US embassy cable - 05MANAMA1581

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 001581 
 
SIPDIS 
 
SENSITIVE 
 
NEA/ARPI 
 
E.O. 12958: DECL: 10/23/2015 
TAGS: PREL, PGOV, ELAB, ETRD, BTIO, BA 
SUBJECT: EDB CHIEF OUTLINES ECONOMIC PLAN 
 
REF: MANAMA 1013 
 
Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d) 
 
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SUMMARY 
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1. (C) Economic Development Board (EDB) CEO Shaikh Mohammed 
Bin Essa Al Khalifa October 18 presented the EDB's plan for 
economic reform to a gathering of the local American Chamber 
of Commerce (AmCham).  Shaikh Mohammed identified three key 
pillars for reform: investment in people; stimulation of 
business; and accountability and transparency in government. 
He has presented the substance of this presentation before 
and some Bahraini business leaders are openly beginning to 
question his ability to translate plans into action.  He will 
need to show results soon if he is to maintain the confidence 
of the business community.  End summary. 
 
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ECONOMIC VISION OUTLINED 
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2. (U) Shaikh Mohammed October 18 presented an economic 
reforms blueprint for Bahrain to the Bahrain American Chamber 
of Commerce.  He opened by observing that Bahrain has come a 
long way since gaining independence from the UK in 1971 and 
has transformed itself from a country offering only basic 
amenities into a world-class financial hub. 
 
3. (U) He noted that Bahrain enjoys key advantages, including 
regionally competitive start-up costs and a geographically 
advantageous location - featuring access to Saudi Arabian and 
South Asian markets.  However, he added that Bahrain must not 
rest on its laurels and needed to maintain the pace of 
business-friendly reforms.  Shaikh Mohammed said these 
reforms would be supported by three underlying goals or 
"pillars," which he identified as: investment in people, 
stimulation of business, and accountability and transparency 
in government. 
 
4. (U) Shaikh Mohammed noted that Bahrain is situated between 
globally significant energy reserves, with substantial gas 
deposits located 200 kilometers to the east (in Qatar), and 
abundant oil deposits 200 kilometers to the west (in Saudi 
Arabia).  In contrast, he said Bahrain holds relatively 
modest reserves and needs to rely on its human resources. 
Nevertheless, he observed, "a lot of people are resisting 
change right now because they see oil at sixty to seventy 
dollars a barrel."  (Note:  Petroleum production and refining 
accounts for roughly 67 percent of GDP.  End note.)  Shaikh 
Mohammed lamented the dearth of qualified Bahraini 
professionals available to meet the demands of a growing 
private sector.  "Bahrainis today can't compete," he said. 
He proposed that this could largely be overcome by reforming 
Bahrain's education system, which he described as a critical 
factor for Bahrain's economic survival. 
 
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Rolling Out the Red Carpet 
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5. (U) On stimulating business, Shaikh Mohammed said the 
EDB's goal was to move from government red tape to government 
red carpet, ensuring Bahrain's position as a preferred place 
to do business for nationals and foreigners alike.  He said 
the government's role was to stimulate business, and the EDB 
was in the process of refining its plan to boost key 
competitive sectors.  (Note: Shaikh Mohammed has previously 
identified these sectors as information technology and 
telecommunications, education and training services, 
financial services, healthcare services and tourism, per 
Reftel.  End Note.)  For example, he said Bahrain should not 
compete as a mass tourism destination.  He noted that Bahrain 
has archeological sites as old as the pyramids of Egypt, but 
these should be more actively promoted to niche markets only. 
 Shaikh Mohammed promised further clarification by year end 
on the EDB's strategy for key sector support and said the 
strategy would feature an emphasis on quality and downstream, 
value-added services. 
 
6. (U) With regard to greater accountability and transparency 
in government, Shaikh Mohammed said the EDB would expedite 
the formation of government holding companies to better 
manage GOB holdings in firms.  As an example of why this is 
needed, he said that since 1968, the GOB's interest in the 
Bahrain Petroleum Company (BAPCO) had grown in value from USD 
one million to USD one billion, and that these assets must be 
managed for an optimal return.  He also said the EDB would 
introduce a system to identify key performance indicators to 
track and improve the efficiency and effectiveness of 
government offices serving Bahrain's business community.  The 
EDB will also seek to promote performance-based GOB budgeting 
and transparency in providing access to land.  Shaikh 
Mohammed noted that only eleven percent of land in Bahrain is 
currently zoned. 
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SOME EXECUTIVES DOUBTFUL 
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7. (SBU) Though some AmCham executives in attendance 
expressed enthusiasm for the presentation, several others 
were clearly unimpressed and openly expressed impatience. 
"We need action, not more talk," said one attendee.  Pointing 
to Shaikh Mohammed's lackluster delivery, one AmCham board 
member suggested that Shaikh Mohammed may have too much on 
his plate and feared he may not be equal to the task of 
heading up the EDB.  "They need someone with more zip," he 
said.  A respected Bahraini economics professor and 
journalist who had not attended the presentation told Econoff 
October 22 that he had recently heard negative comments from 
several Bahraini business leaders reflecting a growing 
skepticism of the EDB's relevance. 
 
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COMMENT 
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8. (C) Shaikh Mohammed's presentation was a recycling of 
remarks he has delivered in various business community venues 
over the past several weeks.  He appeared visibly tired and 
his presentation lacked the enthusiasm characteristic of 
previous talks he has delivered.  His ability to quickly 
capitalize on new powers the EDB has been given (Reftel) to 
implement the substantive policy improvements he envisions 
will be critical to maintaining the support of the Bahraini 
business community.  Given current oil prices, which in 
effect offer a reprieve on the urgency of implementing 
economic reforms, this may prove all the more challenging. 
End Comment. 
 
 
 
MONROE