and Dr. Khirbash
are both very involved in the current donors'
conference. You will want to thank him for the UAE's
active support for Iraqi Reconstruction and the core
group. You will also want to raise the issue of a UAE
donation to the UN Trust Fund. Currently the UAE is
not a member of the Donors' Committee and does not
appear to be ready to commit the $10 million required
to join the committee.

-- H.E. Sultan Nasser Al-Suwaidi, Governor of the UAE
Central Bank. He is another U.S.-educated official,
with a bachelor's degree from San Diego State
University. He is a regular contact of the Embassy and
has been a tireless champion of the UAE's anti money
laundering and anti terrorist finance efforts. He
receives generally high praise from bankers here for
his efforts and his commitment. Over the last few
months, we have noticed that he has been increasingly
"prickly" in his remarks to the press about
cooperation with the U.S. Much of this can be traced
to some negative press articles on the UAE financial
system, one written by a New York Times reporter who
was on Secretary Snow's traveling press squad during
the IMF/WB Annual Meetings. Minister of State for
Foreign Affairs Hamdan Bin Zayed Al-Nahyan and the
Governor called on Treasury Secretary Snow in October
to raise this issue. Secretary Snow's answer was that
the article did not reflect the official U.S. view of
the UAE. You will want to reinforce the message that
Washington appreciates his cooperation. You will also
want to note that you understand that Central Bank's
cooperation with our law enforcement agencies has been
excellent and vital. We know that the UAE is actively
issuing search and freeze orders on suspicious
accounts, but you may want to press for more
information on their actions. You will also want to
ask the governor about his plans to host the 2nd
Hawala Conference and encourage him to do so.


4. (SBU) Trade - The UAE is very interested in
negotiating a Free Trade Agreement with the U.S. As a
first step, they negotiated a TIFA with us over the
last several months. For our side, due to the
importance of the bilateral relationship in a number
of areas and due to the size and diversity of the UAE
economy, we also want to push the process forward as
quickly as possible and would like to see UG - UAE FTA
negotiations begin before U.S. Presidential elections
this November. The UAE is a significant trading
partner, with a rapidly growing economy and U.S.
business presence. As it has become the region's
center for trade, banking, transport and tourism, a
FTA with the UAE could advance the President's MEFTA
goal by providing an attractive platform into which
other regional states could "dock." We have recently
concluded negotiations on an English language text for
the TIFA and language services is working on
reconciling the Arabic text (both texts are equally
valid). The UAE has proposed to come to the U.S. for
a signing ceremony on either March 12 or 15 and we are
waiting to see if that will fit on Ambassador
Zoellick's schedule.

5. (SBU) The clear preference here is for the UAE and
the U.S. to pursue a FTA bilaterally rather than
through the GCC. In that regard, the GCC
Secretariat's proposal to initiate region-wide free

trade negotiations with the United States has put UAE
officials in the uncomfortable political position of
having to support the GCC 'party line,' while at the
same time, vigorously pursuing a bilateral TIFA and
FTA agreement with Washington. We want to use the FTA
to resolve some of the bilateral economic irritants
that we have with the UAE, including restrictive
agency laws and U.S. concerns about labor rights
(especially the right of association). In contrast
the UAE's record on IPR protection is excellent.

6. (SBU) Donors Coordination Issues - The two key
interlocutors are MFA Under Secretary Al-Noaimi, who
has been the primary senior-level working person on
the Iraq donors issue, and Dr. Khirbash, who led the
UAE delegation to Madrid and will also chair the UAE's
participation in this conference. As a member of the
Iraq Core Donors's Group, the UAE has played an active
role in providing humanitarian and reconstruction
assistance to the Iraqis. The UAE pledged $215
million at the Madrid Donors' Conference. Abdullah
Rashid told the DCM in Early February that the UAE has
disbursed this amount on humanitarian assistance and
Siemens generators for four power plants. As of the
end of last year, we had estimated that the UAE had
provided $80 to $100 million in assistance to Iraq
(including in-kind assistance) some of which was
included in the $215 million pledge. The problem has
always been that the assistance is provided by
different governmental arms and from the Emirate of
Abu Dhabi, which makes it very difficult for anyone
(including the UAE) to provide an accurate total.
Despite their generosity, the UAE prefers to provide
assistance bilaterally and has -- so far -- declined
to pledge any money to the UN trust fund. The host of
the conference, therefore, is not a member of the
donors' committee. The UAE also committed to forgive
most of Iraq's $7 billion bilateral debt after meeting
with Special Presidential Envoy James Baker. We would
want to see the UAE continue its key role in Iraqi
reconstruction and to encourage its support for
multilateral efforts. We would hope your meeting and
the conference would help us (and them) better
understand how much assistance they have already

7. (SBU) The UAEG has maintained a robust assistance
package to the Palestinians. With more than $75
million in project assistance to Palestinians in the
West Bank and Gaza since September 2000, the UAE has
been a major Arab donor to the Palestinians since the
Intifada began three years ago. In 2003, the UAE Red
Crescent Authority gave $11.8 million in humanitarian
aid to the Palestinians, with development projects
accounting for the lion's share (42 percent), and
seasonal programs, such as Ramadan iftar meals and Eid
Al Adha meat donations 20 percent. The efforts are
carefully monitored and very much support our strategy
to ensure that funds do not fall into the wrong hands.

8. (SBU) The UAE continues to play a very helpful role
in Afghanistan, particularly in the provision of
humanitarian and reconstruction assistance. UAE
humanitarian and military programs in Afghanistan are
ongoing, and we expect the final price tag to far
exceed the $150 million already spent.

9. (SBU) Cooperation on Anti Terrorist Financing: The
UAEG has been very cooperative in the fight against
terrorist financing. We continue to share information
on exchanging records in connection with terrorist
financing and other money laundering cases on an ad
hoc basis. Although the U.S. Mission perceives that
our relationship with the UAEG on money laundering and
terrorist finance is close and cooperative, the UAE
Central Bank Governor publicly criticized the United
States at the IMF/World Bank meetings in September
about failing to provide data, documents, and evidence
on cases of suspected money laundering to the UAEG.
Since September 11, the UAE has provided thousands of
pages to the U.S. in support of investigations into
the September 11 terrorist attacks. We want to ensure
that the cooperation continues and that the UAE
continues to share information with us. You will want
to be prepared to answer the charge that the
cooperation is all one way, with the UAE always
providing information but receiving little in return.
If this comes up, you may want to note that we have
asked the Central Bank for a list of cases, where the
USG has not provided information and will be happy to
follow up on any cases for which the Central Bank
provides us with the information.

10. (U) The UAEG implemented a law to criminalize
money laundering, to include terrorist financing, in
January 2002. The Central Bank has circulated to all
financial institutions under its supervision the lists
of individuals and entities suspected of terrorism and
terrorist financing included in UN Security Council
resolutions. To date, the Central Bank has frozen a
total of USD 3.13 million in 18 bank accounts in the
UAE since 9/11. In 2002, the UAEG worked in
partnership with the United States to block terrorist
financing and froze the assets of more than 150 named
terrorist entities -- including significant assets in
the UAE belonging to the Al-Barakat terrorist
financing group.

11. (SBU) Although we assess the formal financial
sector in the UAE as being effectively controlled, the
UAE is home to an unknown number of informal money
remitters (known as hawala brokers). They are
required to register with the Central Bank and about
100 have done so. So far, the Central Bank is trying
to bring the hawala dealers in to the system "gently,"
but does have plans to seek out unregistered Hawala
dealers in the future. The new attention on hawala is
encouraging more people to use regulated exchange
houses in the UAE. Traders in Dubai's Central Souk
said hawala exchange rates are now only 3 percent
cheaper than formal exchange houses, persuading many
to use the formal, and more secure, banking network.
We understand that the Central Bank plan to host
another conference on Hawala in April and would be
interested in learning how the planning is going.

12. (SBU) The UAEG carefully monitors registered
charities in the country and requires the
organizations to keep records of donations and
beneficiaries. The Ministry of Labor and Social
Affairs regulates charities and charitable
organizations in the UAE. The UAEG is much more
sensitive post-9/11 to the oversight of charities and
accounting of transfers abroad. In 2002, the UAEG
mandated that all licensed charities here interested
in transferring funds overseas must do so via one of
three umbrella organizations: the Red Crescent
Authority, the Zayed Charitable Foundation, or the
Muhammad Bin Rashid Charitable Trust. These three
quasi-governmental bodies are properly managed, and in
a position to ensure that overseas financial transfers
go to legitimate parties.


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