VZCZCXRO9543
RR RUEHDE
DE RUEHAD #1772 1211044
ZNY CCCCC ZZH
R 011044Z MAY 06
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 4833
INFO RUEHDE/AMCONSUL DUBAI 6082
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

C O N F I D E N T I A L ABU DHABI 001772 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR NEA/ARP, EB 
STATE PLEASE PASS TO USTR FOR SDONNELLY AND DBELL 
NSC FOR MMALVESTI 
 
E.O. 12958: DECL: 04/30/2016 
TAGS: ETRD EINV EPET EFIN AE
SUBJECT: UAEG FTA CONCERNS POST-DUBAI PORTS WORLD 
 
 
Classified By: Ambassador Michele J.Sison for reasons 1.4 (b) and (d). 
 
¶1. (C) Summary.  The UAEG views the upcoming investment 
chapter talks as crucial to the success of an FTA, especially 
in light of the recent Dubai Ports World episode. On April 
22, Foreign Minister Abdullah bin Zayed Al Nahyan (AbZ) told 
visiting Assistant to the President for Homeland Security and 
Counterterrorism (APHSCT) Frances Townsend that unless the 
UAEG and the USG can make progress on the investment chapter 
during the upcoming May meetings, the FTA will fail. On April 
23, Minister of Labor Ali Al Kaabi also expressed concerns 
about an FTA to the Ambassador.  In the wake of the Dubai 
Ports World controversy, many Emiratis appear to be 
questioning the value of an FTA and whether it would 
positively affect UAE businesses. During its recent Trade 
Policy Review negotiations, the WTO pushed the UAE to further 
liberalize its economic, trade and service sectors. End 
Summary. 
 
¶2. (C) On April 22, Ambassador and APHSCT Townsend met with 
Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan (MbZ), 
Foreign Minister Abdullah bin Zayed Al Nahyan (AbZ), and 
Yousef Al Otaiba, MbZ's International Affairs Director. 
During the lunch meeting, AbZ said, "if we end up without an 
FTA, oil and gas will be the reason.... The UAE has been as 
cooperative and creative as possible, but this issue is very 
serious for our national security."  AbZ noted that the 
U.S.-UAE negotiations are the first between the U.S. and a 
major OPEC exporter, and he anticipates this problem will be 
an issue in U.S. FTA negotiations with other oil-producing 
countries as well.  AbZ also told the Ambassador in an aside, 
"if you cannot sign an FTA with the UAE, you will never get 
one with Qatar, Kuwait, or Saudi Arabia." 
 
¶3. (C) Additionally, Yousef Al Otaiba told APHSCT Townsend 
that the challenges with negotiating an FTA are no longer 
just due to ADIA and ADNOC,s position on the natural 
resources issue.  He said that many UAE businessmen do not 
see the benefit of an FTA and are using the DP World incident 
as ammunition.  In addition, AbZ said the private sector is 
"trying to push the FTA away."  Recounting a recent meeting 
between UAE Minister of Economy Sheikha Lubna Al Qasimi and 
all of the UAE Chambers of Commerce, AbZ said that the UAE 
business community was "trying to make use of the DPW fiasco 
as the basis for claiming that a U.S.-UAE FTA will hurt the 
UAE business community." 
 
¶4. (C) On April 23, Minister of Labor Ali Al Kaabi also told 
the Ambassador he is worried about an FTA, especially in 
light of the recent DP World controversy.  The Minister said 
he would not invest in the U.S. for fear of being blocked by 
Congress since he is from a "terrorist country."  Al Kaabi 
said he does not see any benefit from an FTA for Emirati 
businessmen.  This same sentiment has been voiced to emboffs 
by several Emiratis in the private sector, including Khalifa 
Al Muhairi, an influential Emirati businessman who serves on 
the board of the Abu Dhabi Chamber of Commerce.  Al Muhairi 
believes an FTA should have an escape clause in case either 
side wants to withdraw from the agreement at a later date. 
 
¶5. (C) The UAE is engaging in a public outreach campaign to 
inform its citizens that many of the upcoming regulatory 
changes are part of the UAE's broader obligations under the 
World Trade organization (WTO). During its recent Trade 
Policy Review negotiations, the WTO urged the UAE to further 
liberalize its economic, trade and services policies. 
According to local press reports, some members of the WTO 
raised serious objections to the absence of competition 
legislation in the UAE, which requires foreign companies to 
hire a local agent.  Additionally, WTO members are concerned 
about UAEG ownership of large businesses, the lack of telecom 
liberalization and low private sector participation in 
infrastructure development and management.  The WTO 
encouraged the UAE to further liberalize its services sector 
and to separate the regulatory functions of state enterprises 
from their commercial activities.  Press reports of the WTO 
talks included a statement by Dr. Mohammad Khalfan bin 
Kharbash, Minister of State for Financial and Industrial 
Affairs and Co-Chairman of the UAE FTA negotiating team, 
saying the UAE and the U.S. will hold FTA negotiations in Abu 
Dhabi May 9-11. 
 
¶6. (C) Comment:  The above statements by key UAEG officials 
and Emirati businessmen regarding an FTA may be tangible 
evidence of negative fallout from the DP World controversy. 
End comment. 
SISON