US embassy cable - 04ABUDHABI1969

UNCLAS SECTION 01 OF 02 ABU DHABI 001969 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR: NEA/ARP, NEA/ENA, L, L/NESA, E, EB, 
EB/ESC 
 
TREASURY PLEASE PASS OFAC 
 
E.O. 12958: DECL: N/A 
TAGS: EFIN, ETTC, PREL, TC 
SUBJECT:  REQUEST FOR MOVEMENT ON ARBIFT 
 
1. (U) This is an action request.  Please see para 
5. 
 
2. (SBU) In a June 7 meeting, Ministry of Finance 
Assistant Under Secretary for Revenue and Budget 
Khalid Al-Bustani provided EconChief with a copy of 
a letter from the UAE Minister of State for Finance 
and Industry to OFAC head Richard Newcomb regarding 
ARBIFT.  Al-Bustani asked EconChief whether there 
had been any progress in releasing the $125 million 
in assets frozen in the USA. 
 
3. (SBU) Al Bustani stressed that the UAE considers 
ARBIFT a UAE bank not a Libyan bank.  He noted that 
the bank is incorporated in the UAE as a UAE 
national bank, its client base is in the UAE, and 
its management team is Emirati.  In addition, Al- 
Bustani stated that the assets frozen in the U.S. 
were not Libyan assets, but Emirati assets.   Al- 
Bustani acknowledged that the Libyans own a sizable 
minority share of ARBIFT at 42.25 percent, the same 
share as the UAE, with the Algerians owning the 
remaining 15.5 percent.  (Note:  The UAE federal 
government owns the UAE share.  ARBIFT is the only 
retail bank owned by the UAE federal government. 
End Note) Al-Bustani stated that the freeze hurt 
the UAEG.  Seventy five percent of the Bank's paid 
up capital was frozen, requiring the UAEG to 
support the bank in order to keep it operational. 
 
4. (U) Begin Text of Letter dated May 17, 2004 
 
Dear Mr. Newcomb: 
 
Further to our previous correspondences and 
meetings regarding the Arab Bank for Investment and 
Foreign Trade (ARBIFT) frozen assets in the United 
States of America. 
 
As you are aware, the UAE interest has been greatly 
effected by the OFAC decision to place the bank 
since 12 November 1992 under embargo list due to 
the US Treasury's perception of the Bank as being a 
"National of Libya."  As we have explained that the 
bank is a UAE incorporated company, it operates 
under the supervision of the UAE Central Bank, the 
bank senior management are UAE nationals and, 
therefore, it cannot be classified as a Libyan 
entity. 
 
In this context, I would like to refer to your 
meeting with Mr. Khalid Ali Al Bustani Assistant 
Under Secretary for Revenue and Budget in 
Washington on 29/4/2004 regarding the bank frozen 
assets.  We have been encouraged by your response 
regarding [a] possible solution [to] the bank's 
outstanding problem. 
 
Therefore, I would like to reiterate the UAE's 
request for releasing the frozen assets of ARBIFT 
and solicit your support to bring an end to this 
matter. 
 
Yours Sincerely, 
 
Dr. Mohammed Khalfan Bin Kherbash 
Minister of State for Finance and Industry 
 
5. Comment and Action Request:  With the recent 
easing of U.S. economic sanctions against Libya to 
allow the resumption of commercial activities, 
financial transactions, and investments, the UAE is 
again requesting us to resolve this longstanding 
bilateral irritant.  Our understanding is that 
ARBIFT has been removed from OFAC's SDN list now 
that prospective transactions are authorized, but 
that its assets are still frozen.  The UAE's 
position remains that the frozen assets are not/not 
Libyan assets and, therefore, should be released. 
Post would appreciate any update that we can give 
the UAEG on the status of the issue and on any 
possible solutions.  Post would appreciate learning 
whether there are any steps the UAEG could take or 
information that it could provide to demonstrate 
that the assets do not belong to Libya and should 
not be frozen.  End comment and action request. 
 
Wahba