VZCZCXRO0526
PP RUEHDE RUEHDIR
DE RUEHAD #0975/01 2411037
ZNR UUUUU ZZH
P 281037Z AUG 08
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC PRIORITY 1380
INFO RUEHDE/AMCONSUL DUBAI 7924
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE

UNCLAS SECTION 01 OF 04 ABU DHABI 000975 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ARP BMASILKO, NEA/PI, NEA/PPD 
ALSO FOR OES, EEB 
 
E.O. 12958: N/A 
TAGS: ECON EINV ETRD EIND SENV PGOV AE US
SUBJECT: ABU DHABI MEGA PROJECTS: POWERS BEHIND THE DREAM 
 
REF:  A) ABU DHABI 945 (Mega-projects: Masdar) 
B) ABU DHABI 943 (Mega-projects: Listing) 
C) ABU DHABI 920 (Mega-projects: Overview) 
D) DUBAI 329 (Labor accommodations) 
E) DUBAI 271 (Dubai mega-projects) 
F) DUBAI 272 (Dubai mega-projects) 
 
ABU DHABI 00000975  001.2 OF 004 
 
 
SUMMARY 
------- 
 
¶1.  (SBU) Abu Dhabi, the capital of the UAE and one of the richest 
cities in the world, is taking bold steps to change its landscape 
(reftels A, B, C).  With approximately 1,460,000 residents in the 
Emirate of Abu Dhabi (the majority in the city of Abu Dhabi itself), 
one-tenth of the planet's oil, and estimates of nearly $1 trillion 
invested abroad, few can fathom its vast wealth.  And what does a 
small country do with such phenomenal resources?  Abu Dhabi is 
moving fast and furiously to make its mark as a rival of Singapore, 
Tokyo -- and perhaps, Dubai.  Residents of Abu Dhabi navigate around 
construction sites with foreign workers building skyscrapers, 
five-star hotels, shopping malls, million dollar residential areas, 
and more!  But who and what are behind all the seemingly limitless 
developments and grand investments?  Much of it starts with the Abu 
Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan and follows 
with billions of dollars of investments, an emerging cast of mega 
developers, and, of course, U.S. (and other non-UAE) commercial 
interests.  This cable will note key players in Abu Dhabi's quick 
race to the top in the midst of cranes, trucks, concrete, dust, and 
sand -- all working towards making the Abu Dhabi brand known 
world-wide.  End summary. 
 
ROYAL LEADERSHIP 
---------------- 
 
¶2.  (SBU) The November, 2004 death of UAE founder Sheikh Zayed bin 
Sultan Al Nahyan left the field of Abu Dhabi leadership to his 19 
sons; Sheikh Khalifa, the eldest, former Crown Prince and undisputed 
senior player, easily became Ruler of Abu Dhabi and President of the 
UAE Federation.  Next in line, Sheikh Mohammed bin Zayed (MbZ) 
became the new Crown Prince, taking over the day-to-day running of 
Abu Dhabi.  The new team quickly set in motion a spirited plan to 
make Abu Dhabi a well-known financial and touristic epicenter of the 
region.  Sheikh Mohammed has since made his mark on almost every 
major development underway in Abu Dhabi. 
 
¶3.  (SBU) Sheikh Mohammed, juggling the roles of Crown Prince and 
Deputy Supreme Commander of the UAE Armed Forces, also heads the Abu 
Dhabi Executive Affairs Authority and the Emirate's major 
development organization "Mubadala."  Since its establishment in 
2002, Mubadala represents the main investment vehicle for the 
Emirate to achieve a broad range of sustainable social and economic 
benefits.  Further, MbZ heads the Abu Dhabi Council for Economic 
Development (ADCED) -- the Emirate's premier economic planning 
institution. A hands-on manager, MbZ is a graduate of Britain's 
Sandhurst military academy and upon becoming Crown Prince rapidly 
asserted his role in upgrading Abu Dhabi infrastructure.  As part of 
MbZ's ambitions to put Abu Dhabi on the world map, he champions a 
vision of Abu Dhabi as a hub for culture, tourism, research, and 
prosperity. 
 
¶4.  (SBU) MbZ's team has consistently touted the benefits of 1) 
transportation, 2) iconic landmarks, 3) attractive tourist and 
resort destinations, and 4) sustainable investment.  One of the 
first projects to get off the ground was Abu Dhabi's own 
international air carrier, Etihad Airways.  The idea was to 
duplicate the success of Emirates, the airline that helped put Dubai 
on the map as a tourist destination.  Initially, Etihad placed an $8 
billion order with Airbus, including four A380s, and recently it 
ordered $9.4 billion from Boeing (35 Dream Liners and ten 777s). 
Abu Dhabi's iconic character took another step into luxury with the 
2005 construction of the $3 billion Emirates Palace hotel, featuring 
$1,000-a-night rooms and $10,000-a-night suites.  The lavish 
"seven-star" palace sets a tone for other developments, many 
designed to complement the work of the Abu Dhabi Tourism Authority, 
established in 2004 to promote and develop the Emirate's 
international image as a tourist destination.  Finally, with 
Mubadala as a key tool, MbZ seeks to invest wisely ($200 billion 
over the next ten years) to ensure Abu Dhabi's position both 
domestically and internationally.  With billions of dollars on hand 
and limitless ambition, MbZ and his team have overseen a boom of 
construction, real estate development, and mega project expansion in 
Abu Dhabi since 2004. 
 
MUBADALA 
-------- 
 
¶5.  (SBU) Investing, and investing big, in the development of the 
Emirate, Mubadala is a Public Joint Stock Company headquartered in 
 
ABU DHABI 00000975  002.2 OF 004 
 
 
Abu Dhabi focusing on developing and managing extensive and diverse 
portfolios of commercial initiatives.  Mubadala's sole shareholder 
is the Government of the Emirate of Abu Dhabi.  It is currently 
managing a multi-billion dollar portfolio of local, regional, and 
international investments, projects, and initiatives.  It employs 
over 500 employees.  Through its investment and development 
projects, Mubadala is both a catalyst for, and a reflection of, the 
drive for economic diversification of Abu Dhabi.  Its impact is 
evident domestically and internationally in sectors such as energy, 
aerospace, real estate, healthcare, technology, infrastructure, and 
services.  A plan to open a branch campus of New York University is 
yet another example of the diversity and drive of the organization. 
 
¶6.  (SBU) Decision-makers at Mubadala have undertaken bold and 
deliberate steps to drive growth in new areas of the local economy, 
and facilitate greater engagement with the business world and the 
private sector.  Its CEO is Khaldoon Khalifa al Mubarak, a 
thirty-something, Tufts educated entrepreneur at the forefront of 
the economic development in Abu Dhabi.  He has helped expand 
Mubadala into shopping malls, residential properties, healthcare, 
petroleum, telecommunications, and many other global business 
opportunities.  (Mubarak also leads the Executive Affairs Authority 
under MbZ's leadership.  A close confidant of the Crown Prince and a 
frequent interlocutor with senior USG visitors, he embodies the 
confidence and ambition of the Abu Dhabi vision articulated by 
MbZ.) 
 
¶7.  (SBU) The Mubadala website quotes Sheikh Mohammed as saying: 
"Our Emirate is in the midst of a significant time in its history, 
and continues to enjoy a proud record of successful international 
partnerships across a range of sectors.  As our economy continues to 
diversify, organizations such as Mubadala Development are ideally 
placed to expand on those achievements."  Mubadala is obviously 
expanding and doing so in a big way -- with hands in almost every 
major project in Abu Dhabi, including large stakes in the major mega 
developers who are quickly turning profits as big ideas start to 
become a reality. 
 
¶8.  (SBU) To name a few of its investments, Mubadala acquired a 5% 
share of Ferrari in July 2007, and is a shareholder in Abu Dhabi 
Ship Building, Aldar Properties, Injazat Data Systems (with U.S. 
company Electronic Data Systems) and the National Central Cooling 
Company.  Additionally, along with Volkswagen and the Al Olayan 
Group of Saudi Arabia, Mubadala has also become a partner in 
LeasePlan, Europe's leading fleet management company.  It is also 
making bold foreign investments, including its recent joint venture 
with General Electric Company worth $8 billion focused on providing 
commercial finance in the Middle East and Africa. 
 
MEGA DEVELOPERS 
--------------- 
 
¶9.  (SBU) With the boom in construction and infrastructure 
development in Abu Dhabi that has been partially fueled by Mubadala, 
there have also emerged a number of new, and rapidly profitable, 
developers.  The most notable are Aldar and Sorouh, both publicly 
traded companies with significant ownership held by the Abu Dhabi 
government (including Mubadala) and/or members of the Abu Dhabi 
Royal Family.  Aldar and Sorouh are flourishing largely because of 
the 2005 Law Number 19 which formally abandoned an old property 
regime and permitted the sale of land by citizens and, in some 
areas, the purchase of 99-year leaseholds by foreigners.  This law 
paved the way for large-scale developers to move in and expand 
business opportunities to include foreign investment, including the 
purchase of residential real estate in Abu Dhabi.  There are, of 
course, a number of other developers present in Abu Dhabi but Aldar 
and Sorouh are currently cornering the market on the major 
developments -- subcontracting out work to a galaxy of smaller 
concerns.  Below is an overview of the two companies. 
 
ALDAR 
----- 
 
--- Developer:  Aldar 
--- Major Developments:  Al Raha Beach and Gardens, Yas Island, 
Central Market, and Cleveland Clinic. 
--- Estimated Investments:  Over 33 million square meters of land 
area valued at over AED 39 billion ($11 billion USD) under 
development in some of Abu Dhabi's most high profile projects. 
 
¶10.  (U) Aldar (purportedly modeled after Emaar Properties, the 
development company that built much of Dubai), is charged with 
developing a number of Abu Dhabi's strategic sites, including YAS 
Island and neighboring Raha Beach.  Aldar was formed in 2004 and is 
actively developing a range of commercial, residential, and retail 
projects in addition to luxury resorts.  It also has plans to expand 
internationally (to date, Aldar is only working in the UAE and 
Kazakhstan).  The company is owned by leading Abu Dhabi 
 
ABU DHABI 00000975  003.2 OF 004 
 
 
institutions, including Mubadala, and has over 20,000 investors 
throughout the UAE and over 500 employees. 
 
SOROUH 
------ 
 
--- Developer:  Sorouh 
--- Major Developments:  Lulu Island, Al Reem Island, and Khalidiya 
Village 
--- Estimated Investments:  Projects are valued in excess of AED 45 
billion ($12 billion USD). 
 
¶11.  (U) Another relatively new and highly successful developer is 
Sorouh.  Launched in September 2005, it employs in excess of 180 
individuals.  Sorouh is one of the most widely held stocks with 
approximately 55,000 shareholders in the UAE.  Sorouh is also the 
largest Abu Dhabi-based, publicly listed real estate developer. 
Sorouh has launched projects valued in excess of AED 45 billion ($12 
billion USD). 
 
TDIC 
---- 
 
--- Government Developer:  Tourism Development and Investment 
Company (TDIC) (sole equity stakeholder is Abu Dhabi Tourism 
Authority) 
--- Major Developments: Saadiyat Island, Guggenheim Abu Dhabi, and 
Louvre Abu Dhabi. 
 
¶12.  (SBU) Another companion to these highly successful developers 
is the Tourism Development and Investment Company (TDIC), 
established in April 2006 with the Abu Dhabi Tourism Authority as 
its sole equity stakeholder.  Some of TDIC's projects include the 
transformation of Saadiyat Island (27 square kilometer "cultural" 
island near the UAE capital outlined in ref B) and Desert Islands (a 
multi-experiential destination in the emirate's Western Region). 
The range of TDIC's project portfolio spans redevelopment of urban 
landmark districts, new-build mixed-use complexes, down-town 
business and leisure resorts, desert resorts and a leading-edge 
headquarters which is to be a showcase in sustainability.  (Every 
new UAE institution needs an "iconic" home!)  Sheikh Sultan Bin 
Tahnoon Al Nahyan is the Chairman of TDIC and also chairs Abu Dhabi 
Tourism Authority. 
 
U.S. COMMERCIAL INTERESTS: BENEFICIARY OF THE BOOM 
--------------------------------------------- ----- 
 
¶13.  (SBU) With over 750 U.S. companies operating in the UAE, a 
significant number of U.S. firms are integrally involved in various 
aspects of the mega development in Abu Dhabi.  There is obvious 
interest in the success of the mega projects among U.S. investors 
hoping to profit from the billions of dollars being poured into Abu 
Dhabi's renaissance.  U.S. companies are involved in almost every 
aspect of development; where they are not building, they are 
consulting.  Awards like U.S.-based Thorium Power's two consulting 
and strategic advisory service agreements worth $8.1 million to 
evaluate nuclear energy are not uncommon.  Etihad has purchased 
millions of dollars of U.S. aircraft equipment.  Additionally, 
U.S.-based construction companies are involved directly or 
indirectly in almost every aspect of project development.  As the 
mega projects continue to pursue an ambitious agenda, the 
opportunities for U.S. business interests seem limitless.  Hotels 
around Abu Dhabi are filled to overcapacity with business travelers 
trying to insert themselves into the mix: defense contractors, 
environmental consultants, and real estate speculators -- all coming 
to Abu Dhabi banking on the profitability of massive infrastructure 
upgrades. 
 
¶14.  (U) According to the US-UAE Business Council's January 2008 
"Trade and Investment Report", U.S. goods exports to the UAE 
increased by 352 percent from $2.6 billion in 2001 to $11.9 billion 
in 2006.  This growth is far greater than the 42 percent increase 
for overall U.S. exports around the world.  The UAE's share in U.S. 
exports to the Gulf Cooperation Council (GCC), which consists of the 
UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman, doubled from 25 
percent in 2001 to 49 percent in 2006.  The UAE is the single 
largest export market for U.S. goods and services in the Middle 
East, and U.S. exports to the UAE have expanded nearly five-fold 
from 2000 to 2006.  In 2006, the UAE imported $2,571 of U.S. goods 
per capita, which exceeded that of many important U.S. trading 
partners including Kuwait ($821), Saudi Arabia ($330), Japan ($468), 
Germany ($501), Mexico ($1,287), and Israel ($1,558). 
 
¶15.  (U) Additionally, according to the report, U.S. exports to the 
UAE originate from a wide variety of U.S. states.  In 2006, the five 
largest sources were: Washington (33 percent), Texas (21 percent), 
California (8 percent), New York (6 percent), and Tennessee (3 
percent).  U.S. foreign direct investment in the UAE rose 445 
 
ABU DHABI 00000975  004.2 OF 004 
 
 
percent from at least $834 million in 2001 to $4,547 million in 
¶2006.  This figure far exceeds a worldwide increase of 63 percent in 
the same period and an increase of only 22 percent in Saudi Arabia. 
The pace of UAE investments in the United States has also quickened. 
 Recent examples include a proposed 20 percent share in NASDAQ, a 
7.5 percent share in the Carlyle Group, an 8.1 percent share in 
Advanced Micro Devices, and a 4.9 percent stake in Citigroup. 
Cooperation extends beyond the private sector. U.S. non-profit 
organizations are also expanding their activities in the UAE, 
including a Johns Hopkins University partnership in a new cancer 
treatment center and a New York University plan to establish a 
branch campus in Abu Dhabi by 2010.  If the boom continues as 
planned, U.S. investments in the UAE will continue to expand 
rapidly. 
 
BUT WHERE DOES THE UAE GO FROM HERE? 
------------------------------------ 
 
¶16.  (SBU) Comment:  What does all this development and expansion 
really mean for Abu Dhabi and the UAE?  With less than 20% of the 
resident population being Emirati citizens, who will occupy the 
residences and patronize the projects?  If the foreign population 
grows, where does this increasing demographic imbalance leave the 
culture and heritage of the country?  The final cable in the series 
will take a look at the socioeconomic impact of the mega projects on 
the future of the nation.  End comment. 
QUINN