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Cablegate: Scenesetter for Secretary Clinton's Feb 15-16

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S E C R E T SECTION 01 OF 05 RIYADH 000178

NOFORN
SIPDIS

FOR SECRETARY CLINTON FROM AMBASSADOR SMITH

E.O. 12958: DECL: 02/10/2020
TAGS: OVIP PREL PGOV PTER SA YM IR ECON
SUBJECT: SCENESETTER FOR SECRETARY CLINTON'S FEB 15-16
VISIT TO SAUDI ARABIA

Classified By: AMBASSADOR JAMES SMITH
REASONS 1.4 (B) & (D)

INTRODUCTION
------------

1. (C) Madam Secretary, Mission Saudi Arabia warmly welcomes
your visit to the Kingdom, a country which, by virtue of its
energy resources, financial power, counterterrorism efforts,
and leadership of the Muslim world, plays a critical role in
many global and regional issues of importance to us. Your
visit comes at a time of emerging opportunities for
engagement to advance the goals that you and the President
have laid out in your speeches in the region.

2. (C) Our alliance with Saudi Arabia, while complicated and
subject to occasional disjunctions, has proven durable.
Taking stock of where we stand, we see a mixed picture. The
good news is that the Saudi leadership still sees the United
States as its most important strategic partner and guarantor
of its stability. We also share many global and regional
objectives, including the need for global financial and
energy stability, a common view of threats posed by terrorism
and extremism, the dangers posed by Iran and destabilization
in Pakistan, and the linkage that progress toward Middle East
peace has to virtually all other regional issues. Finally,
Saudi Arabia has become one of our most important allies in
the fight against Al-Qaida and terror financing.

3. (C) The bad news is that we differ on tactics in some key
objectives, and we are often frustrated by Saudi
unresponsiveness and a dearth of interlocutors among an aging
collective leadership. The status of women, religious
freedom, and human rights are ongoing concerns. On the Saudi
side, King Abdullah believes we are not always reliable,
consistent, or willing to heed his advice on important issues
such as Iraq. Saud Al-Faisal and others have openly been
critical of U.S. policies they describe as having shifted the
regional balance of power in favor of arch-rival Iran.
Differences of opinion on some of these issues can be
exacerbated by our differing cultures and value systems,
which can introduce a degree of skepticism and hesitancy in
the relationship.

4. (C) Despite the problems, a negative assessment of the
bilateral relationship would miss a critical point relevant
to U.S. goals in the region: Saudi Arabia is a country in
transition, and the changes underway present opportunities
for engagement that can advance U.S. interests and national
security. Saudi Arabia faces transitions on multiple levels,
from the geopolitical, where its trade and energy relations
are shifting from west to east, to economic, where greater
integration in the world economy is steadily exposing Saudis
to international best practices. Domestically, greater
access to internet and cell phones is unleashing new forms of
social activism, something demonstrated by an outpouring of
Saudi spontaneous voluntary assistance in the aftermath of
the Jeddah floods.

EDUCATION & DIVERSIFICATION TO COMBAT EXTREMISM
--------------------------------------------- --

5. (C) Having faced down what amounted to an insurgency by
Al-Qaida from 2003 to 2006, Saudi Arabia's leadership
acknowledged the pressing need for systemic reforms to combat
extremist ideology and provide for a rapidly expanding
population (the annual growth rate is about 2 percent). King
Abdullah's strategy is two-pronged: he has attacked the
roots of the extremism that fed Al-Qaida through education
and judicial reforms to weaken the influence of the most
reactionary elements of Saudi Arabia's religious
establishment. He is also promoting economic
diversification. The King is keenly aware of the urgent need
to make Saudi education more relevant to today's workplace
and increase the role of women in the economy, goals which
remain controversial in this deeply conservative,
inward-looking desert Kingdom. Guided by a vision that
dovetails with some key elements of the President's Cairo
speech, King Abdullah has begun to implement an ambitious
plan to transform Saudi Arabia's economy away from excessive

RIYADH 00000178 002 OF 005


reliance on hydrocarbons and towards a knowledge-based
economy that can provide sustainable development for the
long-term. Achieving these goals will require nothing short
of a revolution in the education system and significant
changes in most aspects of Saudi society, especially the
status of women.

6. (U) Seen from the outside, the pace of political reform
seems glacial (a notable exception is that changes introduced
after the WTO negotiations have been very fast for any
country; regulatory agencies are also standing up quickly).
Yet for certain elements of Saudi society, the changes are
coming too fast. Whatever the pace, however, the reality is
that serious reforms are gradually but irrevocably changing
Saudi society. Recently implemented reform measures include
re-shuffling the Ministry of Education's leadership last
February (bringing in the King's pro-reform son-in-law as the
new minister); a top-to-bottom restructuring of the country's
courts to introduce, among other things, review of judicial
decisions and more professional training for Shari'a judges;
the creation of a new investment promotion agency to overhaul
the once-convoluted process of starting a business here; the
creation of a regulatory body for capital markets; the
construction of the King Abdullah University for Science and
Technology (the country's new flagship and
controversially-coed institution for advanced scientific
research); and a substantial budgetary investment in
educating the workforce for future jobs. The Saudi government
is also encouraging the development of non-hydrocarbon
sectors in which the Kingdom has a comparative advantage,
including mining, solar energy, and religious tourism. The
Kingdom's 2010 budget reflects these priorities -- about 25
percent is devoted to education alone -- and amounts to a
significant economic stimulus package.

U.S. PARTNERSHIPS TO SUPPORT
REFORM & ECONOMIC DEVELOPMENT
-----------------------------

7. (SBU) Saudi officials have been candid in stressing the
importance they place on strong ties with the United States
to help them meet reform challenges, both through increased
engagement at the government level, including educational
exchanges and more FDI, particularly in energy, high tech,
and manufacturing. The past year has seen several large
investments by prominent U.S. firms in advanced technology
areas, and we are working to raise the profile of our trade
and investment relations, including through a major Saudi
exposition in Chicago at the end of April. The Mission has
also steadily expanded USG engagement in education, public
health, science & technology, entrepreneurship, and civil
society. There are now more than 22,000 Saudi students
studying in the US, exceeding pre-9/11 levels. Public health
engagement has included breast cancer awareness and CDC
cooperation to set up an advanced epidemic screening network
that protected this year,s 3 million Hajj pilgrims. Our
Science & Technology umbrella agreement is already expanding
cooperation, including new projects with NASA. Our MEPI
programs include a first-time ever exchange visit by a group
of Saudi judges, leadership development for women, prevention
of violence against women and children, and youth exchange
and study. One female participant in our Social
Entrepreneurship Forum was a finalist in the 2009 Global
Student Entrepreneur Awards. She and seven other Saudi
entrepreneurs will attend the President's April summit.
Mission elements have also provided training to help the SAG
implement a new law to combat trafficking in persons.
Intensive engagement with the SAG on IPR is another success
story. You will want to congratulate Saudi officials for the
significant progress Saudi Arabia has made over the last
several years in improving IPR protection, which resulted in
the Special 301 Committee deciding to remove Saudi Arabia
from the Watch List.


SAUDI STRATEGIC CALCULATIONS
----------------------------

8. (C) TURNING EAST: Saudi Arabia is trying to come to terms
with the shift in global energy and trade ties towards Asia,

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which has both political and economic consequences.
Bilateral trade with China has more than tripled, and China
will soon be Saudi Arabia,s largest importer. Saudi Arabia
has also committed significant investments in China,
including the $8 billion Fujian refinery. Increased trade
has also brought increased friction, including anti-dumping
complaints from both sides. Saudi Arabia is thinking through
how best to take a leaf from the Chinese playbook and use
these expanded trade ties to achieve important political
goals. In this regard, Saudi Arabia has told the Chinese
that it is willing to effectively trade a guaranteed oil
supply in return for Chinese pressure on Iran not to develop
nuclear weapons.

9. (S/NF) COUNTERING IRAN: We expect that Saudi Arabia will
continue to develop its ties with China, in part to
counterbalance relations with the West. While the King's
preference is to cooperate with the U.S., he has concluded
that he needs to proceed with his own strategy to counter
Iranian influence in the region, which includes rebuilding
Riyadh-Cairo-Damascus coordination, supporting Palestinian
reconciliation, supporting the Yemeni government, and
expanding relations with non-traditional partners such as
Russia, China, and India to create diplomatic and economic
pressure on Iran that do not directly depend on U.S. help.
The King told General Jones that if Iran succeeded in
developing nuclear weapons, everyone in the region would do
the same, including Saudi Arabia.

10. (S/NF) The King is convinced that current U.S. engagement
efforts with Tehran will not succeed; he is likely to feel
grimly vindicated in his view by Ahmadinejad's February 11
boast that having successfully enriched uranium to a level of
20 percent, Iran "is now a nuclear nation." The King told
General Jones that Iranian internal turmoil presented an
opportunity to weaken the regime -- which he encouraged --
but he also urged that this be done covertly and stressed
that public statements in support of the reformers were
counterproductive. The King assesses that sanctions could
help weaken the government, but only if they are strong and
sustained. The King will want you to elaborate on the
President's statement that the time for sanctions has come.
He will also want to hear our plans for bolstering Gulf
defenses vis a vis Iran. (The King has invited General
Petraeus to his desert camp for discussion on this topic on
Tuesday.)

11. (C) CLIMATE CHANGE: Your visit offers an important
opportunity to head off a serious clash over climate change.
Saudi officials are very concerned that a climate change
treaty would significantly reduce their income just as they
face significant costs to diversify their economy. We want
to get beyond the obstructionism that Saudi negotiators have
often shown during the negotiations and persuade senior
leaders to work with us in a partnership to meet their
strategic concerns, including by cooperating on developing
solar and biomass energy. The King is particularly sensitive
to avoid Saudi Arabia being singled out as the bad actor,
particularly on environmental issues. Your conveying the
importance the President places on working as partners with
Saudi Arabia on the Copenhagen process will be very important
in making this dialogue more constructive. Secretary Chu
intends to explore specific areas of collaboration during his
February 21-23 visit.

SAUDI REGIONAL SECURITY CONCERNS
--------------------------------

12. (S) PREVENTING A COLLAPSE OF YEMEN: Saudi participation
in international diplomatic efforts to stabilize Yemen
reflect Saudi fears that instability on its southern border
is a clear and present danger. The King will tell you that
Yemen's strategic location makes an Al-Qaida presence there
more threatening than in Afghanistan; he will stress the need
to support Yemeni unity, despite his mistrust of Ali Abdullah
Saleh. With respect to Saudi involvement in the war against
the Houthis, the King will stress that the SAG's motivation
was self-defense. As Al-Qaida infiltrators from Yemen
multiplied, the SAG concluded that the Houthi rebellion had
distracted Saleh's government to the detriment of Saudi

RIYADH 00000178 004 OF 005


security. The military intervention was triggered by a
Houthi incursion into Saudi territory, but it presented a
long-sought excuse to fortify the porous Saudi-Yemeni border.
On February 7, Prince Khalid also informed Ambassador Smith
the fighting is wrapping up, and that a ceasefire arrangement
could be in place by mid-February.

13. (C) GESTURES AFTER ALL?: The King appreciates the
President's commitment to Middle East peace but is skeptical
the U.S. can bring sufficient and sustained pressure to bear
on Israel, especially regarding settlements. The King told
General Jones that progress on Middle East peace was only
possible if President Obama was willing to pressure Israel,
and Saudi officials have rebuffed U.S. requests for
confidence-building gestures to help restart negotiations.
Despite their adamant rhetoric, however, several members of a
private Jeddah-based think tank run by a retired Saudi
general have very quietly been participating in Track Two
discussions, apparently with SAG knowledge, and even put
forward a proposal on Gaza. In a more dramatic public
encounter that has provoked commotion in the region, former
Saudi Ambassador to the U.S. Prince Turki Al-Faisal shook
hands with Israeli Deputy FM Ayalon to settle a dispute over
joint seating at a Munich conference. Both sides have since
insisted the gesture did not signal changes in policy, with a
"senior Saudi diplomat" issuing a statement emphatically
denying that the incident constituted any form of recognition
for Israel.

14. (S/NF) AFGHANISTAN/PAKISTAN: King Abdullah firmly
believes that Asif Zardari is the primary obstacle to the
government's ability to move unequivocally to end terrorist
safe havens there ("when the head is rotten, it affects the
whole body"). The King told General Jones that U.S.
development assistance would rebuild trust with the Army,
which he asserted was staying out of politics in deference to
U.S. wishes, rather than doing what it "should." On
Afghanistan, the King has expressed support for the new U.S.
strategy, saying that spending on roads, schools, hospitals
and mosques would dissipate popular mistrust and help rebuild
the country. The King has not yet acknowledged the Saudi
role in Taliban mediation in conversations with USG
officials; GIP Director Prince Muqrin has explained to
several recent USG visitors that the SAG prefers to keep such
discussions in intelligence channels until any agreement is
reached. Perhaps reflecting this, the Saudi media downplayed
President Karzai's recent visit and the Afghan Ambassador
reported that the meeting with the King lasted only ten
minutes.

A NOTE ABOUT THE KING
---------------------

15. (C) The Custodian of the Two Holy Mosques will offer you
a traditional Saudi welcome at the desert "encampment"
outside Riyadh, where he likes to spend his winter vacations.
You will find in 86-year old King Abdullah a wry and
forthright interlocutor. Having struggled with a speech
impediment throughout his life, he tends to express himself
tersely. Reflecting his Bedouin roots, he judges his
counterparts on the basis of character, honesty, and trust.
He expects commitments to be respected and sees actions, not
words, as the true test of commitment; and he expects
good-faith consultations, not surprises. Once the King has
lost trust in a counterpart, as has been the case with Nouri
Al-Maliki or Asif Zardari, his personal antipathy can become
a serious obstacle to bilateral relations. On the other
hand, as with President Obama, the King's esteem will help
navigate differences and at times change policies. The King
is undoubtedly looking forward to his discussions with you,
and Mission Saudi Arabia enthusiastically looks forward to
supporting your visit.

MISSION STAFFING
----------------

16. (U) The U.S. Mission in Saudi Arabia includes Embassy
Riyadh, and Consulate Generals Dhahran and Jeddah. The
entire Mission, representing ten agencies, consists of 605
staff (212 U.S. Direct Hire (USDH) and 393 Locally Engaged

RIYADH 00000178 005 OF 005


(LE) staff).
SMITH

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