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Cablegate: (U) Scenesetter for the Manama Dialogue, December 12-14

O 021035Z DEC 08

S E C R E T MANAMA 000795




E.O. 12958: DECL: 12/02/2038


Classified By: CDA Christopher Henzel for reasons 1.4 (b) and (d)

1. (S/NF) Mr. Secretary, Ambassador Burns, Chairman Mullen, General Petraeus - Embassy Manama is delighted to welcome you all back to Bahrain. King Hamad and his leadership team value your friendship and appreciate your visit. We and they will want to use this visit to advance greater GCC defense cooperation and a more integrated regional security architecture.

2.(S/NF) In bilateral discussions Bahraini leaders will focus, as always, on Iran and the need for continued American leadership. In addition to reviewing the Gulf states' collective security efforts, we should express continued support for King Hamad's reforms, especially efforts to give Shi'a Bahrainis a greater sense of inclusion in society and politics.

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3. (C) This year's Manama Dialogue will be the fifth organized here by the London-based International Institute for Strategic Studies (IISS). Among the more notable participants IISS expects are Qatari Prime Minister Hamad bin Jassim, Chinese FM Yang Jiechi, Iraq's Deputy Prime Minister Barham Saleh and National Security Advisor Mowaffaq Rubai'e, and Iranian Supreme National Security Council SecGen Saeed Jalili (although Iran has a history of last-minute cancellations at Manama Dialogues). Post understands Turkey's defense minister and a senior Russian MFA delegation might also attend.

Iran ----

4. (S/NF) There is no love lost between the Bahraini leadership and the Iranian regime. The King and Crown Prince see Iran as the most serious long-term threat to Bahrain and the region. In their view, it is thanks to the U.S. Navy that the Gulf has been protected from this threat and has been able to prosper. In October, Majles Speaker Ali Larijani visited (along with the deputy chief of staff of Iran's armed forces) to lecture the King about his close relationship with the U.S. Navy and to warm him about the delicate position in which that places Bahrain. The Iranians also asked to assign a military attach to their Embassy in Manama. We don't expect the answer to be positive. The Sunni ruling family remains extremely sensitive to potential Iranian support for dissident Shi'a in Bahrain, and will be loath to provide any opportunities for outside meddling. (Despite the GOB's periodic claims that there are Hezbollah or Iranian-connected sleeper cells in Bahrain, they have never offered hard evidence of such a presence and our reporting has been unable to substantiate it.)

5.(S) Bahrain views its defense needs through the prism of the Iranian threat. As the smallest GCC state, lacking the oil wealth of its neighbors, it looks to the U.S. and an enhanced GCC security architecture as its most effective defense. Since the meetings with Secretary Gates and regional CHODs on the margins of last year's IISS, the United States has deployed one Patriot battery and an Aegis cruiser to Bahrain. A second Patriot battery is scheduled for arrival in 2009. At the November 15 U.S.-Bahrain Gulf Security Dialogue (GSD) meeting (ref A), and at Secretary of the Navy Donald Winter's audience with King Hamad November 24 (septel), the GOB made clear that it appreciates the deployment of these important assets. The King, Crown Prince and Foreign Minister all strongly believe that there needs to be a greater political will among GCC members in favor of collective self-defense against the Iranian threat, and they are willing to act on this conviction.

Iraq ----

6. (S) King Hamad has been forward-leaning in recognizing Iraq and working to reintegrate it with the Arab world. He sent an Ambassador to Baghdad in September and dispatched his Foreign Minister Sheikh Khalid to Baghdad on an official visit in October. During that visit, Sheikh Khalid delivered an invitation from the King and Prime Minister for President Talabani and Prime Minister Maliki to visit Bahrain. Bahrain has also taken a leadership role in support of efforts to bring Iraq back into the Arab fold. With our encouragement, Bahrain invited Iraq to join the GCC Plus Two forum, and FM Hoshyar Zebari attended the group's ministerial in Manama last April, thereby transforming it into the GCC Plus Three.

7. (S) We have also prodded Bahrain's leaders to think about integrating Iraq into the region's security architecture. Given the changed strategic reality on the ground, it makes sense to take a fresh look at the mission and structure of the GCC, with a view to including Iraqi assets and capabilities. The Bahrainis understand and accept the logic of this approach, but are sensitive to intra-GCC politics, and particularly the need to resolve Iraqi-Kuwaiti disputes over borders and other issues. That said, we believe the Bahrainis can be counted on to support new thinking on this score.

Israel, and a Proposed New Regional Organization --------------------------------------------- ---

8. (S/NF) Bahrain has no formal relations with Israel but has long had unofficial contacts with Israel's MFA. Sheikh Khalid's most recent meeting with Tzipi Livni was on the margins of the recent interfaith conference in New York.

9. (S) In a September 27 speech to the UNGA, FM Shaikh Khalid proposed a new regional organization that would include Israel, Iran, Turkey and the Arab states. A senior aide to the Foreign Minister reiterated to CDA November 24 that Bahrain did not foresee any preconditions to Israeli's participation. King Hamad has told us that the idea for the proposal grew from a brainstorming session he had earlier this year with President Gul of Turkey. The idea is unpopular with the Islamist majority elected to Bahrain's parliament, and no Arab leaders, aside from Arab League SecGen Amre Mousa, have spoken publicly in favor of the idea yet. Nevertheless we may see Shaikh Khalid make another public push for the organization during the Manama Dialogue.

Russia, China and India -----------------------

10. (S/NF) King Hamad visited Russia for the first time this month, on December 2. At her meeting with Shaikh Khalid November 18 (ref B) , Secretary Rice urged that the King use this opportunity to raise Bahrain's concern about Iran, and emphasize that Russian arms sales to countries in the Middle East are counterproductive to regional stability.

11. (S) The King has expressed concern to us on two occasions that China's role in the Gulf might one day expand beyond trade and into security; he welcomed improved U.S.-India relations as a balance to China in the region. The King recently received the Chinese defense minister and a member of the political bureau.

Internal Dissent ----------------

12. (C) King Hamad's reforms -- revival of an elected lower house of parliament, press liberalization, and a more transparent justice system -- have had the unintended consequence of bringing Sunni-Shi'a tensions out into the open. Sunni Islamists make up the government's majority in the elected lower house, helped, Shi'a say, by Royal Court funding and gerrymandering.

13. (C) Wifaq, the party that dominates Bahrain's Shi'a majority, advocates for redress of Shi'a grievances through electoral politics. The Shi'a Haq Movement and other more radical factions reject the current electoral system, and inspire the small bands of youths who frequently skirmish with riot police.

14. (C) Bahraini leaders are becoming increasingly impatient with sectarianism and with Shi'a street violence. We should urge the GOB to stick with the reform strategy, and to find ways to give a greater sense of inclusion to the Shi'a -- especially to the moderates -- in the interest of Bahrain's long-term stability.

15. (C) Some Bahraini Sunnis, in and out of government, suggest to foreigners (and may even believe themselves) that Iran is behind Shi'a discontent here. In post's view, there is not convincing evidence of Iranian involvement here since at least the mid-1990s. Shi'a discontent stems chiefly from their lower standard of living, unofficial exclusion from sensitive government positions, and Sunni domination of parliament. About a third of Shi'a here look to Iranian clerics for religious guidance; the rest follow clerics in Iraq and Lebanon.

16. (S) Staff for Congressman Frank Wolf invited two Haq leaders last month to speak at a public briefing on Capitol Hill on human rights. Many Sunnis were outraged, and accused Shi'a in general of disloyalty. The Interior Minister warned that unauthorized contacts with foreign governments and NGOs are technically illegal. Both Wifaq and Haq responded with defiant pledges to continue and expand such contacts. Shaikh Khalid raised the Wolf briefing with Secretary Rice November 18 (ref A), and Bahraini leaders are likely to do so again during bilateral meetings.

Economy -------

17. (C) Bahrain's liberalized economy has been growing at 6-7 percent in recent years. We expect that growth to slow to about 5 percent. The financial services sector accounts for 22 percent of Bahrain's GDP, and so far appears to be weathering the financial crisis. Two Bahrain-based investment banks backed by consortia of Arab governments needed to be recapitalized by their government backers. No private investment banks have yet admitted to seeking government help, though there are rumors some may need it. Bahrain's real estate and construction booms, though never as wild as those in Dubai or Doha, are already visibly slowing. Bahrain's central bank expects a 30 percent downward real estate price adjustment here.

18. (C) Bahrain's demand for oil and natural gas will exceed its supply in the next few years, and the GOB is casting about for new sources of the cheap energy to which Bahrain's industry is addicted. Qatar, Bahrain's preferred source, says it cannot offer gas to Bahrain for technical reasons. As a result, Bahrain has been engaged for two years in negotiations to buy natural gas from Iran. In a worst-case scenario, the Bahrainis might close a deal with Iran in the coming year, but the negotiations may also be a GOB attempt to pressure Qatar and Saudi Arabia to step in and help.

Counterterrorism ----------------

19. (S/NF) Bahrain's Sunni extremist scene is small and watched closely by the authorities. Bahrain's security services collaborate closely with the USG on counterterrorism.

Regional Air and Missile Defense --------------------------------

20. (S) At a meeting earlier this year with CENTAF commander Gen Gary North, Bahraini Crown Prince Salman confirmed that Bahrain is eager to see the long-discussed regional U.S.-GCC air defense system become a reality. He said that while Bahrain could not afford to provide significant resources for the system, it would try to compensate with political support. He said, for example, that Bahrain would have no objections if other GCC states needed to station radars on Bahrain's territory or share data.

21. (S) Bahrain eagerly hosted General North's June, 2008 meeting of GCC air chiefs, and continues to support his follow-up efforts to improve technical cooperation. At the November 15 GSD meeting, Bahrain's Minister of State for Defense responded enthusiastically when Centcom Deputy J-5 Admiral Franken spoke of the U.S. goal of a "netted air and missile defense from Oman to Turkey."

Patriots and Aegis ------------------

22. (S/NF) Given its worries about Iranian pressure, the Bahraini government deeply appreciates the U.S. Patriot battery that was recently deployed at Riffa airbase, as well as the deployment of an Aegis cruiser to the area. In line with U.S. and Bahraini military assessments that a second Patriot battery is needed to adequately defend the island, the Bahrainis will likely inquire about plans to deploy the second battery.

Maritime Picture ----------------

23. (S) NAVCENT continues efforts to develop a shared maritime picture among its partners in the region to counter criminals and terrorists. Boosted by Secretary Gates' discussions on this subject during the 2007 Manama Dialogue, several governments increased their cooperation with Navcent's Maritime Domain Awareness Program. Through the Maritime Safety and Security Information System (MSSIS), links throughout the region enable governments to share information.

24. (C) Bahrain's outdated coastal radar is a potential vulnerability for a Bahraini government concerned about ongoing drug smuggling and, if Iran chose to change its strategy, subversion - a potential concern for NAVCENT headquarters as well. Both Embassy Manama and NAVCENT support using about $20 million in section 1206 counterterrorism funds to upgrade Bahrain's coastal radar; our request for the funds (ref C) is currently under consideration. Bahrain is beginning the upgrade on its own and has budgeted $8 million.

Conclusion ----------

25. (C) Bahrain's leaders are supportive of the American presence in the region, and will be receptive to requests that they continue to engage with their GCC neighbors in support of our policies on regional defense cooperation, Iran, and re-integration of Iraq into the Arab world.

********************************************* ******** Visit Embassy Manama's Classified Website: http://www.state.sgov.gov/p/nea/manama/ ********************************************* ******** HENZEL NNNN End Cable Text

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