VZCZCXYZ0000
PP RUEHWEB

DE RUEHMKA #0006 0031447
ZNY CCCCC ZZH
P 031447Z JAN 07
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC 0000
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHC/DEPT OF LABOR WASHINGTON DC
RUCPDOC/USDOC WASHDC
RUEATRS/TREASURY WASHDC

C O N F I D E N T I A L MANAMA 000006 
 
SIPDIS 
SIPDIS 
STATE FOR EB, NEA/ARP 
LABOR FOR JRUDE 
DEPARTMENT PASS TO USTR FOR JBUNTIN 
E.O. 12958: DECL: 12/27/2016 
TAGS: ECON EFIN PGOV BA POL ECTRD
SUBJECT: PRIME MINISTER HIGHLIGHTS GOB ECONOMIC AND SOCIAL 
AGENDA 
 
REF: A. 06 MANAMA 2004 
     ¶B. 06 MANAMA 1750 
     ¶C. 06 MANAMA 1418 
CLASSIFIED BY: AMBASSADOR WILLIAM T. MONROE, REASONS 1.4 (B) AND (D). 
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SUMMARY 
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¶1.  (C) PRIME MINISTER SHAIKH KHALIFA BIN SALMAN AL KHALIFA 
DECEMBER 20 REVIEWED THE GOB'S 2007-2008 BUDGETARY PRIORITIES 
BEFORE A JOINT SESSION OF THE NATIONAL ASSEMBLY.  KEY 
PRIORITIES HIGHLIGHTED BY THE PM INCLUDED PROGRAMS TO RAISE 
LIVING STANDARDS, EMPLOYMENT, AND WAGES.  THE GOB AGENDA 
SHARES MUCH COMMON GROUND WITH THE ECONOMIC PLATFORM OF 
LEADING SHIA OPPOSITION SOCIETY AL WIFAQ, WHICH RECENTLY WON 
40 PERCENT OF THE SEATS IN THE NEW PARLIAMENT.  EARLY 
GOVERNMENT-PARLIAMENT COOPERATION ON ECONOMIC AND SOCIAL 
ISSUES COULD SET A POSITIVE TONE IN ADVANCE OF TOUGHER 
BATTLES AHEAD.  END SUMMARY. 
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BUDGET HIGHLIGHTS 
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¶2. (U) THE PM DECEMBER 20 REVIEWED THE GOB'S 2007-2008 
BUDGETARY PRIORITIES BEFORE A JOINT SESSION OF THE 
NEWLY-OPENED NATIONAL ASSEMBLY, FOLLOWING RECENT LOWER HOUSE 
COUNCIL OF REPRESENTATIVES (COR) ELECTIONS AND NEW 
APPOINTMENTS TO THE UPPER HOUSE SHURA COUNCIL.  KEY GOB 
PRIORITIES HIGHLIGHTED BY THE PM INCLUDED PROGRAMS TO RAISE 
LIVING STANDARDS, EMPLOYMENT, AND WAGES.  THE PM ALSO VOWED 
TO IMPROVE THE SPEED AND RESPONSIVENESS OF GOVERNMENT 
SERVICES.  "WE HAVE THE BIGGEST BUDGET IN THE HISTORY OF THE 
COUNTRY," HE SAID, NOTING THAT TWO-YEAR REVENUES HAD 
INCREASED FROM BD 2.5 BILLION ($6.7 BILLION) TO BD 3.3 
BILLION ($8.9 BILLION) FROM THE PREVIOUS BUDGET, AN INCREASE 
OF 32.4 PERCENT.  SPENDING WILL INCREASE FROM BD 3.0 BILLION 
TO BD 3.7 BILLION, AN INCREASE OF 22.6 PERCENT.  (NOTE: OIL 
AND PETROLEUM PROCESSING REVENUES CURRENTLY ACCOUNT FOR SOME 
76 PERCENT OF GOVERNMENT REVENUES.) 
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HOUSING PUSH 
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¶3. (U) THE BUDGET ALLOCATES BD 200 MILLION TO INCREASE 
HOUSING AVAILABILITY IN THE NORTHERN GOVERNORATE.  (NOTE: 
LOCATION OF MANY RELATIVELY POOR SHIA VILLAGES.)  HOUSING 
PROJECTS HAVE ALSO BEEN LINED UP IN OTHER REGIONS OF THE 
COUNTRY AT A COST OF BD 415 MILLION.  THESE PROJECTS CONTINUE 
A RECENT GOVERNMENT TREND OF INVESTING IN PUBLIC HOUSING TO 
ADDRESS CONCERNS ABOUT A SHORTAGE OF HOMES.  THE BUDGET ALSO 
PROVIDES AN EXTRA BD 30 MILLION FOR HOME LOAN FINANCING.  IN 
ADDITION, FAMILIES ON THE HOUSING WAITING LIST FOR FIVE YEARS 
OR MORE WILL RECEIVE A BD 100 MONTHLY SUBSIDY FOR HOUSING, 
WHICH WILL TOTAL BD 14 MILLION OVER THE NEXT YEAR (REF. C). 
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BETTER LIVING THROUGH SUBSIDIES 
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¶4. (SBU) UNDER THE GOVERNMENT'S PROGRAM, SOME BD 193 MILLION 
WILL GO TO SUBSIDIZE FOOD, ELECTRICITY, WATER AND GASOLINE 
FOR LOW-INCOME FAMILIES IN 2007.  THE ALLOCATION JUMPS TO BD 
212 MILLION FOR 2008.  (NOTE: THE GOB HAS NOT INCREASED 
GOVERNMENT-CONTROLLED CONSUMER GASOLINE PRICES IN 23 YEARS. 
IN 2005, THE GAS PRICE CEILING AMOUNTED TO A BD 80 MILLION 
GAS SUBSIDY (REF. B).) 
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PRIVATE INVESTMENT, LABOR RIGHTS HAILED 
--------------------------------------- 
¶5. (U) THE PM PROMISED THAT THE GOVERNMENT WOULD ALSO SUBMIT 
DRAFT LEGISLATION MODERNIZING INVESTMENT LAWS IN ORDER TO 
IMPROVE INVESTOR CONFIDENCE, ENSURE BAHRAIN'S REGIONAL AND 
GLOBAL COMPETITIVENESS, AND ATTRACT MORE FOREIGN DIRECT 
INVESTMENT.  ECHOING A GOB MESSAGE THAT CALLS ON THE PRIVATE 
SECTOR TO TAKE THE LEAD AS BAHRAIN'S "ENGINE OF GROWTH," THE 
PM SAID THE GOVERNMENT WILL ENCOURAGE THE PRIVATE SECTOR TO 
PLAY A LARGER ROLE IN THE ECONOMY.  HE OBSERVED THAT SINCE 
2002, THE GOVERNMENT HAS SUCCESSFULLY LIBERALIZED 
TELECOMMUNICATIONS, PUBLIC TRANSPORTATION AND SEA PORTS.  HE 
PRAISED POWER AND WATER PRIVATIZATIONS AND SAID THAT AS A 
RESULT, ELECTRICITY PRODUCTION WOULD INCREASE BY 54 PERCENT. 
HE PROJECTED THAT DESALINATED WATER PRODUCTION WOULD INCREASE 
BY 75 PERCENT.  HOWEVER, THE PM ADDED THAT PRIVATIZATION 
WOULD NOT COMPROMISE WORKER RIGHTS.  THE GOVERNMENT WOULD 
MOVE FORWARD WITH LABOR REFORM WITH A VIEW TOWARD 
RESTRUCTURING BAHRAIN'S LABOR MARKET, WHICH HAS HISTORICALLY 
DEPENDED ON CHEAP FOREIGN LABOR AT THE EXPENSE OF PROMOTING A 
MORE TECHNICALLY QUALIFIED, WELL-TRAINED, INDIGENOUS WORK 
FORCE. 
--------------------------------------------- -- 
AL WIFAQ FORESHADOWS NATIONAL ASSEMBLY RESPONSE 
--------------------------------------------- -- 
¶6. (U) A NATIONAL ASSEMBLY COMMITTEE OF SIX COR DEPUTIES AND 
SIX SHURA MEMBERS WILL PRESENT AN OFFICIAL RESPONSE TO THE 
GOB BUDGET IN EARLY JANUARY, WITH AL WIFAQ MEMBERS EXPECTED 
TO CONTRIBUTE SIGNIFICANTLY TO THE RESPONSE.  ACCORDING TO AL 
WIFAQ'S PUBLISHED PLATFORM, THE SOCIETY WILL FOCUS ON 
ATTRACTING FOREIGN DIRECT INVESTMENT, JOB CREATION, A STRONG 
PRIVATE SECTOR, COLLECTIVE BARGAINING AND WORKER PROTECTIONS, 
HOUSING, INCREASED WAGES, MORE EQUITABLE WEALTH DISTRIBUTION, 
AND IMPROVED TRAINING AND EDUCATIONAL OPPORTUNITIES. IT 
CONDEMNS CORRUPTION IN THE BAHRAINI ECONOMY.  AL WIFAQ 
SECRETARY GENERAL SHAIKH ALI SALMAN TOLD JOURNALISTS DECEMBER 
 
SIPDIS 
3, "WE WILL WORK IN CLOSE COOPERATION WITH OTHER POLITICAL 
SOCIETIES IN ORDER TO ACHIEVE OUR GOALS COLLECTIVELY.  NOW WE 
ARE A STRONG GROUP IN PARLIAMENT...  WE WILL FOCUS ON 
BUILDING A SOCIETY WHERE EVERYBODY CAN HAVE A JOB, HOUSE, AND 
EDUCATION." 
¶7. (C) NEWLY-ELECTED AL WIFAQ DEPUTY AND FINANCE AND ECONOMY 
COMMITTEE MEMBER DR. JASSIM HUSSAIN TOLD EMBOFFS DECEMBER 26 
THAT IT WAS IMPORTANT FOR THE GOVERNMENT TO PUT THE ECONOMY 
AT THE TOP OF ITS AGENDA.  HE PRAISED THE GOVERNMENT FOR 
WORKING TO IMPROVE THE INVESTMENT REGIME, AND SAID COR 
DEPUTIES SHOULD WORK "HAND-IN-HAND" WITH BUSINESS TO SHAPE 
THE GOVERNMENT'S PROGRAM.  HE TOLD JOURNALISTS, "THE PRIVATE 
SECTOR WILL PLAY A VITAL ROLE IN THE ECONOMY AND IT HAS A 
FRIEND IN AL WIFAQ."  HE ADDED THAT AL WIFAQ WAS CONCERNED 
WITH ENSURING A MINIMUM STANDARD OF LIVING FOR BAHRAINIS.  HE 
DOES NOT SUPPORT A MINIMUM WAGE BECAUSE IT COULD PUT PRESSURE 
ON BOTH THE PRIVATE SECTOR AND CONSUMERS.  INSTEAD, AL WIFAQ 
WANTS THE GOVERNMENT TO PROVIDE SUBSIDIES TO LOW-INCOME 
BAHRAINIS TO IMPROVE THEIR STANDARD OF LIVING. 
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COMMENT 
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¶8. (C) AS DESCRIBED IN THEIR ELECTION MATERIALS, AL WIFAQ 
CANDIDATES RAN ON A PLATFORM OF USING THE TOOLS AND RESOURCES 
OF GOVERNMENT TO ADDRESS THE COUNTRY'S ECONOMIC AND SOCIAL 
ILLS - UNEMPLOYMENT, LOW WAGES, HOUSING SHORTAGE, AND THE 
LIKE.  THE GOVERNMENT, IN ITS PROGRAM PRESENTATION TO THE 
NATIONAL ASSEMBLY, HAS IDENTIFIED MANY OF THE SAME ISSUES AS 
PRIORITIES.  WHILE MANY OBSERVERS FEAR RELATIONS AMONG 
PARLIAMENTARIANS AND BETWEEN THE COR AND GOVERNMENT COULD BE 
RIVEN WITH SUSPICION AND MISTRUST BASED UPON SUNNI-SHIA AND 
PRO-GOVERNMENT-OPPOSITION FAULT LINES, EARLY COOPERATION ON 
ECONOMIC AND SOCIAL ISSUES COULD SET A POSITIVE TONE IN 
ADVANCE OF TOUGHER BATTLES THAT INEVITABLY LIE AHEAD. 
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VISIT EMBASSY MANAMA'S CLASSIFIED WEBSITE: 
HTTP://WWW.STATE.SGOV.GOV/P/NEA/MANAMA/ 
********************************************* ******** 
MONROE