US embassy cable - 04ABUDHABI4504

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 004504 
 
SIPDIS 
 
STATE FOR EB A/S WAYNE AND DAS CONNELY 
STATE FOR NEA, NEA/ARPM NEA/PI 
STATA PASS USTR FOR CATHY NOVELLI AND DOUG BELL 
 
E.O. 12958: DECL: 12/13/2014 
TAGS: ETRD, ECON, PREL, GCC, TC 
SUBJECT: UAEG STRESSES COMMITMENT TO FTA 
 
REF: MANAMA 1829 
 
(U) CLASSIFIED BY AMBASSADOR MICHELE J. SISON FOR REASONS 1.4 
(B AND D) 
 
1. (C) Summary:  Senior UAEG officials reiterated their 
commitment to negotiating an FTA with the U.S. in the wake of 
Saudi criticism of Bahrain for signing a FTA with the U.S. 
On December 11, UAE Minister of Information and MFA U/S both 
discussed the Saudi actions at the December 7 GCC 
ministerial, noting that the Saudis were already retaliating 
against Bahrain.  They viewed the Saudi actions as 
counterproductive.  MFA U/S Al-Noaimi emphasized the UAEG's 
desire to resolve this internal GCC crisis on a technical 
basis and not to "politicize" it. UAE Minister of Economy and 
Commerce also told Ambassador that the UAE had not (to that 
point) received any "direct" Saudi pressure to back away from 
negotiations.  End Summary. 
 
2. (C) In December 11 meetings with Ambassador and visiting 
NEA DAS Philo Dibble, UAE Minister of Information, Sheikh 
Abdullah bin Zayed Al-Nahyan and MFA U/S Abdullah Rashid 
Al-Noaimi both said that the UAE remained committed to 
negotiating a FTA with the U.S.  Sheikh Abdullah emphasized 
that after the GCC ministerial in Bahrain, the UAE had 
contacted other GCC countries and neither the Saudis nor the 
rest of the GCC were likely to change their positions. 
 
3. (C) Both Sheikh Abdullah and Al-Noaimi raised the recent 
GCC ministerial in Bahrain where, they said, the Saudis had 
raised significant concerns about the Bahraini FTA with the 
U.S.  Al-Noaimi described the incident as a "major issue" for 
the GCC, explaining that the Saudis had threatened to 
"reconsider" the entire GCC economic set up.  Sheikh 
Abdullah stated that the Saudis had banned some goods trade 
(including sand) with the Bahrainis, as well as causing 
problems with "a shared oil field."   He speculated that that 
Saudi concerns over the Bahrain FTA -- and other GCC nations 
following suit -- could cause the cancellation of the 
upcoming GCC summit or turn it into a purely ceremonial 
event. 
 
4. (C) Al-Noaimi explained that the Saudis were concerned 
about the precedent of the Bahrain FTA.  They saw their power 
and influence "slipping away" and want to hold on to their 
influence and status.  He added that the UAE and the Saudis 
needed to look for a new basis for a relationship, where the 
Saudis didn't see "everyone as a rival."  Sheikh Abdullah 
speculated that the Saudi intransigence on the issue might be 
their way to deflect attention from their problem with 
extremists.  He added that the Saudis had essentially offered 
three options for countries that wanted to negotiate 
bilateral FTAs: A) sign the FTA and delay implementation 
until every GCC country signs on; B) negotiate a multilateral 
FTA; or C) "do whatever you want with the Americans" and take 
the consequences.  He added that he thought the Saudi action 
was counterproductive, because it was encouraging countries 
like Bahrain and the UAE to pursue bilateral FTAs -- if only 
to resist Saudi pressure. 
 
5. (C) Sheikh Abdullah accused the Saudis of slowing the GCC 
- EU FTA negotiations.  Al-Noaimi, on the other hand, 
acknowledged that 16 years of negotiations had not been 
successful, but blamed the EU for not being serious enough 
and for having a broader agenda than free trade.  The EU, he 
said, wanted the GCC to develop into a real economic unit, 
noting that the EU had insisted that the GCC create a customs 
union.  He added that it is difficult to negotiate with 25 
countries and added the negotiations are not moving so "why 
negotiate." 
 
6. (C) Al-Noaimi stated that the issue of Saudi intransigence 
on FTAs was a GCC internal issue.  He stated that the UAE 
wanted to develop technical solutions to reconciling the GCC 
customs Union with bilateral FTAs and avoid politicizing the 
matter.  He cited as an example, how to ensure that General 
Motors can ship goods from Bahrain to Saudi Arabia, without 
the Saudis complaining that the goods are entering duty free. 
 He added that the UAE was drawing on its own experience as a 
federation in balancing the interests of individual emirates 
with the interest of the federation as a whole.  He 
emphasized that the UAE didn't want the group interest to 
harm the interest of an individual country or visa versa. 
 
7. (C) In December 8 and 12 conversations, UAE Minister of 
Economy and Planning had told Ambassador that the UAE 
remained committed to negotiating a FTA with the U.S. and had 
not come under and "direct" Saudi pressure to back away from 
negotiations.  Sheikha Lubna also referred to a December 8 
press interview with former UAE Minister of Communication 
Ahmed Humaid Al-Tayer urging the UAEG to negotiate an FTA 
with the U.S. only as part of a collective GCC effort. 
Sheikha Lubna stated that Al-Tayer had ties to UAE merchant 
families and was reflecting their concerns (especially 
concerns about their exclusive agency rights).  She 
emphasized that &private citizens8 such as Al-Tayer were 
entitled to express their opinion, adding that the UAEG would 
not be publishing a response.  Ambassador emphasized the 
USG,s commitment to creating a Middle East Free Trade Area 
as a means of securing economic growth and stability for the 
entire region. 
 
 
Sison 
SISON