US embassy cable - 05MANAMA1257

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 001257 
 
SIPDIS 
 
STATE FOR NEA/ARPI, NEA/PI 
STATE PASS USTR JBUNTIN 
USDOC FOR ITA/MAC/ONE 
 
E.O. 12958: DECL: 08/24/2015 
TAGS: PREL, EFIN, EPET, ECON, KMPI, ELAB, BA 
SUBJECT: AMBASSADOR'S MEETING WITH MINISTER OF FINANCE 
SHAIKH AHMED 
 
REF: MANAMA 1185 
 
Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d). 
 
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SUMMARY 
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1. (C) In an August 24 meeting with the Ambassador, Finance 
Minister Shaikh Ahmed bin Mohammed Al Khalifa reaffirmed 
Bahrain's commitment to move ahead quickly on implementation 
issues of the U.S. - Bahrain Free Trade Agreement (FTA).  On 
the development of the G8 - BMENA Entrepreneurship Center, 
Shaikh Ahmed pledged his support for getting the Center up 
and running.  He outlined an ambitious agenda for the coming 
year, including increased capitalization for the Bahrain 
Development Bank (BDB), reevaluation of the fuel subsidy, 
enhancing customs efficiency, port privatization and 
healthcare reform.  End Summary. 
 
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FTA IMPLEMENTATION 
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2. (C) The Ambassador briefed Shaikh Ahmed on the status of 
FTA ratification in Washington, noting our interest that 
Bahrain's labor laws comply with ILO core labor standards. 
The Minister welcomed a planned USTR - Department of Labor 
mission to Bahrain in early September.  The Ambassador said 
it was important that Bahrain move ahead quickly on any 
outstanding implementation issues, such as IPR, to ensure 
that the agreement comes into force as soon as possible.  The 
Minister agreed, saying the GOB would devote the necessary 
resources on implementation issues to conclude any work on a 
timely basis.  The Ambassador also urged Shaikh Ahmed to 
ensure that GOB contracts impose no Israeli boycott 
restrictions.  Shaikh Ahmed responded that Ambassador 
Designate to the U.S. Nasser Belooshi had recently raised the 
issue and promised that a statement on Bahrain's position 
would be forthcoming.  He also said he would review the GOB's 
contract language and follow-up with the Ambassador on his 
findings. 
 
3.  (C) The Ambassador raised the same subjects August 27 
with Foreign Minister Shaikh Mohammed bin Mubarak Al Khalifa. 
 Shaikh Mohammed said he was aware of the sensitivity of the 
boycott issue and pledged to work with Shaikh Ahmed and 
Ambassador Belooshi on it to ensure there are no concerns. 
He promised to talk to the Labor Minister to facilitate the 
visit of the USTR/Labor team. (Note: Minister of Labor Al 
Alawi told the Ambassador August 28 that he had received a 
call from the Foreign Minister and looked forward to meeting 
with the delegation.  End Note.)  He urged expeditious 
congressional ratification of the FTA. 
 
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ENTREPRENEURSHIP CENTER 
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4. (C) The Ambassador noted our concern about moving ahead 
with the Entrepreneurship Center.  Ministry of Finance 
Director of Economic Planning Yousif Humood and MFA Bilateral 
Relations Director Dhafer Al Umran had told Emboffs 
previously that the GOB was hesitant to proceed before having 
a plan to raise funds for a building (reftel).  The 
Ambassador said that funding for a building, or even a 
business plan for a building, fell outside the MEPI agenda 
and would not be forthcoming.  The GOB should approve the 
arrival of the Beyster Institute expert to begin work on the 
Center as soon as possible. 
 
5. (C) Shaikh Ahmed explained that the MFA is wary about 
starting a project without a clear vision of how it would be 
maintained beyond the initial two-to-three-year period. 
However, his own position is that even without participation 
from the G-8, the benefits of Beyster's activity in Bahrain 
stood on their own merits.  He said he would be in touch with 
the MFA to push the project forward (Note: Subsequently the 
Foreign Minister gave the green light for the Beyster 
Institute expert to come as soon as possible.  End Note.) 
 
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FINANCE AGENDA 
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6. (C) Turning to financial affairs, Shaikh Ahmed said he 
hoped to improve the value of BDB holdings and increase 
income from government-held properties.  He said a more 
robust BDB would provide a boost to the middle class by 
increasing the availability of business loans. 
7. (C) He acknowledged that Bahrain is currently enjoying the 
benefits of high oil prices, but said the GOB would not 
depend on prices to remain high in the long term.  The 
government would need to reevaluate its current fuel subsidy, 
noting that it will spend BD 44 million (USD 117 million) to 
subsidize fuel this year.  He compared this to the BD 45 
million it will spend on healthcare over the same period. 
"Do people want cheap gas or better healthcare and 
education?" he asked.  "I don't think anyone has posed that 
type of question to the public."  His additional goals 
include pension reform, the 2007 inauguration of a privatized 
port, review of governmental fiscal policy, the next budget, 
and revamping customs regulations.  With regard to 
healthcare, he said the goal was to improve the quality of 
free healthcare over time and give patients the option to pay 
privately for special services and accommodations. 
 
MONROE