US embassy cable - 04MANAMA1829

C O N F I D E N T I A L MANAMA 001829 
 
SIPDIS 
 
STATE PASS USTR/NOVELLI 
 
E.O. 12958: DECL: 12/08/2014 
TAGS: PREL, ECON, BA, GCC 
SUBJECT: GCC CRISIS? MINISTERIAL FOUNDERS ON BAHRAIN FTA 
ISSUE 
 
REF: MANAMA 1814 
 
Classified By: Ambassador William T. Monroe.  Reason: 1.4 (B)(D) 
 
 1. (C) The December 7 meeting of GCC Ministers of Foreign 
Affairs and Finance, aimed at preparing for the 25th GCC 
Summit in Manama December 20-21, ended in failure over Saudi 
insistence that all discussions of FTAs with the United 
States stop, Deputy Foreign Minister and Minister for Foreign 
Affairs Shaykh Mohammed bin Mubarak Al-Khalifa told the 
Ambassador December 8.  His account paralleled what Kuwait 
Foreign Minister Dr. Mohammed Al-Sabah told an embassy source 
before departing back to Kuwait today. 
 
2. (C) According to Shaykh Mohammed, the Saudis at the 
Ministerial insisted that bilateral discussions with the 
United States on FTAs stop until there is first agreement 
among the GCC countries.  If this movement on FTAs is not 
stopped, they said, Saudi Arabia would withdraw from the GCC 
Customs Union.  The FTA issue was the first item on the 
agenda.  Shaykh Mohammed said that when he tried to move the 
discussion on to other issues, such as Iraq or Iran, the 
Saudis declined.  The FTA issue was left on the table 
unresolved, with delegations agreeing to consult in their 
capitals.  GCC Foreign and Finance Ministers will depart for 
Rabat this weekend for the December 11 Forum for the Future 
meeting.  Shaykh Mohammed expected to have further bilateral 
discussions on the issue while in Rabat.  The King's position 
on this is clear, he said.  If the FTA issue is not removed 
from the agenda, he will cancel the Summit.  Shaykh Mohammed 
said he would not call it a deadlock at this time, but he did 
term it a crisis. 
 
3. (C) King Hamad had traveled to Riyadh December 7 to 
discuss the issue with King Fahd and Crown Prince Abdullah 
(reftel), but Shaykh Mohammed said that the King was unable 
to raise the issue during his meetings with them.  Kuwait's 
Dr. Mohammed said he was told that, when the King raised it, 
his Saudi interlocutors declined to enter into a discussion, 
saying there were too many people in the room. 
 
4. (C) Shaykh Mohammed said that the King's position on the 
FTA with the U.S. remains firm: Bahrain has signed it, and it 
will respect its signature.  He noted that the EU has been 
negotiating unsuccessfully for 15 years to get a free trade 
agreement with the GCC, and Bahrain will not sacrifice its 
interests to wait for a common GCC position (in other words, 
when the Saudis are ready). 
 
5. (C) Comment.  The Bahrainis are perplexed by the sudden 
Saudi hardline on the FTA, which has long been well-known to 
the Saudis.  Shaykh Mohammed said that the Saudis had raised 
a general concern in multilateral fora from time to time, but 
never bilaterally.  Finance Minister Abdullah Seif suggested 
to the Ambassador that perhaps the Saudis only became 
concerned when they recognized that other GCC countries were 
starting to follow Bahrain's lead and negotiate their own 
bilateral FTAs.  He wondered what could be done to help move 
the Saudis forward on WTO and FTAs.  Other observers have 
speculated that the real target of the Saudis is the U.S.; 
the Saudis are alarmed that the U.S. influence among the 
other GCC countries is growing at Saudi expense, and Bahrain 
is the softest and easiest country on which Saudi Arabia can 
exercise its leverage.  Clearly, it is in our interest to 
support Bahrain and other GCC countries who wish to negotiate 
FTAs with the U.S.  This issue will no doubt come up on the 
margins of the Forum for the Future meeting, and GCC 
countries (especially Bahrain) will be seeking U.S. reaction. 
MONROE