This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 000326 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/01/2016 
TAGS: PREL BA IS QA ETRD OVIP SECRETARY OF COMMERCE GUTIERREZ BILAT ECTRD OFFICIALS REGION
SUBJECT: SECRETARY GUTIERREZ MEETS WITH KING HAMAD: FTA, 
HAMAS, GAS FROM QATAR 
 
Classified By: Ambassador William T. Monroe.  Reason: 1.4 (b)(d) 
 
¶1. (C) Summary. In a February 27 meeting with visiting 
Commerce Secretary Gutierrez, King Hamad strongly praised the 
strength of the U.S.-Bahrain relationship, said that Bahrain 
can never forget what the U.S. has done for it, and stressed 
the importance of the Free Trade Agreement for Bahrain.  He 
lamented the negative influence that populist ideologies had 
had in the region, including Bahrain, after the colonial 
powers left, but said that Bahrain is trying to correct 
mistakes of that era, including nationalization of the oil 
sector.  The Crown Prince is leading the effort in Bahrain to 
privatize.  On Hamas, he said Hamas was elected by the people 
and should be given a chance.  Hamas should be weakened, he 
stated, but not by cutting off its funds, which only enhances 
its prestige.  Both Israel and Hamas have to be encouraged to 
work with each other.  In terms of developing industry in 
Bahrain, the King remained hopeful of getting gas supplies 
from Qatar, but acknowledged for the first time that Qatar 
has a problem of available gas resources and wants to wait 
until 2007 to start discussions.  End summary. 
 
¶2. (C) While in Bahrain to deliver a keynote speech at a U.S. 
co-sponsored conference on Free Trade in the Middle East, 
Secretary of Commerce Carlos Gutierrez met February 27 with 
 
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King Hamad.  The King opened the meeting by thanking the 
Secretary for the strong support for Bahrain he expressed in 
 
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his speech that morning at the Free Trade Conference.  What 
the U.S. has done for Bahrain, the King said, is something 
that Bahrain can never forget.  The relationship began over 
100 years ago with a hospital.  It was an American oil 
company that first discovered oil in Bahrain in the 1930s. 
It was only later, after people-to-people relations had long 
been established, that official relations were established, 
first when the U.S. Navy came in the late 1940s and then when 
formal diplomatic relations "crowned the relationship" in the 
1970s. The significance is that U.S.-Bahrain relations 
developed naturally, and not through government actions. 
 
¶3. (C) The King observed that many of the great achievements 
in Bahrain actually dated back to the first part of the 20th 
century.  Examples he cited included: 
 
-- Women competed in municipal elections in the 1920s 
-- Labor unions were established in the 1950s 
-- Bahrain first had a Shura (advisory) Council 100 years ago 
-- Foreigners were allowed to own property and vote in 
municipal elections 
 
Much of this was set back, the King said, by the populist 
ideologies that swept the Arab world as the colonial powers 
left.  Young graduates, educated in Damascus and Baghdad, 
returned home and pushed an anti-Western agenda.  "We 
listened to them," he said, "forgetting where they were 
coming from."  And then Bahrain, which had been quite 
comfortable with its U.S. and British friends, suddenly found 
itself criticized in the region for being a U.S. ally. 
 
¶4. (C) Big mistakes were made in the Arab world at that time, 
King Hamad said, including the push to nationalize oil, which 
Bahrain did too.  Bahrain now realizes that was a mistake, 
and is looking at the possibility of bringing its former oil 
partners back.  Bahrain now has a big oil ministry.  Why?  It 
did fine in the old days without one.  What the Crown Prince 
is trying to do in his reform effort is to de-centralize and 
privatize.  Bahrain must get the private sector back in, or 
it will not be able to cope in the modern world. 
 
¶5. (C) The Secretary stated that it was his understanding the 
King was a prime motivator behind Bahrain's decision to 
negotiate an FTA with the U.S. and said that the U.S.-Bahrain 
FTA was an important accomplishment.  The King responded that 
it was wonderful that a small country like Bahrain has the 
respect of a big country like the U.S.  He took great 
satisfaction that the Bahrain FTA passed Congress with the 
largest majority of any FTA. The FTA is very important for 
Bahrain, and now Bahrain must learn how to benefit from it. 
The Secretary stated that the Commerce Department was ready 
to support Bahrain in this effort. 
 
¶6. (C) The Secretary asked the King how he saw the region, 
and what worried him.  The King replied that the security 
situation in the region is worrisome, and there are concerns 
about Iran and Iraq.  Thankfully, the situation in Bahrain is 
more secure.  The people of Bahrain want to maintain what 
they have.  No one has raised a word about the presence of 
the Fifth Fleet in Bahrain, even though the U.S. is blamed 
for bad things throughout the region.  In Bahrain, there are 
radical Muslims, but they have been pulled into parliament. 
When it came to the FTA, and the abolishment of the boycott 
office, they were OK with it because they know that what the 
government is doing is good for Bahrain. 
 
¶7. (C) The King said the Israeli-Palestinian situation 
continues to worry him.  "We need real peace," he said.  "If 
we can't be good at war, we should at least be good at 
peace."  Bahrain has no real issues with Israel.  The King 
met Perez in Sharm Al-Shaikh.  The Crown Prince has met 
Israelis at conferences.  Bahrain has a Jewish member of 
parliament (in the appointed Shura Council). The Foreign 
Ministry has nominated a Jewish woman (Houda Nonoo) to be on 
the board of the Foundation for the Future.  But Bahrain 
can't be expected to lead on this issue, and Israel must 
help.  Hamas was elected by the people.  Hamas should be 
given funds for two-three months to see what they do. 
Cutting them off only increases their prestige.  Hamas should 
be weakened, but not by cutting off their funds. 
 
¶8. (C) The King stated that he urged Hosni Mubarak, who had 
just departed Bahrain after a short overnight visit, to try 
to persuade Israel to work with Hamas and vice-versa. 
Mubarak told him that he had instructed Intelligence Chief 
Omar Soliman to "talk sense" to both sides. 
 
¶9. (C) Turning to Bahrain's economic future, the King stated 
that Bahrain remains hopeful of getting natural gas from 
Qatar, which will be essential if the country is to expand 
key industries, including aluminum giant Alba.  Qatar has 
promised to help, but has a problem of available gas 
resources and now says it wants to wait until 2007 to start 
talking about it.  Bahrain thinks that, in any event, 
construction should begin now because of the time required to 
build the pipeline.  That way, the pipeline will be ready 
when Qatar has resources available and can supply the Bahrain 
market.  (Comment: This is consistent with Embassy Doha 
reporting, but the first time the Bahrainis have acknowledged 
to us that Qatar may have a supply problem and that a deal is 
not imminent.  End comment.) 
MONROE