US embassy cable - 05MANAMA718

C O N F I D E N T I A L MANAMA 000718 
 
SIPDIS 
 
E.O. 12958: DECL: 05/20/2015 
TAGS: PREL, PGOV, ECON, ELAB, BA 
SUBJECT: PM SHAIKH KHALIFA DISCUSSES ECONOMIC SITUATION, 
LABOR REFORM WITH AMBASSADOR 
 
 
Classified by Ambassador William T. Monroe for reasons 1.4 
(b) and (d). 
 
1.  (C) The Ambassador, during a May 17 meeting with Prime 
Minister Shaikh Khalifa bin Salman Al Khalifa, discussed 
Bahrain's efforts to attract foreign investment to spur 
economic growth, and the possible impact of the Crown 
Prince's labor reform initiative on the business sector. 
 
2.  (C) The PM told the Ambassador that, when he sees other 
countries in the region doing so well economically, he 
"becomes jealous."  Bahrain has good laws and regulations but 
needs more investment and a stronger work ethic among its 
people.  They should be working instead of talking politics 
all the time, the PM said.  He noted that a day earlier, a 
Saudi investor had pulled out of a deal to purchase the 
Marina Club in Bahrain, supposedly because of a concern about 
required social security payments for employees.  He 
commented that the government should not put obstacles in 
investors' way. 
 
3.  (C) The Ambassador stated that the U.S.-Bahrain free 
trade agreement had generated interest in doing business in 
Bahrain among the American business community, and this 
should assist Bahrain's economy.  The PM said that Bahrain 
had embarked on a path to democracy, but he worried that 
increased political activity in Bahrain could scare off 
investors.  He encouraged ministers to speak publicly about 
the government's policy initiatives to improve the economy, 
so the people would have a better understanding of the 
positive role the government plays.  "If there are problems," 
he said, "we should hear about them from the people and 
correct them." 
 
4.  (C) In response to the Ambassador's question, the PM said 
that "everyone is nervous about labor reform."  Labor reform 
could delay development, he claimed.  Any legislative changes 
should be phased in gradually.  He said that people look at 
other regional countries, which do not put restrictions on 
foreign labor, and wonder why Bahrain is different.  He 
admitted that Bahrainis need to be trained, work harder, and 
produce more, but asserted that this is the employer's 
responsibility.  He cited the example of the contracting 
company building the Bahrain Financial Harbor, which had sent 
25 Bahrainis to its headquarters in Dubai for training.  He 
stated that Bahrainis were becoming more accustomed to the 
idea of accepting certain types of work that they would not 
do before.  Bahrainis now work at the Ritz Carlton and other 
hotels in Manama, and some 2,000 Bahrainis are employed at 
the upscale Seef Mall.  The culture of work is spreading 
among the citizens, he said. 
 
5.  (C) Comment:  The Prime Minister, recently returned from 
an extended trip and vacation in the Far East, appeared more 
relaxed, fit, and good humored than in previous meetings. 
His concerns about labor reform parallel those of many in the 
business community, who share his apprehension of a possible 
negative impact as a result of the proposed changes. 
 
MONROE