US embassy cable - 03ABUDHABI772

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 000772 
 
SIPDIS 
 
DEPT FOR NEA/RA, NEA/ARP, EB/CBA FOR MICHAEL GARCIA 
 
E.O. 12958: DECL 02/17/08 
TAGS: BEXP, BBSR, ECON, ETRD, EINV, TC 
SUBJECT:  AMEMBASSY ABU DHABI AND AMCONSUL DUBAI FACILITATE U.S. 
BUSINESS IN THE UAE 
 
REF: STATE 29441 
 
1.  (U) Classified by Ambassador Marcelle M. Wahba for 
reasons 1.5 (B) and (D). 
 
2.  (C) Comment and summary.  The U.S. Mission to the UAE has 
facilitated a number of high-profile business deals in the 
UAE during the last year.  Family connections and political 
influence remain key to doing business in the UAE and many of 
our official contacts also own prominent private businesses, 
act as sponsors to foreign firms, or influence the selection 
of bids for major government/local contracts. Our close and 
continuing relationships with the powerful elite in the UAE 
has no doubt led to increased U.S. exports, selection of U.S. 
firms for various contracts and tenders, and positive resolution 
for U.S. firms in commercial disputes during the last year. 
End summary and comment. 
 
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Sealing The Deal: Engine Alliance and Emirates Air 
--------------------------------------------- ----- 
 
3.  (C) Following a two-year campaign, Engine Alliance 
(a General Electric/Pratt & Whitney joint venture) signed 
a General Terms Agreement on June 5, 2002 with Emirates 
Airline to provide the engines to power Emirates new fleet of 
A-380 aircraft.  The Ambassador and Consul General in Dubai, 
supported by FCS Dubai, actively advocated on behalf of Engine 
Alliance and made official representations on the American firm's 
behalf throughout the 2-year long campaign, including with 
Dubai Crown Prince Mohamed Bin Rashid, Emirates CEO Shaykh Ahmed 
Bin Saeed, and senior executives of Emirates Airline.  The 
expected total value of the program -- with parts and services 
over the life of the program -- is estimated at over US$3.6 
billion. Additionally, with Emirates seriously considering buying 
between 10-20 additional A-380s, this deal will squarely put 
the Engine Alliance in a strong position to capture such follow-on 
orders. 
 
4.  (C) The Ambassador and Consul General have also lobbied 
extensively with Emirates CEO Shaykh Ahmed on behalf of 
Boeing's efforts to sell 25 B-777 long-range aircraft 
to Emirates Air.  This sale is still pending. 
 
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Managing The Boycott Clause: Raytheon and Civil Aviation 
--------------------------------------------- ----------- 
 
5.  (C) The Ambassador, FCS and Econchief's sustained 
advocacy brought to a close on June 14, 2002 a 39-month long 
saga to help U.S. firm Raytheon secure a US$30 million 
deal with the Abu Dhabi Civil Aviation Department for 
air traffic control radars in Abu Dhabi and Al-Ain.  The 
Ambassador successfully urged Abu Dhabi Crown Prince (and 
de facto ruler) Shaykh Khalifa bin Zayid Al-Nahyan to over-rule 
his own Planning Department in May by having the Abu Dhabi 
Executive Council -- in writing -- exempt Raytheon from the 
Israeli boycott clause of the contract. 
 
6.  (C) When the French company Airsys proved unable to beat 
Raytheon's price and the Abu Dhabi Executive Council awarded the 
contract to the U.S. firm in August 2001, Airsys tried to make 
an issue of the Israeli boycott clause in the antiquated, 
standard contract form still used by the Deaprtment of Civil 
Aviation. Using their connections within Abu Dhabi's Planning 
Committee, the French sought to have the Raytheon bid 
disqualified for non-compliance unless the firm accepted the 
boycott provision.  Advocacy by the Ambassador and the country team 
throughout this 3-year period was instrumental in helping Raytheon 
overcome efforts by Airsys to wrest away the deal. 
 
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Moving Full Speed Ahead: Ford Agency Dispute 
-------------------------------------------- 
 
7.  (C) In the fall of 2001, Consul General Dubai made repeated 
interventions with Dubai Crown Prince Shaykh Mohammed Bin 
Rashid to resolve a longstanding dispute between Ford Motor 
Company and its dysfunctional local agent, Galadari Brothers. 
Shaykh Mohammed directed the Dubai Attorney General to broker an 
out-of-court settlement that allowed Ford to establish a new 
agency with Al-Tayer Motors.  After being absent from the local 
market for a number of years, Ford is now once again selling cars 
in the UAE, and the UAE has developed into one of its most 
successful regional markets -- helping to offset downturns in 
the Saudi market, according to the regional Ford office based 
in Dubai. 
 
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Protecting U.S. Pharmaceuticals: PhRMA v. UAEG 
--------------------------------------------- - 
 
8.  (C) The Ambassador and Econchief negotiated tirelessly 
throughout spring 2002 to stop the production of pirated U.S. 
pharmaceuticals in the UAE and establish adequate IPR protection 
for American products over the long-term.  Despite UAE 
pharmaceutical manufacturer Julphar's political ties at the highest 
levels of the UAEG, the Front Office intervened on behalf of 
the U.S. pharmaceutical industry several times at the 
political (ministerial) level and doggedly pursued concessions 
from both industry representative PhRMA and the UAEG in 
face-to-face negotiations.  On March 27, 2002, 
the UAE Ministries of Health and Finance and Industry 
conveyed in writing their acceptance of PhRMA's "best and final 
offer" under which 25 U.S. patent-protected, innovative products 
would be afforded 5-year data exclusivity protection (as against 
a UAE-submitted list of 168). Under the terms of the agreement we 
crafted and which PhRMA and the UAEG accepted, all other 
U.S.-patented drugs, whether pending registration or not, will 
be given data exclusivity protection in the UAE market 
equal to the patent term -- a major commitment which puts the 
UAE well beyond its minimal WTO TRIPs obligations. 
9.  (C) To date, the UAEG has kept to the terms of the March 
agreement and has not registered any new U.S. pharmaceuticals for 
production in the UAE, despite such requests from Julphar and 
other local manufacturers.  As a result of Post's 
continuing efforts, the UAE has been removed from the 301 
Watchlist -- a major priority for the UAEG -- and passed fully 
TRIPs-compliant patent, copyright, and trademark laws in 2002, 
further protecting an incalculable amount/dollar value of 
U.S. intellectual property in the UAE for years to come. 
 
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Sustained Advocacy For U.S. Oil Companies 
----------------------------------------- 
 
10.  (C) Post has a long tradition of advocating on behalf of 
U.S. oil companies for government contracts and tenders in the 
UAE.  As a result, U.S. firms are well represented in the oil 
sector here (Exxonmobil is an equity stakeholder in Abu 
Dhabi's onshore concession and Conoco-Phillips manages Dubai's 
main oilfield).  Our advocacy efforts paid off in May 2002, when 
(in a surprise to many in the industry) 
U.S. energy firm Occidental Petroleum was selected to take a 24.5 
percent stake in the US$3.5 billion Dolphin Project to pipe 
natural gas from Qatar to the UAE.  Aware of Post's sustained 
efforts to advocate on behalf of American firms, de facto Defense 
Minister Muhammad bin Zayid Al-Nahyan and patron of the Dolphin 
Project told the Ambassador in advance of the official 
announcement on May 8 that a U.S. firm had won the competition. 
 
11.  (C) Most recently, ADNOC Deputy CEO Abdullah Bin Nasser 
Al-Suweidi asked Econchief and Econoff to suggest companies to 
participate in a joint venture with contracting Al-Fahim Group for 
oilfield services in the emirate of Abu Dhabi. 
Econoff passed ADNOC the name of U.S. company Halliburton's 
regional representative and in January 2003, Halliburton signed 
a Joint Venture Agreement with Al-Fahim to offer open and cased 
hole logging and wireline perforating services in Abu Dhabi. 
While the value of the business is relatively small, it is 
indicative of the informal way in which the Front Offices 
frequently facilitate and promote business for U.S. companies. 
 
12.  (C) We eagerly await ADNOC's decision later this year to 
select an international oil company as a 28 percent equity 
partner in the development of the Upper Zakum oil 
field -- one of the largest offshore oil fields in the world. 
This project is both technologically complex and commercially 
lucrative (the field holds an approximate 40-50 billion barrels 
of oil; half of Abu Dhabi's reserves). In mid-2002, ADNOC 
Deputy CEO Abdullah Bin Nasser Al-Suweidi asked Econchief to 
facilitate contacts at an appropriately senior level with U.S. 
oil giant Chevron-Texaco; ADNOC had not had previous contact 
with the firm and wanted to ensure their initial approach was 
appropriately received.  Econchief was able to contact Chevron's 
Vice-President, brief him on Upper Zakum and Mr. Al-Suweidi, 
and put the two together by telephone the next day.  As a result, 
Chevron-Texaco has been invited to submit a bid in the 
project, raising U.S. participation to two (the other is 
ExxonMobil), out of a total field of five.  While the final 
decision has not yet been made, ADNOC CEO Yousef Bin 
Omeir recently told Charge that American oil firms bring 
the best technology and expertise to the table. 
 
Wahba