US embassy cable - 05ABUDHABI1170

C O N F I D E N T I A L ABU DHABI 001170 
 
SIPDIS 
 
STATE FOR NEA/ARPI 
NSC FOR NEA STAFF 
 
E.O. 12958: DECL: 03/14/2015 
TAGS: PGOV, ECON, PREL, PINR, TC 
SUBJECT: DUBAI BUSINESSMAN CRITICIZES DUBAI CROWN PRINCE 
AND COMMENTS ON PRESIDENT KHALIFA'S FINANCES 
 
 
Classified By: Classified by Ambassador Michele J. Sison for reasons 1. 
4 (b & d). 
 
1. (C) Summary: In a recent conversation with DCM, Dubai 
developer and government official Mohammed Al-Abbar sharply 
criticized Dubai Crown Prince Sheikh Mohammed bin Rashid 
Al-Maktoum (MbR) for arrogance and for losing touch with the 
people of Dubai.  Al-Abbar told DCM that the only reason MbR 
had approved a recently announced housing project for UAE 
nationals in Dubai was to preempt an announcement that the 
federal government would be undertaking a similar project. 
Al-Abbar claimed that UAE President Sheikh Khalifa bin Zayed 
Al-Nahyan had given away his personal inheritance to charity 
and did not control fabulous personal wealth.  End Summary. 
 
2. (C) On February 20, Dubai developer, Chairman of Emaar 
Properties (Dubai's largest publicly traded real estate 
development company), and Director General of the Dubai 
Department of Economic Development Mohammed Al-Abbar told DCM 
that MbR had a huge ego and had lost touch with ordinary 
Emiratis. He claimed MbR was increasingly isolated and 
surrounded by a small coterie of close advisors and rarely 
circulated with the people.  He noted that MbR no longer let 
people speak during his meetings.  He also complained that 
MbR was too tied in to "big business" (i.e., Dubai state 
owned companies).  An ordinary businessman, he said could not 
compete with "Dubai Inc." 
 
3. (C) Al-Abbar also complained that MbR was focusing on mega 
projects to the detriment of affordable housing for ordinary 
Emiratis.  Al-Abbar said that he had recommended that Dubai 
build affordable housing for Emiratis and given MbR a 
proposal two years ago.  According to Al-Abbar, MbR "sat" on 
the proposal until he learned that the Federal Ministry of 
Public Works had offered Emaar USD 100 million to build 
affordable housing in the northern emirates.  Only then, did 
he announce that Dubai would be building 10,000 new homes. 
Al-Abbar said that MbR had made the announcement to ensure 
that the Ministry of Public Works wouldn't "beat him to the 
punch." 
 
4. (C) Al-Abbar asserted that Dubai was operating under a 
permanent budget deficit, since its infrastructure costs were 
high and government revenues were low, depending on dwindling 
oil production and limited custom revenues.  He confirmed 
that the Emirate of Abu Dhabi had cut off subsidies to Dubai 
two years ago. He described UAE president Sheikh Khalifa bin 
Zayed Al-Nahyan's decision to increase sharply funding for 
infrastructure projects in the four poorer northern emirates 
as in keeping with Sheikh Khalifa's governing philosophy to 
"weaken the Sheikhs, strengthen the people." 
 
5. (C) Al-Abbar briefly discussed the state of Sheikh 
Khalifa's personal finances, explaining that Emaar managed 
some of Sheikh Khalifa's investments.  According to Al-Abbar, 
Sheikh Khalifa had given his inheritance to charity and did 
not have great private wealth.  However, he explained that 
Sheikh Khalifa, as the sovereign, could borrow money on his 
personal guarantee.  Al-Abbar's company would invest such 
funds and return the earnings to Khalifa.  (Comment:  Emboffs 
have heard discussions about Sheikh Khalifa's -- relative -- 
poverty before, including allegations that former first lady 
Sheikha Fatima had engineered that the bulk of Sheikh Zayed's 
personal wealth go to her sons and not to the other sons of 
former President Zayed.  Sheikh Khalifa is not one of the 
"sons of Fatima." End Comment.)  Sheikh Khalifa still 
controls Abu Dhabi's considerable oil revenues and has 
not/not turned over control of the Supreme Petroleum Council 
(the organization that controls Abu Dhabi's oil policy and is 
a source of its wealth) to Crown Prince Sheikh Mohammed bin 
Zayed, despite turning over the chairmanship of the Abu Dhabi 
government to MbZ.  Al-Abbar doubted Sheikh Khalifa would 
turn over decisions regarding national resources to MbZ or 
the rulers of the other Emirates. He commented that Khalifa 
would prefer to vest budgetary authority in the Federal 
National Council and predicted that Khalifa would institute 
elections for this currently appointed body. 
 
6. (C) Comment:  While it is true that there is a good deal 
of uneasiness among Dubai notables about the pace of 
development, most of our Dubai interlocutors are sympathetic 
to MbR's basic vision for Dubai's future.  He is aggressively 
pushing the emirate to grow and to diversify its economy away 
from its --dwindling -- oil reserves.   Following an Emaar 
stock market debacle several years ago that cost many Dubai 
businessmen many millions of dollars, Al-Abbar has fallen out 
of favor, and it is possible that Al-Abbar is to some extent 
reflecting his own sense of being "cut off" from MbR.  End 
Comment. 
SISON