US embassy cable - 03ABUDHABI936

C O N F I D E N T I A L ABU DHABI 000936 
 
SIPDIS 
 
STATE FOR NEA/ARP, NEA/RA, EB/CBA AND 
EB/ESP 
USDOC FOR 4530/ITA/MAC/ONE/DGUGLIELMI, 
4520/ITA/MAC/ONE/CLOUSTAUNAU, 
4500/ITA/MAC/DAS/WILLIAMSON, 
3131/CS/OIO/ANESA 
 
E.O. 12958: DECL: 2/25/2008 
TAGS: ECON, PGOV, EINV, TC 
SUBJECT: THE DIFFICULTIES OF DOING BUSINESS IN ABU DHABI 
 
1. (U) Classified by DCM Richard Albright for reasons 1.5 
(b) and (d). 
 
2. (C) In a 2/19 meeting with Econ FSN, an Emirati 
businessman from one of Abu Dhabi's lesser families harshly 
criticized the local business climate, particularly in 
contrast with the relative simplicity and openness of Dubai. 
Abdullah Al-Mehrazi is the owner of a large construction 
business and also serves as a senior official at the UAE's 
telecoms monopoly Etisalat; nonetheless, he hails from a 
modest family of limited political connections -- a fact 
which no doubt influences strongly his view that business in 
the UAE capital has more to do with political connections 
and influence than entrepreneurial skill. 
 
3.  (C)  The Emirati businessman noted that applications for 
necessary permits and licenses often languish for two years 
or more in the Abu Dhabi bureaucracy -- by which time 
conditions have often changed to the point that the original 
business idea is no longer relevant to the market.  Nor are 
such delays simply procedural; Al-Mehrezi noted that delays 
often are deliberate in order that those with greater 
influence (wasta) could fill the market need -- in some 
cases the bureaucrats themselves simply lift the business 
model of an applicant and implement it through their own 
private firms (or those of friends and relatives).  Such an 
environment serves only to reduce investor confidence, he 
observed -- this in contrast to Dubai which is introducing 
e-government, streamlining procedures, and actively courting 
business. 
 
4.  (C) Al-Mehrezi mentioned a number of specific examples 
of corruption.  He stated that the Al-Jaber group, headed by 
Obaid Al-Jaber, is given more business than other companies 
in Abu Dhabi due to Al-Jaber's close relationships with UAE 
President (and Abu Dhabi ruler) Sheikh Zayed and Sheikh 
Mohamed Bin Butti Al-Hamed (the head of Abu Dhabi 
Municipality). Compliant (and interested) bureaucrats often 
will inflate costs on a project awarded to a preferred 
bidder, driving up budgets by as much as two or three times 
-- with the resultant extra profits divided all around. 
 
5.  (C) Comment: It is unusual for an Emirati businessman to 
be so open regarding the shortcomings of the local 
commercial environment.  We attribute Al-Mehrazi's 
outspokenness to the lack of influence (wasta) of his 
family, an unfortunate fact which is compounded by his 
choice of business -- construction -- which here is widely 
regarded as one of the most corrupt sectors of the local 
economy where an informal cartel of the politically 
influential effectively excludes most outside competition. 
 
Wahba