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Cablegate: Some Bahrainis Recognize the Need to Plan For

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 MANAMA 000799

SIPDIS

DEPARTMENT FOR DRL: KAUDROUE AND NEA/ARP,
CAIRO FOR STEVE BONDY
LONDON FOR ETHAN GOLDRICH
DEPARTMENT OF LABOR LEWIS KARESH AND SUDHA HALEY
DEPARTMENT PASS TO USTR WILLIAM CLATANOFF AND JASON BUNTIN

E.O. 12958: N/A
TAGS: ELAB KTEX PGOV PREL ETRD KWMN KMPI BA
SUBJECT: SOME BAHRAINIS RECOGNIZE THE NEED TO PLAN FOR
PROBABLE TEXTILE INDUSTRY CONTRACTION

REF: MANAMA 726

1. SUMMARY. Assistant USTR for Labor WIlliam Clatanoff, who
visited Bahrain May 9-13, sounded a clarion call warning to
Bahrainis that its textile and garment industry is in danger
from the WTO-mandated end to the textile quota system. He
made clear that the US-Bahrain Free Trade Agreement (FTA) is
not a panacea to save the industry. It could, he said, save
some textile firms and some jobs, but Bahrainis need to
prepare for the worst. Bahrainis across the board heard the
call and some appeared inspired to take action. If Bahrainis
do not take action, Post expects that the political
opposition may mistakenly attribute the loss of garment
industry jobs to the FTA and not the WTO. The average
conspiracy-minded Bahraini easily could conclude that the GOB
and USG colluded to improverish already poor Shi'a families.
USG technical assistance to help address this problem could
keep us on an even public relations keel. END SUMMARY.

---------------------
END OF TEXTILE QUOTAS
---------------------

2. AUSTR Clatanoff visited Bahrain to raise awareness about
the potential negative impact of the phase-out of textile
quotas on January 1, 2005 in accordance with the WTO
Agreement on Textiles and Clothing (ATC) (see reftel).
Clatanoff met with GOB officials, parliamentarians, the
business community, concerned NGOs and the union federation
to discuss the end of the ATC transition period and possible
options for re-employing hundred of Bahraini workers who may
lose their jobs.

-----------------
FTA IS NO PANACEA
-----------------

3. After listening to the Bahrain Chamber of Commerce and
Industry's (BCCI) Ready-made Garment Committee describe how
the Free Trade Agreement (FTA) will double Bahrain's existing
textile market, Clatanoff politely refuted the Committee's
conclusions. As he had done in every previous meeting,
Clatantoff noted that the Bahraini textile industry's labor
costs are 10 times China's. Even optimal FTA negotiated
Tariff Preference Levels (TPL) alone would not overcome
China's labor cost advantage. Clatanoff instead asserted
that the FTA cannot save Bahrain's current textile industry
nor is it reasonable for Bahrainis to expect it to expand.
What the US-Bahrain FTA can do, he said, is ease the
transition for the Bahrain garment industry to adjust to
world market competition. To overcome world wage
differentials, Bahrain would have to leverage other
advantages. For example, Clatanoff noted, key US importers
and their customers ascribe to codes of conduct that mandate
purchasing only from countries that guarantee workers freedom
of association and the right to organize and bargain
collectively.

----------------------
WHAT CAN BAHRAINIS DO?
----------------------

3. Clatanoff advised Bahraini interlocutors that they should
look at four aspects of labor market restructuring.

- Refocus the textile industry. The business community
could organize trade delegations to the US to solicit US
companies to set up shop in Bahrain. The textile companies
could expand their customer base and market themselves to US
clients that have corporate ethics policies that demand
factories with good working conditions, quick-turn-around,
expedient logistics and the right for workers to form unions.

- Identify new industries for conservative Shi'a women. The
business community could work with the Ministry of Industry
to identify new industries to which garment workers can
transfer.

- Immigration policy and Bahrainization. The Ministry of
Labor and Social Affairs (MOLSA) could limit the issuance of
foreign work visas, allowing for job replacement by
Bahrainis.

- Retraining. MOLSA could coordinate with the union
federation and training institutes to offer re-training for
positions in a new sector or for garment positions that are
vacant due to Bahrainization.

-------------------------
PUBLIC AWARENESS CAMPAIGN
-------------------------

4. Clatanoff stressed the need for a public awareness
campaign to explain that the end of the textile quota system
may cause a loss of jobs in the sector. Alerting the public
ahead of time should lessen any shock or anger by the Shi'a
community. Such a reaction could trigger a political
backlash, he worried. Clatanoff continued that the public
relations campaign needs to separate the possible job losses
resulting from the end of the textile quota system from the
FTA. The coincidental entry into force of the FTA and the
expiration of worldwide quotas could create opportunities for
people to blame textile sector job losses on the FTA. This
could become a public relations nightmare for both the GOB
and the USG. Both the GOB and the USG should publicly
elaborate on what the FTA can and cannot do to help the
sector. MOFNE Acting Director of Economic Planning Yousif
Humood told EconOff on May 9 that he is willing to launch a
public awareness effort after the last round of FTA
negotiations concludes.

--------------------------------
BAHRAINI REACTION TO SUGGESTIONS
--------------------------------

5. For the most part, the GOB and the business community
were in favor of undertaking measures to aid the garment
industry. Initially, BCCI's presentation described expansion
of the industry. But after listening to Clatanoff challenge
its assumptions about the FTA, BCCI Ready-made Garments
Committee Chairman Abdul Ali Al-Aali told Emboffs on May 12
that his committee would be willing to discuss the
possibility of organizing a delegation to the US to attend
trade shows to sell Bahrain to US companies. Taking into
consideration the conditions under which conservative Shi'a
women work, Ministry of Industry Director of Information Sami
Ahmed Hussain Kadhem told PolOff on May 10 that he already
has identified factory work such as electronics assembly,
downstream aluminum products manufacture, airline food
preparation, and revitalization of handicrafts production as
possible alternate industries. MOLSA Assistant
Undersecretary for Training Abdul Ellah E. Al-Qassimi told
Emboffs on May 11 that his division is ready to offer any
kind of re-training to transition these workers. MOLSA
Director of Labor Relations Ali A. Al-Khalifa told PolOff on
May 11 that a new immigration policy is being discussed in
conjunction with Bahrainization and unemployment insurance.
The Deputy Secretary General of the Supreme Council for Women
(SCW) Hala Al-Ansari told Emboffs on May 15 that SCW is
willing to provide some funding and training for women in
leadership and empowerment. To ensure success by so many
different entities, Al-Ansari suggested that a foreign
consultant be hired to coordinate implementation by all
concerned parties.

6. At a luncheon where Clatanoff met NGOs and the union
together, president of the textile union Kadija Ali Attiya
came away inspired by the support offered by other NGO
representatives attending the event. Attiya told PolFSN on
May 18 that she was previously unaware of the expiration of
bilateral textile quotas. She lamented that she is only one
person with no staff, unable to reach every worker and to
organize a "save jobs" campaign. Public Freedoms and
Democracy Watch Vice President Nizar Al-Qari offered his
organization's full support. Al-Qari also offered to draft
letters for Attiya to the GOB, the trade union federation and
the business community to seek recommendations for solutions.
Bahrain Women's Society Vice President Soroor Qarooni
offered Attiya help planning a campaign to inform garment
workers of the situation.

7. One official thought it was wrong to focus on the plight
of these 3,500 Shi'a women. Crown Prince's Court Economic
Advisor Sirene Al-Shirawi told Emboffs on May 9 that free
market forces would reshape Bahrain's labor market.
Subsidizing or protecting any industrial sector would hinder
that process. Al-Shirawi downplayed the implication that the
loss of 3,500 Shi'a jobs would be highly publicized by the
opposition. "There will be pain, but it will pass," she
said. Al-Shirawi said she was willing to consider making
these women a case study for unemployment insurance in the
Crown Prince's labor reform study.

8. COMMENT. Bahrainis will need to work together to address
anticipated Bahraini textile worker redundancies.
Clatanoff's previous experience as Advisor to GOB's Minister
of Labor in 1981-1984 and FTA Chief Labor Negotiator were
great selling points with the Bahrainis. His personal and
professional experience lent credibility to his suggestions.
If Bahrainis do nothing to mitigate the loss of these garment
industry jobs, Post expects that the opposition will have
another opportunity to highlight the GOB's sectarian
discrimination against the Shi'a. The opposition also may
mistakenly attribute the loss of garment industry jobs to the
FTA and not the WTO. The average conspiracy-minded Bahraini
easily could conclude that the GOB and USG colluded to
improverish already poor Shi'a families. USG technical
assistance to help address this problem could keep us on an
even public relations keel. END COMMENT.

9. AUSTR William Clatanoff did not clear this cable.
NEUMANN

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