VZCZCXRO0999
PP RUEHDE RUEHDIR
DE RUEHMS #0786/01 2271335
ZNY SSSSS ZZH
P 151335Z AUG 07
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC PRIORITY 8621
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE

S E C R E T SECTION 01 OF 04 MUSCAT 000786 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
DEPT FOR NEA/FO, NEA/ARP 
 
E.O. 12958: DECL: 08/14/2017 
TAGS: PARM PREL KNNP ECON PDEM MU
SUBJECT: SCENESETTER FOR NEA A/S WELCH VISIT TO MUSCAT (AUG 
23-25) 
 
REF: A. MUSCAT 780 
     ¶B. MUSCAT 709 
     ¶C. MUSCAT 705 
     ¶D. MUSCAT 700 
     ¶E. 06 MUSCAT 1670 
 
Classified By: Ambassador Gary A. Grappo, reasons 1.4 b and d 
 
Summary 
------- 
 
¶1. (C) Embassy Muscat and I warmly welcome your return to 
Oman.  Omani officials look forward to meeting with you to 
receive updates on issues concerning the Israeli-Palestinian 
conflict, Iraq, and Iran.  While Oman remains a strong friend 
and ally and cooperates with us on a wide range of subjects, 
our designation of Oman in June as a Tier 3 country for 
trafficking-in-persons (TIP) generated a surprising reaction 
from both the government and the media.  Regional concerns, 
however, remain uppermost in the minds of the Omani 
leadership.  On the domestic front, your visit will present a 
good opportunity to urge the Omanis to continue their nascent 
efforts to combat TIP.  The U.S.-Oman Free Trade Agreement, 
once implemented, should boost Oman's ambitious economic 
diversification efforts.  Oman's economy continues to grow on 
the account of high oil prices, albeit at a slower pace than 
¶2006.  The government's massive recovery effort from Cyclone 
Gonu will likely cost an estimated USD 3-4 billion; on the 
positive side, much of this is going back into the domestic 
economy, further boosting growth for this year and into 2008. 
 The government is actively promoting the October Majlis 
al-Shura elections, though turnout is expected to be low. 
End Summary. 
 
 
Regional Security Issues 
------------------------ 
 
¶2. (C) Regional stability continues to be of primary 
importance to the Omani government.  Of utmost concern to 
them is re-establishing dialogue toward finding a resolution 
to the Israeli-Palestinian conflict.  Oman's leadership is 
generally supportive of the President's proposed Middle East 
peace conference, but wants to see inclusive participation. 
Characterizing it as an "opportunity that can't be missed," 
the Omani government stands firmly behind the concept of 
having broad participation, including Syria, Lebanon, and 
other Arab and Muslim countries; to have otherwise would not 
fulfill the goal of having a "true" international peace 
conference. 
 
¶3. (C) The Omanis caution that for the conference to be a 
success, Israel must be prepared to take risks to support 
Palestinian Prime Minister Abu Mazen and show the 
Palestinians that they are serious about addressing 
Palestinian concerns.  In order to achieve tangible progress, 
the government advises that participants focus on a 
"medium-term package," rather than final status issues.  The 
Omani government believes that any overarching peace plan 
developed would have to address three critical issues: the 
right of return, permanent borders and the status of 
Jerusalem.  Oman most likely would support a plan that 
includes the resolution of these three issues, so long as 
they are settled through direct negotiation between Israel 
and the Palestinians.  Oman is "skeptical" of Israeli 
intentions, given "contradictory" statements offered by the 
Israelis.  For example, Minister Responsible for Foreign 
Affairs Yusuf bin Alawi recently pointed out that Israeli 
Prime Minister Ehud Olmert had expressed notional 
"acceptance" of the Arab League Peace Initiative, but then 
had publicly rejected the return of Palestinian refugees to 
present-day Israel. 
 
 
Iraq 
---- 
 
¶4. (C) Omani officials, who cast a wary eye toward events 
occurring in Iraq, will want to hear your views on the 
situation there, especially on where we may be headed over 
the next 3-6 months.  Though not a major financial donor 
(Oman pledged USD 3 million at the Madrid conference), Oman 
has supported our efforts to promote security and political 
stability in Iraq.  Iraqi Prime Minister Nuri al-Maliki led a 
10-member delegation to Muscat in April 2007; the Omani 
government has completely forgiven Iraqi debt. 
 
¶5. (C) The Omani government remains very concerned that 
Maliki does not have the stature to lead the country 
 
MUSCAT 00000786  002.2 OF 004 
 
 
effectively over the long-term.  Bin Alawi has been critical 
of Maliki's ability to reach outside of his power base and 
questions whether the Prime Minister has effective control of 
Iraqi security forces.  In dismissing rumors of former Prime 
Minister Iyad Allawi replacing Maliki, bin Alawi acknowledged 
that the situation in Iraq "will not change overnight 
regardless of who is Prime Minister." 
 
 
Iran 
---- 
 
¶6. (S/NF) Oman does not view Iran as an enemy or direct 
threat to its national security, as explained more fully in 
reftel A.  Accordingly, it prefers dialogue and cooperation 
on mutual maritime security and other shared interests, 
rather than isolating Iran or interfering in its internal 
politics.  Barring a significant increase in Iran's 
provocative rhetoric, acts of belligerency in the region, or 
a defiant withdrawal from the non-proliferation treaty, Oman 
will likely continue its policy of engagement with Iran and 
oppose sanctions against the regime in Tehran.  Nevertheless, 
the relationship is skin-deep, as Omanis and Iranians, in 
general, do not share cultural or religious affinities and 
have little in common. 
 
¶7. (S/NF) Questions persist within the Omani leadership as to 
what extent Iran poses a threat.  Oman's military and 
security services generally have a more pragmatic view of 
Iran's threat potential than does the Ministry of Foreign 
Affairs (MFA).  Mirroring U.S. concerns, leaders in these 
institutions worry about growing instability in the region 
resulting from Iranian policies, perceived as expansionist. 
The MFA, on the other hand, appears more ready to downplay 
Iran's destabilizing activities and to dismiss threatening 
statements as just political rhetoric intended for domestic 
consumption.  Eager to ease Iranian suspicions of Muscat's 
close security ties with the U.S., MFA officials, including 
bin Alawi, emphasize Oman's long-standing good relations with 
Iran in public statements and joint press conferences.  MFA 
officials have also called for the U.S. to integrate Iran 
into a regional security framework. 
 
¶8. (C) Concerning Iran's nuclear program, Oman's leadership 
believes that Iran has improved its working relationship with 
EU High Representative Javier Solana and with the 
International Atomic Energy Agency (IAEA).  Bin Alawi advised 
that Iran appears to be "more forthcoming" on issues related 
to its nuclear activities and "very concerned" about another 
UN Security Council sanctions resolution.  The Omani 
government is skeptical of additional punitive sanctions 
meted out by the UN Security Council, which "will only make 
hard-liners in Tehran stronger." 
 
 
Trafficking in Persons 
---------------------- 
 
¶9. (C) The Omani government reacted strongly to its Tier 3 
designation, with some officials questioning our motives for 
such harsh criticism of a long-time friend.  Nevertheless, 
the designation has gotten their attention.  Since the 
designation, the Omani government has drafted, with the 
assistance of a prominent U.S.-based expert, an anti-TIP law 
that both criminalizes TIP and establishes a national 
committee to coordinate anti-TIP initiatives.  The government 
plans to hold its first internal anti-TIP workshop in 
September.  The draft law and formation of a national 
committee represent significant steps by the government in 
meeting the targets set out in the 60-day action plan.  The 
government will soon send officials from the Royal Oman 
Police and the Ministry of Manpower on a Voluntary Visitors 
Program to learn from and observe U.S. colleagues in their 
handling of TIP crimes.  Nevertheless, considerable work 
remains, and you can help reinforce post's engagement on this 
subject by stressing that the government's continued 
proactive efforts will be needed in order to meet the 
requirements listed in the 60-day action plan. 
 
 
FTA Pending 
----------- 
 
¶10. (C) The implementation of the U.S.-Oman Free Trade 
Agreement remains pending.  We have made considerable 
progress in working through the issues related to 
intellectual property, customs, telecommunications, 
transparency, and labor, among others.  Nevertheless, before 
setting an implementation date, we await the government's 
 
MUSCAT 00000786  003 OF 004 
 
 
promulgation of draft tender, copyright, and industrial 
property laws, in addition to its adoption of 
telecommunications licensing and customs administration 
procedures.  The Sultan has a personal interest in the FTA 
and has instructed his ministers to work actively for its 
success. 
 
¶11. (U) Oman's pursuit of an FTA is part of its overall plan 
to reduce dependence on dwindling petroleum reserves.  Oman 
continues to follow its ambitious industrialization and 
economic diversification program.  Several billion dollars of 
U.S. investment have poured into Oman in the past few years, 
including from Dow Chemical (petrochemical complex), Bechtel 
(aluminum smelter) and Occidental Petroleum.  Oman actively 
seeks private foreign investors, especially in the 
industrial, information technology, tourism and higher 
education fields. 
 
 
Gonu Windfall 
------------- 
 
¶12. (C) Under the quiet leadership of the Sultan, the Omani 
government is moving quickly to recover from the devastating 
impact of Tropical Cyclone Gonu.  The official storm tally of 
fatalities was 49; but many, including officials, privately 
estimate the number of dead and missing at 500-1,000. 
Estimates peg the damage caused by the cyclone at USD 3-4 
billion.  Under the direction of the state-run Oman 
Charitable Organization, the government has offered to 
replace houses, cars, and household effects of those Omani 
nationals whose uninsured property was destroyed by Gonu. 
The organization, which has received 59,000 petitions from 
affected families so far, estimates cumulative losses to be 
USD 300 million.  On the positive side, the domestic economy 
should receive an added boost from the spending associated 
with Gonu.  On the downside, the government has claimed most 
of the credit in media outlets for its activities, 
overshadowing extensive volunteer relief efforts.  (Note: A 
media contact confided in receiving a directive not to 
publish volunteer actions, nor the amount of aid received by 
the Sultanate from neighboring GCC countries.  End note.) 
While undoubtedly beneficial to affected recipients, the 
generosity of the government further embeds the image of the 
Sultanate as a paternalistic welfare state in the Omani 
psyche. 
 
 
Upcoming Elections 
------------------ 
 
¶13. (C) The Omani government has been promoting the upcoming 
October 27 elections for the Majlis al-Shura, its lower 
consultative chamber.  Established in 1991, the Majlis 
al-Shura has slowly been given expanded powers, including the 
right to review and propose changes to (but not veto) 
legislation, question ministers, and examine government 
financial plans.  The government has sent "awareness teams" 
to address Omani employees at government offices and major 
private companies to encourage them to register to vote and 
run for office.  A total of 717 candidates, including 20 
women, have been registered.  Regulations on official 
campaign activities limit outreach to voters, but candidates 
often campaign informally at social events and many rely 
heavily on tribal connections to win their electoral races. 
While press editorials generally have backed the government's 
voter registration drive, some articles have surprisingly 
questioned the utility of casting a ballot for a body often 
seen as failing to seriously benefit citizens.  On-line 
commentaries and polls indicate that voter apathy continues 
to plague the government's efforts to increase participation 
in the elections. 
 
 
Collaboration with Iraqi SU*1-!dHF;;f 
¶14. (S) The Omani government has agreed "in principle" to our 
request to accept Iraqi WMD/missile scientists for one-year 
fellowships at USG expense, and is strongly considering 
participation in the program.  Oman would require 
"comprehensive background information" on relocation 
candidates and emphasized that these individuals should have 
"strong professional qualifications" so that they could be 
properly placed at a university or other appropriate 
institution.  Of particular interest to the MFA is placing 
qualified individuals at the Middle East Desalination 
Research Center (MEDRC), established in 1996 through the 
Middle East Peace Process (MEPP) multilateral working group 
 
MUSCAT 00000786  004 OF 004 
 
 
on water resources.  As the only active MEPP Track II 
institution in the Gulf, the Omani government attaches great 
significance to MEDRC.  Bin Alawi may ask you for help in 
encouraging other countries, as well as private 
donors/foundations, to support MEDRC. 
GRAPPO