US embassy cable - 04MANAMA1618

S E C R E T SECTION 01 OF 02 MANAMA 001618 
 
SIPDIS 
 
NOFORN 
 
E.O. 12958: DECL: 10/24/2014 
TAGS: PREL, PTER, BA 
SUBJECT: AMBASSADOR MEETS WITH CROWN PRINCE 
 
REF: A. MANAMA 1489 B. MANAMA 1558 
 
Classified By: Ambassador William T. Monroe.  Reason: 1.5 (B)(D) 
 
1. (S/NOFORN) Summary. The Crown Prince told the Ambassador 
October 23 that he would make calls to key Congressional 
leaders to urge early ratification of the FTA.  He defended 
his recent labor reform proposals, which were recently 
criticized by elements in the business community.  He denied 
that he had been given a role in the constitutional dialogue, 
stressing that his focus would be on the economy and 
education. He criticized the British Ambassador for meeting 
with opposition leaders who are operating outside of the 
constitution and the political system.  He acknowledged that 
the government's stiff reaction to human rights activist 
Al-Khawaja's speech attacking the Prime Minister had 
increased Al-Khawaja's popularity, but said this was not all 
bad as "Al-Khawaja is very secular."  He added that action 
against Al-Khawaja (Shia) might make it easier to move 
against the four terrorist suspects (Sunni), as "balance is 
very important in Bahrain."  He expected the four to receive 
a prison sentence when they go to trial starting November 1. 
End summary. 
 
2. (C) The Ambassador, meeting with Crown Prince Salman Bin 
Hamed Al-Khalifa the evening of October 24, began the 
discussion by reviewing the state of play on ratification of 
the Free Trade Agreement.  It was unclear, the Ambassador 
said, whether the Congress would be able to get to the FTA 
during the lame duck session expected to begin in 
mid-November, but USTR reports that it would like to push it 
through as soon as possible, perhaps at least beginning the 
effort in November and certainly moving early in 2005.  The 
Crown Prince said that he would contact key members of 
Congress to help underscore the importance of the agreement 
for Bahrain. 
 
3. (C) The Crown Prince asked the Ambassador how the Embassy 
viewed his labor reform proposals, based on a McKinsey and 
Company report that recommended incentives to hire Bahraini 
workers rather than expatriates (ref a).  The Ambassador 
applauded the effort to address Bahrain's structural 
employment problems, but wondered how a plan that in effect 
raised labor costs would impact on Bahrain's export 
competitiveness.  The Crown Prince said that the plan called 
for increasing productivity to compensate for higher wages. 
Funds raised from higher fees on expatriate labor would be 
poured into training programs for Bahraini workers.  The 
Ambassador noted press reports that Bahraini business leaders 
criticized the plan during a discussion at a prominent 
business leader's Ramadan majlis.  The Crown Prince 
acknowledged the criticism, but said not all business leaders 
in Bahrain shared that view.  He said that a business group 
would issue a statement that evening supporting the plan. 
(Note:  The first deputy president of the Bahrain Chamber of 
Commerce and Industry did issue a statement saying that the 
views expressed at the Ramadan majlis on the negative impact 
of the labor reform proposals did not reflect the views of 
the private sector in the chamber.)  The Crown Prince also 
noted that Bahrain's economic development would not hinge on 
labor intensive industries, but increasingly on the service 
sector, where higher wages would have less of an impact. 
 
4. (C) The Ambassador asked if the fact that human rights 
activist Al-Khawaja had used the McKinsey Report's critiques 
of the Bahrain economy to launch his personal attack on the 
Prime Minister (for which he was subsequently arrested) would 
affect his efforts to push forward the McKinsey proposals. 
The Crown Prince said it would not.  He said that Al-Khawaja 
case was now in the courts, being handled through legal 
channels.  The Ambassador noted that, in vigorously pursuing 
the case, the government had in fact increased Al-Khawaja's 
notoriety and popularity among at least a part of the 
population.  The Crown Prince acknowledged that this was 
true, but said that was not entirely a bad development. 
Al-Khawaja is very secular, he observed. 
 
5. (C/NOFORN) The Ambassador asked about the status of the 
constitutional dialogue between the government and four 
opposition Shia parties who boycotted the last parliamentary 
elections.  Noting that the government broke off the dialogue 
last week after British Ambassador Lamb had met with leaders 
of the opposition parties, the Ambassador sought the Crown 
Prince's views on where this was headed.  The Crown Prince 
was highly critical of Ambassador Lamb, saying an ambassador 
should not have contacts with the leadership of groups that 
are operating outside the constitution and the political 
system.  It would be like an Ambassador in London meeting 
with Gerry Adams at the height of his anti-government 
activity in Northern Ireland, he said.  It is all right for 
lower-level officials to meet them, but not the ambassador. 
 
6. (C) On prospects for re-starting the constitutional 
dialogue, which is led on the government side by the Minister 
of Labor and Social Welfare, the Crown Prince was dismissive 
of its importance, saying that the boycotting opposition 
parties will have to work through the parliament if they want 
to push for reforms.   Asked if he was going to get 
personally involved in the constitutional dialogue, as the 
King implied in his October 9 speech opening the third 
session of the parliament (ref b), the Crown Prince 
categorically denied that the King had this in mind or that 
he would get involved.  "I am sticking to development issues 
such as the economy and education," he stated.  "I won't 
touch the constitutional dialogue issue with a ten-foot pole." 
 
7. (C) The Ambassador observed that the local political scene 
seemed somewhat charged these days, citing as examples 
Bahrain Human Rights Center (BHRC) former executive director 
Al-Khawaja's public criticism of the Prime Minister, his 
subsequent arrest (and closing of the BHRC), continuing 
demonstrations in support of Al-Khawaja, and the breakdown of 
the constitutional dialogue talks.  The Crown Prince said he 
expected this to be the norm now that the King had initiated 
the democratic reform process.  The government and the people 
will continue to feel their way, exploring the limits. 
 
8. (S) The Ambassador asked for an update on the four 
terrorist suspects, who face a court date on November 1.  The 
Crown Prince said that they would go to trial on November 1 
and that he expected they would receive a prison term of no 
more than three years (based on the limited evidence), 
although in the end it would depend on the decision of the 
judge.  (Note: Three years is the maximum sentence allowable 
under the current conspiracy law.)  He expected Yasir Kemal 
to get additional time as a result of his escape from the 
court room after the hearing in September.  The Ambassador 
reiterated that it was critically important that the four 
receive a prison sentence to send the right message on 
terrorism.  The Crown Prince said that the action against 
Al-Khawaja (a Shia) might actually make it easier to move 
against the four terrorist suspects (Sunnis).  "Balance," he 
said, "is very important in Bahrain." 
 
9. (C) Finally, the Crown Prince asked about Iraq. The 
Ambassador described recent positive developments, including 
the recontrol of Samara, the apparent decision of al-Sadr to 
participate in the political process, and the impending start 
of the election registration process.  The Crown Prince 
stressed that it was critically important that we stay the 
course in Iraq and not withdraw prematurely before Iraqi 
security forces are capable of maintaining order. 
MONROE