US embassy cable - 05ABUDHABI3013

S E C R E T SECTION 01 OF 06 ABU DHABI 003013 
 
SIPDIS 
 
DEA FOR ADMINISTRATOR TANDY FROM AMBASSADOR 
 
E.O. 12958: DECL: 07/07/2015 
TAGS: SNAR, PTER, KTFN, EFIN, ETTC, TC 
SUBJECT: SCENESETTER - DEA ADMINISTRATOR TANDY'S VISIT TO 
THE UAE 
 
 
Classified By: Ambassador Michele J. Sison, for reasons 1.4 
(b) and (d). 
 
 1. (C) Administrator Tandy: I would like to welcome you to 
the UAE.  Your visit comes during a dynamic period in the 
U.S.-UAE bilateral relationship.  Over the last few years, 
relations between the U.S. and the UAE have deepened and 
expanded in the economic, military, counter-terror, and 
nonproliferation areas.  In Abu Dhabi we have requested 
meetings for you with Abu Dhabi Crown Prince Mohammed Bin 
Zayed (MBZ), Interior Minister Sheikh Seif, and Central Bank 
Governor Sultan Nasser Al Suweidi.  In Dubai, we have 
requested a meeting for you with Dubai Crown Prince Mohammed 
Bin Rashid (MBR), and you will be meeting with the U.K., 
Canadian, and Australian drug liaison officers and their 
respective Consuls General. 
 
2. (U) Table of Contents: 
- 3-5: Government and Economy 
- 6-10: U.S./UAE Cooperation and Collaboration 
- 11-16: Counternarcotics 
- 17-21: Anti-Money Laundering and Counter Terror Finance 
- 22: Counterterrorism 
- 23-24: Key Discussion Issues 
- 25: Interlocutor Bios 
 
Government and Economy 
---------------------- 
 
3. (U) The UAE is a federation of seven emirates founded in 
December 1971.  Under the constitution, the federal 
government has authority for certain areas that affect the 
federation as a whole, such as foreign affairs, while the 
individual emirates retain authority in areas not 
specifically delegated to the federation.  In all cases, 
however, federal laws and decrees "trump" local laws.  In 
November of 2004, President Sheikh Zayed al Nahyan passed 
away and was succeeded by his eldest son, Sheikh Khalifa bin 
Zayed Al Nahyan.  The political transition following Sheikh 
Zayed's death has been smooth.  President Khalifa has ensured 
stability by pursuing the same domestic, regional, and 
international policy priorities as his father. 
 
4. (U) Over the last 34 years, the UAE has developed into the 
second largest economy in the Arab world.  It has adopted 
progressive economic policies that have helped diversify its 
economy away from a dependence on oil and that will continue 
to strengthen the UAE's position as the region's pre-eminent 
hub for trade, transportation, investment and tourism.  We 
are in the process of negotiating a free trade agreement that 
will advance mutual economic interests and ensure that the 
UAE remains among the top ten countries with which the U.S. 
runs a trade surplus. 
 
5. (U) Individual emirates maintain ownership of natural 
resources within their borders, and as a result, there are 
sharp differences in the wealth of the various emirates.  The 
Emirate of Abu Dhabi, which controls 94% of the oil and gas 
reserves in the UAE, is the richest and most powerful 
emirate.  Lacking Abu Dhabi's vast oil reserves, Dubai has 
managed to achieve a strong economy by providing stability, 
world-class infrastructure such as the ports and airport, an 
openness to foreigners, and a business-friendly climate. 
Dubai has become the region's center of tourism, banking and 
finance, shipping, air travel, retailing, and free zones. 
The five northern emirates are less wealthy, have fewer 
resources and fewer economic opportunities, and are highly 
dependent on grants from Abu Dhabi emirate and the federal 
government. 
 
U.S.-UAE Cooperation and Collaboration 
-------------------------------------- 
 
6. (S) U.S.-UAE cooperation in the security and 
counterterrorism fields is robust and the UAE leadership is 
actively seeking ways to enhance the relationship.  In 
particular, the UAE cooperates very closely with the U.S. on 
anti-money laundering (AML) and counter terror finance (CFT) 
issues.  The Central Bank's Anti-Money Laundering and 
Suspicious Cases Unit (AMLSCU), which serves as the UAE's 
Financial Intelligence Unit (FIU), has a close working 
relationship with the U.S. Department of Treasury's FIU 
(FINCEN), and these officials are often in daily contact with 
one another.  The Central Bank has also assisted the U.S. on 
a number of criminal cases, including by providing documents 
for use in the trial of accused 9/11 associate Zacharias 
Moussaoui.  (Note: The Central Bank, a member of the Egmont 
Group, also cooperates closely with other FIUs around the 
world.  It has assisted the UK, Germany, Portugal, and Turkey 
on AML and CFT investigations.  The Central Bank has also 
frozen 23 accounts based on information and requests from 
other countries, and it has referred 88 cases to counterparts 
in other countries for investigation and asset freezing.) 
 
7. (C) To further enhance our robust cooperation in the field 
of counterterror finance, Homeland Security Advisor Fran 
Townsend proposed establishing a Joint Terrorist Finance 
Coordination Committee (JTFCC) to the Central Bank Governor 
during her visit to the UAE in February.  This committee, 
which will be comprised of representatives from each 
country,s law enforcement, intelligence, foreign affairs, 
and financial regulatory agencies, will set terrorist finance 
priorities and long-term strategy, formalize and coordinate 
information exchange, and arrange training.  Washington is 
drafting a proposal to submit to the UAEG.  DEA may wish to 
consider working through the JTFCC to engage with the AMLSCU 
on issues of joint concern (for example, on training bank 
examiners and law enforcement officials on techniques to 
identify and investigate individuals using hawala to launder 
drug proceeds). 
 
8. (C) As Minister of Interior, Sheikh Saif provides 
significant support to all U.S. law enforcement agencies in 
the UAE, and U.S.-UAE law enforcement cooperation has 
increased dramatically over the past year.  Both the Abu 
Dhabi and Dubai police departments have been responsive to 
the Legal Attache's requests for information in furtherance 
of U.S. criminal investigations.  The Dubai police department 
drug section agreed to assist the FBI's investigation of a 
local resident suspected of supporting terrorism through 
illegal drug activities.  While the case was discontinued 
prior to undertaking the joint effort, the cooperation in 
agreeing to and planning the operation was very positive. 
 
9. (SBU) DHS/ICE has also developed a strong working 
relationship with the Ministry of Interior and both the Abu 
Dhabi and Dubai Police Departments; working joint criminal 
investigations involving many different violations including 
money laundering, smuggling, criminal export investigations 
(including violations of the Arms Export Control Act), child 
pornography, etc.  Sheikh Saif has been a strong advocate of 
developing a close working relationship with DHS/ICE and has 
personally authorized the development of a joint operation 
with the Ministry of Interior targeting U.S. and UAE based 
Hawaladars willing to move the proceeds of illegal activity. 
Additionally, ICE manages the Container Security Initiative 
(CSI) in Dubai with four ICE and Customs and Border 
Protection (CBP) officers co-located with the Dubai Customs 
Intelligence Unit.  CSI is a program designed to screen U.S. 
bound cargo for conventional weapons and WMD. 
 
10. (C) While informal, working-level law enforcement 
cooperation is excellent, formal, judicial cooperation has 
been stilted, at best.  The UAE has recently begun to block 
formal judicial cooperation regarding requests for 
information and return of suspects in order to pressure us to 
conclude Mutual Legal Assistance (MLAT) and extradition 
treaties.  Current negotiations for an MLAT are stalled, 
however, due to the UAEG's insistence on linking negotiations 
to an Extradition Treaty and the UAE's unwillingness to 
extradite its own nationals.  Historically, there were two 
instances where the UAE extradited persons wanted in the 
United States.  In 2004, the UAE rendered a Bangladeshi 
national to Michigan on attempted murder charges, and in 2002 
rendered a Russian on kidnapping for ransom and extortion 
charges to Los Angeles.  However, there have been recent 
instances where the UAE's Ministry of Justice released 
fugitives wanted by the United States. 
 
Counternarcotics 
---------------- 
 
11. (U) Although illicit drug use is not viewed a critical 
problem in the UAE, recent seizures suggest that drug 
trafficking is a growing concern for the country.  The UAE 
serves as a likely narcotics transshipment point for drugs en 
route from major drug-producing countries such as Afghanistan 
to Western European and African nations.  This is due to its 
proximity to major drug cultivation regions in Southwest 
Asia, its long (700 kilometer) coastline, and high volumes of 
shipping and transportation at UAE ports.  The UAE has taken 
several recent initiatives to address the menaces of 
trafficking and increasing drug use, including cooperation 
with the United Nations. 
 
12. (U) UAE authorities have pursued nearly 5,000 narcotics 
cases from 1999 to September 2004, with the street value of 
drugs seized exceeding $25 million.  According to press 
reports, the Abu Dhabi Police Anti-Narcotic section handled 
171 cases last year, and already has 68 drug cases in the 
first five months of this year.  Typically, most drug cases 
involve hashish trafficking and use, but recent seizures in 
Abu Dhabi suggest an increase in the trafficking of heroin. 
Authorities seized 39.7 kg of heroin from January to May 2005 
in Abu Dhabi alone, compared with only 2 kg in all of 2004. 
Hashish seizures in Abu Dhabi fell from 1,233 kg in 2004 to 
less than a kilogram during this five-month period. 
(Comment:  It appears the bulk of hashish seized in 2004 came 
from a few significant seizures. End comment.) 
 
13. (SBU) The volume of seizures suggest that traffickers 
increasingly use the UAE as a transshipment point for 
narcotics from regions in south and southwest Asia (primarily 
Afghanistan, Pakistan, and Iran).  Small vessels and 
powerboats transport cargo containers of hashish, heroin and 
opium; some smugglers also use truck and horseback to take 
drugs over the UAE land border.  The majority of these drugs 
go to Western Europe and Africa, while relatively few go to 
the United States.  The UAE is vulnerable to such trafficking 
because of high volumes of shipments, especially in the 
emerging trading centers of Dubai and Sharjah, and a porous 
land border with Oman.  Additionally, some smaller ports in 
emirates other than Abu Dhabi and Dubai do not inspect 
transshipped cargo as they do other goods entering the 
country. 
 
14. (SBU) Rob Walker, Drugs Liaison Officer at the UK 
Consulate General in Dubai, has expressed concern that 
European organized crime was trying to link up with Afghani 
and Pakistani drug traffickers because transiting heroin 
through Dubai is one-third as expensive as it is through 
Holland.  However, Walker also noted that the UAE has taken 
major steps to crack down on shipments of drugs destined for 
the UAE, as well as those transiting through.  Sultan Bin 
Sulayem (Chairman of Dubai Ports, Customs, and Free Zones 
Authority) recently stated that Dubai Customs does not merely 
check containers and seize the drugs they find.  Rather, they 
launch a full investigation by, for instance, cooperating 
with the destination country for the shipment and putting 
tracing devices on the containers of the drugs. 
 
15. (U) TO date, the UAE has not faced an overwhelming 
addiction problem, although it does exist.  The UAE pursues 
an aggressive anti-drug policy that includes harsh penalties 
for offenders, rehabilitation programs and public awareness 
campaigns.  Drug offenses are governed by shari,ah law, 
according to a 1996 amendment to the Penal Code.  Per a 1995 
law, drug offenders may receive capital punishment for drug 
trafficking.  Although no executions have yet taken place, an 
Asian woman is in the appeals process after receiving the 
death sentence in December 2004.  Punishments are markedly 
different for UAE citizens than for foreign nationals. 
Emirati addicts may turn themselves in to a rehabilitation 
center or the police without facing prosecution, and most UAE 
nationals arrested on drug charges undergo a two-year 
rehabilitation program with family counseling.  Third-country 
nationals, in contrast, usually serve out severe prison 
sentences before being deported. 
 
16. (U) The UAE government actively works with the United 
Nations and other countries to stem the flow of narcotics 
into and through the UAE.  The UAE,s joint work with other 
nations to stop trafficking gangs has resulted in arrests in 
Yemen, Pakistan, Iran, Australia, Canada and Holland ) in 
addition to the arrests for 12 cases in neighboring Oman, 
Saudi Arabia and Kuwait.  In 2003, the UAE signed a landmark 
counter-narcotics agreement with Iran to coordinate efforts 
against production, distribution and smuggling across the 
UAE-Iran sea border.  The UAE agreed to foot the $3 million 
bill for the establishment of a UN sub-office on Drugs and 
Crime (UNODC), which will open in Abu Dhabi in September 
2005.  The UNODC will coordinate with the Higher Committee 
for Drugs Control in the UAE, similar organizations in GCC 
countries, and various non-governmental organizations such as 
youth and women,s associations.  The UAE is party to the 
1988 UN Drug Convention, the 1961 UN Single Convention as 
amended by the 1972 Protocol, and the 1988 UN Convention on 
Psychotropic Substances.  The UAE has signed, but has not yet 
ratified, the UN Convention against Transnational Organized 
Crime. 
 
Anti-Money Laundering and Counter Terror Finance 
--------------------------------------------- --- 
 
17. (SBU) While the laundering of narcotics funds may take 
place in the UAE, potential exploitation of the UAE financial 
system by foreign terrorists and terror financing groups has 
been the primary concern.  Following the September 11 
terrorist attacks and revelations that terrorists had moved 
funds through the UAE, Emirati authorities acted swiftly to 
address vulnerabilities.  Both federal and emirate-level 
officials have gone on record as recognizing the threat money 
laundering activities in the UAE pose to the nation's 
security and continue to take significant steps to better 
monitor cash flows through the UAE financial system and to 
cooperate with international efforts to combat the financing 
of terrorism. 
 
18. (S) Law No. 1/2004 (the counter terror law) and Law No. 
4/2002 (the anti-money laundering law) form a robust legal 
framework to combat money laundering (AML) and terror finance 
(CFT).  The Central Bank Governor has the authority to freeze 
accounts for up to seven days if he suspects that the funds 
will be used to fund or commit any of the crimes listed in 
the two laws, but the Central Bank must provide evidence to 
the Attorney General for prosecution in order to maintain the 
freeze beyond seven days.  In practice, the Central Bank 
holds freezes longer than seven days, even if no evidence has 
(or can be) provided to the Attorney General.  The Central 
Bank Governor is proactive and would rather freeze accounts 
extra-judicially than to allow individuals access to suspect 
funds.  However, the Central Bank has become frustrated when 
the USG has asked the Bank to freeze funds and has not 
provided evidence that could be used in a court of law. 
Central Bank officials have told us on multiple occasions 
they are concerned that courts could force them to release 
frozen assets based on a lack of evidence, which would 
seriously damage the credibility and effectiveness of the 
Central Bank.  The Central Bank, which has the capability to 
examine accounts, follow wire transfers, and ensure banks 
follow appropriate Know Your Customer procedures, does not 
have the law enforcement expertise or mandate to determine if 
there is underlying illegal activity, and thus when they 
freeze accounts at our behest, they need releasable 
information to use in the courts, as they do not really have 
the capabilities to generate their own case. 
 
19. (SBU) The UAE -- and Dubai in particular -- is an 
important financial center for the Gulf region, and the 
Central Bank takes its job of examining and monitoring the 
financial sector very seriously.  Banks and other financial 
institutions supervised by the Central Bank (exchange houses, 
investment companies, and brokerages) are required to submit 
suspicious transaction reports (STRs) to the Central Bank's 
Anti-Money Laundering and Suspicious Cases Unit (AMLSCU). 
Financial institutions are required to follow strict "know 
your customer" guidelines, and all financial transactions 
over $54,000, regardless of their nature, must be reported to 
the Central Bank.  By law, all wire transfers in excess of 
$545 must be reported to the Central Bank, and individuals 
are required to declare cash that they import and export in 
amounts greater than $10,800. 
 
20. (SBU) The informal and mostly undocumented "hawala" 
remittance system is an effective and inexpensive way for 
foreign workers in the UAE to remit funds to their home 
country.  However, the fact that hawala is an undocumented 
and nontransparent system makes it difficult to control and 
an attractive mechanism for terrorist and criminal 
exploitation.  In an effort to regulate hawala dealers 
(hawaladars), the Central Bank began registering UAE 
hawaladars in 2002.  To date, over 160 hawaladars have 
registered and now submit quarterly records of all of their 
transactions (with names and addresses of remitters and 
beneficiaries), but Central Bank officials acknowledge that 
they do not know how many unlicensed hawaladars continue to 
operate.  Governor Al Suweidi has told us that he is 
intentionally taking a soft approach to hawaladar regulation 
-- there are no penalties for failing to register -- because 
he does not want to drive hawaladars further underground.  He 
has told us that he intends to eventually impose penalties 
for failure to register, but he does not seem inclined to do 
this in the near future.  The UAE considers itself a leader 
in hawaladar regulation, and has held three highly successful 
international conferences on hawala use and regulation. 
 
21. (SBU) The UAE is noted for its free trade zones (FTZs), 
and every emirate (except Abu Dhabi) has at least one 
functioning FTZ.  The FTZs allow 100% foreign ownership, full 
repatriation of profits and no taxes, and firms can import 
and export without paying any customs duty.  UAE free zones 
have attracted approximately 5,000 companies and an estimated 
investment of over $4 billion.  Companies located in FTZs are 
treated as being offshore or outside the UAE for legal 
purposes, but they are still subject to UAE criminal law. 
The mammoth Jebel Ali Free Zone (JAFZ) has nearly 3000 
companies on site, including major multinational firms and 
Fortune 500 companies.  While JAFZ has a reputation as a 
"wild child", it has actually grown into a respectable 
"adult", hosting the regional headquarters and distribution 
hubs of many reputable companies.  The existence or extent of 
trade-based money-laundering in the JAFZ is currently 
unknown.  Some of the smaller free zones, Sharjah or Fujairah 
with their closer ties to Russia and Iran respectively, may 
be more likely locations for such money-laundering, although 
this has not been observed. 
 
Counterterrorism 
---------------- 
 
22. (C) The UAE is well aware of its vulnerability to 
terrorist attacks and has taken a number of steps to enhance 
its critical infrastructure and border security along its 
porous land and maritime borders.  In July 2004, the UAE 
strengthened its legal authority to respond to 
terrorist-related activity with the passage of an 
anti-terrorism law (Law No. 1/2004).  The law defines 
terrorism, specifically criminalizes terrorist financing, and 
sets stiff penalties for violations.  UAE law enforcement 
agencies -- with U.S. assistance and training -- are also 
focusing on how they would respond to a potential attack, 
including attacks on critical oil production, power and water 
infrastructure, and ports/airports.  However, there is still 
relatively little coordination within and between the 
emirates on counter-terror strategies.  The primary federal 
decision-makers on counterterror matters are MBZ, Sheikh 
Saif, and Sheikh Hazza (Director of the UAE State Security 
Organization).  Transshipment issues, which primarily involve 
Dubai, are handled autonomously through Dubai Customs and the 
Dubai State Security Division. 
 
 
Key Discussion Issues 
--------------------- 
 
23. (SBU) The Emiratis are likely to raise the following with 
you: 
 
-- Releasable information. The Central Bank has legal 
constraints on asset freezing and thus the USG needs to do a 
better job of passing on information that is usable for 
prosecution purposes; (Central Bank Governor Al Suweidi) 
 
-- Training.  The UAE values U.S. expertise and often 
requests additional training for their customs and law 
enforcement officers; (Sheikh Saif, Central Bank Governor Al 
Suweidi) 
 
-- Saudi Arabia. The Emiratis closely watch developments in 
Saudi Arabia, and will be keen to compare views on security 
developments in the kingdom; (MBZ) 
 
-- Trafficking in Persons.  (Background: Due in large part to 
the use of trafficked underage foreign boys in camel races, 
this June the UAE was downgraded from Tier Two Watch List to 
Tier Three Watch List in the 2005 Trafficking in Persons 
(TIP) Report. The Emirati leadership has indicated to us that 
they will work diligently on each of the steps suggested in 
the TIP action plan.)  If this issue is raised with you, you 
could reiterate our message that fulfillment of the action 
plan will demonstrate significant efforts by the UAEG to 
eliminate trafficking and elevate the UAE to Tier Two Watch 
List status.  (MBZ, MBR, Sheikh Saif) 
 
24. (SBU) It would be appropriate for you to raise the 
following points during your meetings: 
 
-- AML, CFT.  Appreciate the UAE's significant efforts to 
combat terrorism, terror finance, and money laundering; (all 
interlocutors) 
 
-- Export Control Law. The UAE's draft export control law is 
still in the UAE interagency process.  Note that passing an 
export control law would give the UAE grater ability to act 
against transshipments of controlled items; MBZ, MBR, Sheikh 
Saif) 
 
-- CSI and Megaports. Thank Dubai for being the first Middle 
East port to join the Container Security Initiative and 
Megaports Initiative; (MBR) 
 
-- Law Enforcement Cooperation. Note solid law enforcement 
cooperation. (Sheikh Saif, MBR) 
 
Interlocutor Bios 
----------------- 
 
25. (S) We have requested meetings for you with: 
 
-- Mohammed bin Zayed (MBZ).  Sheikh Mohammed bin Zayed Al 
Nahyan became the Crown Prince of Abu Dhabi in November 2004, 
upon the death of his father, Sheikh Zayed.  MBZ is a dynamic 
and charismatic leader and an advocate for necessary changes 
in the social and political arenas.  MBZ is pro-U.S. and has 
been supportive of our efforts in Iraq and Afghanistan and in 
the war on terrorism.  In addition to being Crown Prince of 
Abu Dhabi, MBZ serves as the Deputy Supreme Commander of the 
UAE Armed Forces.  MBZ sees Iran as the UAE's biggest threat, 
and he is very concerned about extremism and instability in 
Saudi Arabia.  MBZ, who speaks excellent English, is very 
personable and likes to get to know his interlocutors on a 
personal basis.  He was born in 1961. 
 
-- Mohammed Bin Rashid (MBR).  Sheikh Mohammed bin Rashid Al 
Maktoum is the Crown Prince (and de facto ruler) of Dubai. 
He is a pragmatic and decisive interlocutor who responds best 
to straight talk.  MBR and MBZ have developed a good rapport 
over the years, and they generally cooperate closely on most 
federal-level decisions.  MBR is the titular UAE Minister of 
Defense, but he plays no role in the decisions, staffing, or 
funding of the UAE Armed Forces.  MBR is well disposed toward 
the United States, and he believes the US military presence 
in the Gulf is mutually beneficial by maintaining balance in 
the region.  MBR advocates a more conciliatory policy toward 
Iran, and he often emphasizes Iran's commercial importance 
and its desire to play a role in the Gulf.  MBR was born in 
1946. 
 
-- Sheikh Saif Bin Zayed.  Sheikh Saif bin Zayed Al Nahyan 
(half brother to MBZ) is the UAE Minister of Interior.  He is 
also Director General of the Abu Dhabi Police, where he holds 
the rank of Lieutenant General.  Sheikh Saif is a good friend 
of the U.S. and pays close attention to Embassy security. 
The Ministry of Interior is responsible for overseeing the 
federal police, prisons, and support centers, and it oversees 
immigration, and civil defense.  Sheikh Saif implemented the 
iris-scanning program at UAE ports of entry to prevent 
deportees from returning to the UAE.  He holds a bachelor,s 
degree in political science from UAE University, and he 
studied English in the UK where he also attended a training 
program for police at Scotland Yard.  We was born in 1968. 
 
-- Sultan Nasser Al Suweidi.  Central Bank Governor Sultan 
Nasser Al Suweidi is a reform-minded Abu Dhabi native who has 
become one of the closest contacts of the Embassy.  The 
Governor has been a key player in our efforts to choke off 
terrorist financing since the September 11 attacks, and 
privately has initiated unprecedented UAEG cooperation with 
Washington on the war on terrorism.  Al Suweidi's public 
comments often defend the UAE banking system and deny its 
shortcomings, but privately he remains collegial and welcomes 
frequent contact with U.S. officials.  Meeting with him for 
the first time, he will be sensitive to any inferences that 
we think the Central Bank is not doing all it can to regulate 
the formal and informal financial systems.  Sultan is a 
micromanager -- his staff will not commit the Central Bank to 
action, preferring instead to send all matters to the 
Governor's office for approval.  He makes frequent trips to 
the Central Bank's branch offices in other emirates, travels 
abroad often to consult with his GCC counterparts, and 
frequently accompanies high-ranking UAE officials to the 
United States.  Governor Al Suweidi was very involved with 
forming the Middle East North Africa Financial Action Task 
Force (MENAFATF), which is headquartered in Bahrain.  Since 
its inception in November 2004, the Central Bank has hosted a 
number of MENAFATF-sponsored conferences and symposia.  Born 
in 1953, Al Suweidi studied at San Diego State University. 
SISON