US embassy cable - 04ABUDHABI716

UNCLAS SECTION 01 OF 03 ABU DHABI 000716 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB, EB/IFD, NEA/ARP 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, EFIN, PTER, ETTC, IZ, TC 
SUBJECT: A/S WAYNE'S BILATERAL MEETINS IN ABU DHABI 
DURING THE IRAQ DONORS' MEETING 
 
 
1. (SBU) Summary:  The UAE hosted Iraq Donors' 
Conference concluded successfully on February 29 with 
the launch of the UN/WB Trust Funds, which received 
pledges of about one billion dollars (septel).  The 
UAEG did not pledge the $10 million to the trust fund 
necessary to join the donors committee, but UAEG 
officials told A/S Wayne that they were working to get 
approval to make that pledge.  A/S Wayne also held 
bilateral meetings with UAEG officials, where he 
thanked the UAEG for its cooperation on Iraq and in 
fighting terrorist financing.  He also explained the 
TIFA process and pointed out that improving labor 
rights would be key, not only to "reopening" OPIC, but 
also for any future trade liberalization.  End 
Summary. 
 
---------------- 
Iraq and the UAE 
---------------- 
 
2. (U) Assistant Secretary Wayne led a U.S. delegation 
to the UAE-Hosted multilateral donors' committee 
meetings for Iraq on February 28 and 29.  The meetings 
concluded successfully in confirming that the donors, 
the UN, and the World Bank were all cooperating on 
behalf of the Iraqis.  The Iraqis explained their 
development and reconstruction priorities, and the 
donors launched trust funds to be administered by the 
UN and World Bank, which received pledges of about one 
billion dollars.  Press coverage was extensive, 
including interviews with A/S Wayne and Ambassador 
Raphel.  The Iraqis, the World Bank, and the UN took a 
very public lead in dealings with the press, with the 
CPA playing a more supporting role.  Despite the 
relatively short notice, the UAE did an excellent job 
in hosting the event and in providing logistical 
support to delegations from over 30 countries.  In a 
sidebar meeting, the Director General of the Arab 
Monetary Fund expressed his interest in future 
cooperation on Iraqi reconstruction.  (Detailed report 
of donor conference septel.) 
 
3. (SBU) In his bilateral meetings with Minister of 
State for Finance and Industry Dr. Mohammed Khalfan 
bin Khirbash and MFA Assistant Under Secretary 
Abdullah Rashid Al-Noaimi, A/S Wayne thanked the UAEG 
for its cooperation on Iraqi reconstruction and urged 
them to participate in the donors' group by pledging 
to the UN/WB Trust Fund.  Dr. Khirbash noted that the 
efforts on Iraqi reconstruction highlighted the 
multilateral commitment to Iraq.  He added that he 
thought this was the first instance that all of the UN 
and affiliated agencies were working under one 
umbrella.  A/S Wayne noted that the international 
community had tried to coordinate efforts in 
Afghanistan and had learned from the Afghanistan 
example on how to better coordinate donor efforts. 
A/S Wayne also explained that the other lesson from 
Afghanistan was the need for the recipient country to 
do a better job of coordinating assistance and needs 
assessments.  For that reason, the CPA and the Iraqis 
were working to have the Ministry of Planning 
coordinate all donors' activities for the Iraqis.  Dr. 
Khirbash suggested that it would be a good idea if 
there were regional representatives on the donors' 
committee and suggested Oman, Qatar, and the UAE.  A/S 
Wayne used that opportunity to press the UAEG to 
commit its $10 million to the UN trust fund, noting 
that it could not be a member of the donors' committee 
until it made a commitment.  Dr. Khirbash said that he 
was working on getting the UAEG to make a commitment. 
(Note:  Al-Noaimi also told A/S Wayne and EconChief 
that he favored having the UAE commit to the UN trust 
fund, but that he was still trying to get approval 
from his superiors.) 
 
------------ 
Trade issues 
------------ 
 
4. (SBU) A/S Wayne also discussed the March 15 TIFA 
signing ceremony and trade issues with Dr. Khirbash 
and Al-Noaimi.  A/S Wayne explained the President's 
vision for a Middle East Free Trade Area developing 
over the next ten years.  Dr. Khirbash commented that 
the countries in the region were at different stages 
of economic development.  A/S Wayne explained that, 
for that reason, the USG preferred to negotiate FTAs 
bilaterally rather than multilaterally.  Dr. Khirbash 
explained that he thought the UAE could play a 
catalytic role in regional economic development and, 
therefore, would be an excellent candidate for a FTA 
with the U.S. 
 
5. (SBU) A/S Wayne stressed that the USG was very 
interested in working with the UAEG on trade issues. 
He explained that the TIFA discussions were important 
steps in identifying any issues that could hinder the 
development of closer trade relations.  He stressed 
that resolving labor issues was key to reopening OPIC 
coverage and would also be an important factor in 
developing closer trade relations between the UAE and 
the U.S.  He urged the UAE to make progress quickly in 
the area. 
 
------------------- 
Terrorist Financing 
------------------- 
 
6. (SBU) A/S Wayne also met with Central Bank Governor 
Sultan Nasser Al-Suwaidi and thanked him for the 
UAEG's cooperation in the fight against terrorist 
financing.  Al-Suwaidi briefly discussed hawalas, 
explaining that the UAEG was encouraging them to 
register and become part of the formal financial 
system.  (Note: Over 100 hawalas have registered so 
far.)  He expected to cover more details on hawalas 
during the 2nd Hawala conference on April 3-4. 
 
7. (SBU) Al-Suwaidi also briefly discussed the 
regulation of charities.  He stated that no one wanted 
money donated for religious purposes to fund 
criminals.  For that reason, it was important to know 
where the money was going.  Efforts to identify 
remitters and receivers, he said, did not contradict 
any religious teachings.  Al-Suwaidi noted that the 
Ministry of Labor registered charities and that the 
Central Bank's Anti Money Laundering and Suspicious 
Cases Unit (AMLSCU - The UAE's Financial Intelligence 
Unit) worked with other UAE ministries on internal 
procedures to prevent diversion of funds from 
charities. 
 
8. (SBU) A/S Wayne also asked whether Al-Suwaidi 
wanted to raise any outstanding issues with him.  Al- 
Suwaidi stated that he thought most of the outstanding 
issues were being resolved.  For its part, AMLSCU was 
responding to Fincen's requests for information on a 
regular basis.  "They come in and they go out" by 
email.  He also noted that the AMLSCU was starting to 
get responses back from the US and other countries. 
 
------------------------------ 
Greater Middle East Initiative 
------------------------------ 
 
9. (SBU) A/S Wayne also took advantage of his meetings 
to explain the Greater Middle East Initiative.  He 
stressed that the U.S. was trying to support the 
efforts of reformers in the region, not/not to impose 
its own vision of reform on the Middle East.  He asked 
Al-Suwaidi for his views on how the USG could assist. 
Al-Suwaidi stated that one of the biggest problems in 
the Middle East was the limited trade among countries 
in the region, adding that the best action countries 
in the region could take would be to lower their trade 
barriers with each other.  Instead of talking about 
grandiose regional FTAs, he suggested a more practical 
approach of eliminating tariffs on a small number of 
commodities.  Once they realized the benefits of lower 
trade barriers on a few commodities, they could 
progressively reduce trade barriers on more 
commodities.  He also stated that he thought that the 
countries in the Middle East needed technical 
assistance in areas such as improving the legal 
infrastructure and perhaps funding for large 
infrastructure rather than normal project funding.  He 
noted that there were a number of regional development 
banks in the GCC and that there was not necessarily a 
shortage of capital for project funding.  What might 
be useful would be a forum where economic policy could 
be discussed (including with the World Bank and the 
IMF) and where technical assistance to support reform 
could be mobilized, Al-Suwaidi said. 
 
10. (SBU) At the Ambassador's reception, A/S Wayne and Dr. 
Jassim Al-Mannai, Director General of the Arab 
Monetary Fund, discussed the AMF's work to train Iraqi 
Central Bank officials and its potential to promote 
economic reform in Iraq.  Dr. Jassim explained that 
the AMF supported economic reform throughout the 
region and expressed willingness to cooperate with us 
on any broader regional efforts. 
 
11. (SBU) This message has been cleared by A/S Wayne. 
 
WAHBA