US embassy cable - 03ABUDHABI2296

S E C R E T SECTION 01 OF 02 ABU DHABI 002296 
 
SIPDIS 
 
STATE FOR IRAQ TASK FORCE, ALSO NEA/ARP, NEA/RA, 
PRM/ANE, AND IO/UNP 
KUWAIT FOR HOC, ORHA 
 
NOFORN 
 
E.O. 12958: DECL 05/11/13 
TAGS: EAID, PREL, PGOV, PHUM, IZ, TC 
SUBJECT:  (S//NF) C-NE3-00449: UAE POISED FOR IRAQ 
RECONSTRUCTION OPPORTUNITIES 
 
REFS: A) DUBAI 1522 
      B) DUBAI 1163 
      C) ABU DHABI 2233 
      D) STATE 103226 
 
1.  (U) Classified by Charge D'Affaires Richard A. 
Albright, for reasons 1.5 (b) and (d). 
 
2.  (S//NF) The following answers are keyed to 
questions in ref D regarding Gulf countries' views and 
intentions on Iraqi reconstruction posed by Washington 
analysts: 
 
A. Not applicable, although we would note that the UAE 
Red Crescent Authority has undertaken robust 
humanitarian operations within Iraq, as has the Shaykh 
Mohammed Bin Rashid Al-Maktoum Charity and 
Humanitarian Foundation (whose patron is the UAE 
Defense Minister and Dubai Crown Prince) in Dubai. 
These two quasi-governmental charities currently are 
serving as the umbrella organizations for the rest of 
the UAE's NGO's relief efforts in Iraq, and have 
largely coordinated their activities in Iraq with the 
Mission. 
 
B. Recent UAEG policy has helped position local 
companies for long-term opportunities in the 
rebuilding of Iraq.  The UAEG sees its role in the 
informal consultative group in Iraq reconstruction as 
a way to brandish its credentials, and prove it's a 
major player.  The UAEG signed an agreement in March 
with the United Nations World Food Program (WFP) 
formalizing WFP's regional office in Dubai, which is 
likely to benefit UAE logistics and transportation 
companies.  The UAEG ratified a largely symbolic free 
trade agreement with Iraq in May 2002, and Dubai in 
particular has had close links with the Iraqi merchant 
class post-1990 because of the ferry service between 
Umm Qasr and Dubai.  While the UAEG has not outlined 
any specific quid pro quo, it clearly hopes its 
cooperation and support for Operation Iraqi Freedom 
will return dividends as Iraq reconstruction contracts 
are let. 
 
C. UAE businesses -- although confused by the initial 
award by USAID of eight Iraq reconstruction contracts 
-- are aware that these contracts are the tip of the 
iceberg.  Local businessmen are encouraged by the 
recent subcontract awarded by Stevedoring Services to 
Dubai Ports Authority for the operation of Umm Qasr 
Port.  We expect UAE oilfield, telecom, 
infrastructure, and financial services companies to 
build upon their reputation for providing first-class 
service, and compete for a number of USAID 
subcontracts and long-term Iraq reconstruction 
contracts. 
 
D. UAE efforts to coordinate regional action on Iraq 
have been limited to humanitarian and multilateral 
financial institution activities.  The UAE Red 
Crescent Authority hosted on 4/6 in Abu Dhabi a forum 
of international aid organizations to discuss the 
humanitarian situation in Iraq.  This was the first 
major meeting of the International Federation of Red 
Cross and Red Crescent Societies, the International 
Committee of the Red Cross, and the national societies 
of the UAE, Jordan, Turkey, Iran, Syria, Saudi Arabia, 
Kuwait, Bahrain, and Qatar since the war in Iraq 
began.  The Abu Dhabi-based Arab Monetary Fund 
likewise hosted a 4/22 meeting of Arab financial 
institutions to discuss multilateral assistance to 
Iraq. 
 
E. We do not know Iraq's official debt to the UAE, but 
the UAE Central Bank Governor told Econchief 5/11 that 
the amount is negligible.  However, a London-based 
think tank recently estimated Iraq's official debt to 
the UAE, Oman, Qatar, and Bahrain at less than USD $17 
billion -- an amount that is far from negligible. 
Post has received indications, however, that the UAEG 
would follow the IMF's lead on Iraq's multilateral 
debt -- i.e. rescheduling, but probably little or no 
forgiveness.  UAE officials have not discussed their 
intentions with us regarding the reconstruction of the 
Iraqi military and security services, but MFA Minstate 
Hamdan told the Ambassador 5/7 that the UAEG favors 
lifting the sanctions on Iraq as soon as possible to 
fund the reconstitution of vital Iraqi governmental 
organizations (ref C). 
 
F. UAE is unconcerned. 
G. As referenced in paragraph C above, certain UAE 
industries are likely to reach out to an Interim Iraqi 
Authority before others.  UAEG officials undertook in 
a 4/29 conference call of the informal group of 
countries on Iraq reconstruction to provide oil 
experts for Iraqi oilfield assessment, and to train 
Iraqi Central Bank officials. 
Two passenger ferry companies that operated out of 
Dubai under UN sanctions are eager to resume service 
to Iraq.  As the UN deliberates the future of Iraq 
sanctions, however, the status of ferry operations 
from Dubai remains unclear.  (Note: One of those 
companies, NAIF Marine Services, made a one-time 
"humanitarian" voyage to the port of Umm Qasr since 
hostilities ceased, and carried more than 300 pilgrims 
and cargo.  End note.) 
 
Dubai's Civil Aviation Operations Manager told Dubai 
PolEconoff on 4/30 that Dubai-based Emirates Airlines 
is eager to begin service to Baghdad, and will seek to 
renew with an Interim Iraqi Authority a February 1990 
agreement authorizing the airline to operate six 
flights per week to Baghdad. 
 
In the absence of Iraqi banking sector reform and an 
independent Central Bank of Iraq, it is unlikely that 
UAE financial institutions will seek to forge 
relationships with Iraqi banks in the near future. 
Financial service providers in the UAE historically 
have viewed Iraqi banks as not credible; the UAE 
Central Bank closely scrutinizes the activities of 
Rafidain Bank in the UAE and has limited its retail 
banking operations. 
 
3.  (U) This cable has been coordinated with AmConsul 
Dubai. 
 
Albright