US embassy cable - 03ABUDHABI2451

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 002451 
 
SIPDIS 
 
STATE FOR EB, NEA/ARP, AND NEA/RA 
 
E.O. 12958: DECL 05/25/2008 
TAGS: EAID, PREL, PGOV, PHUM, KPAL, KWBG, TC 
SUBJECT:  UAE: A MODEL FOR IRAQ? 
 
REFS: A) STATE 131981  B) ABU DHABI 2256  C) DUBAI 
1992 
 
1.  (U) Classified by Charge d'Affaires Richard A. 
Albright, for reasons 1.5 (B) and (D). 
 
2.  (C) Summary and comment:  The UAE is eager to see 
the swift reintegration of Iraq into the international 
trade and investment system, and the emergence of 
Baghdad as an economic counterweight to Riyadh in the 
region.  Given the cumbersome nature of GCC 
deliberations, and the sense here that the UAE already 
is well ahead of its fellow member states when it 
comes to economic liberalization, the UAE is likely to 
prefer to engage Iraq bilaterally on trade and 
investment issues rather than wait for a regional GCC 
approach to be developed.  The UAE will seek to 
further Iraq's economic recovery by offering its 
expertise in the areas of banking and finance and oil, 
and could also serve as a useful model in digital 
readiness and the protection of intellectual property 
rights (IPR).  Iraq probably will receive significant 
UAE private (and perhaps official) investment -- 
especially when a liberalized trading regime and legal 
framework to protect foreign investors in Iraq are in 
place.  End summary and comment. 
 
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The UAE Offers Its Experts For Iraq's Recovery 
--------------------------------------------- - 
 
3.  (C) The UAEG already has provided specific 
proposals for participation in Iraq's economic 
recovery (ref B).  UAE officials committed to provide 
training to Iraqi Central Bank officials in banking 
operations, banking supervision and examination, and 
anti-money laundering detection and investigation. 
Combating terrorist financing through its formal and 
informal financial networks has been a major goal of 
the UAEG since 2000, and an area in which the UAEG has 
made tremendous strides.  The UAE was the first Arab 
country to become a member of the elite Egmont Group 
of Financial Intelligence Units, and could well serve 
as a model for Iraq's own financial system. 
 
4.  (C) The Abu Dhabi-based Arab Monetary Fund (AMF) 
also has offered to help develop responsible fiscal 
and monetary policy in Iraq, carve out a supervisory 
role for the Iraq Central Bank, and help establish a 
liberalized trade regime that would lead to Iraq's 
eventual accession to the WTO.  The AMF has expertise 
in a broad range of economic topics, as well as a 
formal agreement with the WTO to provide training on 
trade-related issues to its Arab membership -- which 
includes Iraq. 
 
5.  (C) UAE officials have indicated that they could 
dispatch experts from the Abu Dhabi National Oil 
Company (ADNOC) to assist in the near term 
reconstruction of the Iraqi oil sector.  Although the 
UAE could assist the Iraqi Oil Ministry in oil 
exploration, refining, processing, distribution and 
management, Abu Dhabi realistically will be Baghdad's 
competitor in this sector over the long-term. 
 
6.  (C) Senior UAE officials have been actively 
engaged with the USG regarding Iraq's reconstruction 
even before the war, including high level visits to 
Washington to promote potential participation in terms 
of assistance, investment and trade.  Recently, 100 
Iraqi businessmen formed an off-shore corporation in 
the Jebel Ali Free Zone (ref C), with the strong 
support of the Government of Dubai, to compete for 
Iraqi reconstruction contracts (Comment:  Dubai is 
perturbed by the fact that while the Jordanian/Iraq 
border appears wide open for commerce, the port of Umm 
Qasr, Dubai's lifeline to the Iraqi marketplace, 
remains closed.) 
 
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The UAE: A Model Of Success 
--------------------------- 
 
7.  (C) The UAE, and Dubai in particular, is well 
ahead of the rest of the region in terms of telecom 
interconnectivity and digital readiness, and could 
serve as a model for communications systems in Iraq. 
Telecom networks in the UAE are based on cutting-edge 
technology, and local governments and businesses are 
regional pioneers in e-government and e-commerce 
initiatives.  We note that Thuraya -- which, to our 
knowledge, is one of only two mobile phone service 
providers currently operating in Iraq -- is based in 
Abu Dhabi, with the UAEG as a major shareholder. 
8.  (C) The UAE is at the forefront of protecting 
intellectual property rights (IPR) in the region. 
Although there is room for improvement in consistent 
implementation, the UAE represents a useful example of 
the strides that can be made working hand-in-hand with 
U.S. Government and businesses to protect property 
rights.  As part and parcel of its development into a 
regional trading center, the UAE Government has made 
the protection of intellectual property a priority in 
recent years.  New copyright, trademark and patent 
laws, passed in 2002, provide high levels of 
protection for U.S. intellectual property, while an 
agreement -- brokered by the Embassy in 2002 -- 
continues to provide TRIPs-plus levels of protection 
for U.S. pharmaceuticals. 
 
------------------- 
Tapping UAE Capital 
------------------- 
 
9.  (C) The UAE's two stock exchanges in Abu Dhabi or 
Dubai offer a pool of investment capital for Iraqi 
companies.  The Abu Dhabi Securities Market (ADSM), 
for example, currently lists 21 local and foreign 
companies on its trading board from several different 
sectors, including banking, insurance, services 
(telecom and IT-related companies), hotels, and is 
actively courting more foreign businesses.  Oatar's 
telecom monopoly, Q-Tel, already is listed and ADSM is 
negotiating with the National Bank of Kuwait to list 
later this year. 
 
10.  (C) The UAEG itself is unlikely to invest 
significantly in Iraq; the Abu Dhabi Investment 
Authority has told us that very little of its 
estimated $200 billion in assets is invested in the 
Middle East  -- mostly to American, European, and 
Asian markets.  The UAE Offsets Group and the 
International Petroleum Investment Company, however, 
are just two of several quasi-governmental 
organizations that may seek both portfolio and 
greenfield investments in Iraq. 
 
11.  (C) UAE construction, transportation, and 
logistics companies are likely to invest significant 
equities in starting businesses in Iraq, upgrading 
Iraq's infrastructure, and directly contributing to 
Iraq's economic recovery.  Prominent UAE companies 
with state-of-the-art technology, electronic mapping, 
and positioning equipment are vying to upgrade and 
manage the major Iraqi airports and seaports.  Dubai's 
successful creation and management of numerous free 
zones may serve as a model for Iraq.  Indeed, UAE 
officials already have proposed the construction of 
three free zones in southern, central, and northern 
Iraq. 
 
12.  (U) This cable was coordinated with Amconsul 
Dubai. 
 
Albright