VZCZCXRO3893
PP RUEHDE
DE RUEHAD #0322/01 0891328
ZNR UUUUU ZZH
P 301328Z MAR 09
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC PRIORITY 2307
INFO RUEHDE/AMCONSUL DUBAI 8213

UNCLAS SECTION 01 OF 02 ABU DHABI 000322 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM ECON EFIN MASS AE
SUBJECT: WELCOMING CODEL McCONNELL TO THE UAE 
 
Sensitive but unclassified; please protect accordingly. 
 
¶1.  (U) This is a joint message from Embassy Abu Dhabi and Consulate 
General Dubai. 
 
¶2.  (U) Summary:  The U.S. Mission to the United Arab Emirates (UAE) 
is pleased to welcome CODEL McConnell for a first-hand review of key 
U.S. priorities here.  Our robust relations with the UAE focus on 
mutual strategic interests throughout the region, as well as our 
common interest in economic growth and prosperity here and at home. 
Abu Dhabi, as federal capital and with 93 percent of UAE petroleum 
reserves, is the focus of our regional security, defense and energy 
cooperation.  Dubai, business capital of the Gulf, has been a key 
commercial center, and is a vital regional trade and transport hub. 
You will meet UAE Vice President, Prime Minister and Dubai Ruler 
Mohammed bin Rashid al Maktoum, a business-oriented leader and the 
man behind Dubai's recent rise to international prominence.  The UAE 
is an active partner in a broad range of mutual goals, particularly 
regarding regional stability and security, and is the largest US 
export market in the Middle East ($17b in bilateral trade in 2008). 
Like the rest of the world, the UAE has been hard hit by the 
economic crisis; but cash-rich Abu Dhabi has been hurt less than 
Dubai which is more vulnerable to negative international financial 
pressure given its globalized economy and high level of financial 
leverage.  End summary 
 
Regional Stability 
 
¶3.  (SBU) The UAE punches above its weight class as a small and in 
many ways developing nation with global ambitions -- while living in 
a rough neighborhood.  The citizen population of about 900 thousand 
(less than 20% of the 5 million residents) faces the myriad 
challenges of running a complex nation in the 21st century and seeks 
moderate allies with whom to carve out a stable place in the 
community of nations.  In that context, U.S. relations are 
traditionally strong and continue to grow.  Key U.S. strategic 
interests throughout the region (involving Iran, Iraq, Pakistan, 
Afghanistan, terrorism, economics, and more) form the core of our 
daily dialogue with the UAE. 
 
¶4.  (SBU) Our broad and enduring bilateral relations have produced 
close military engagement and cooperation for two decades; we base 
key assets in the country, and continually plan and exercise 
together.  Coalition operations in Iraq Afghanistan, and the Horn of 
Africa rely on that cooperation; the UAE also has its own troops in 
Afghanistan under the NATO/ISAF banner.  A favorite liberty location 
for the Fifth Fleet, the UAE hosts more US Navy ships, principally 
at Dubai's Jebel Ali port, than any port outside the United States. 
Our regional military logistics profile benefits from our UAE hosts 
who share various facilities throughout the country.  Defense 
coordination is in our common national security interests, and 
therefore cooperation continues to grow.  Following recent UAE 
purchases, including transport aircraft, air defense and other high 
value systems, the UAE will be the United States' largest Foreign 
Military Sales customer this year. 
 
¶5.  (SBU) The UAE is intent on cooperating with us to create a 
stable economic, political, and security environment in a troubled 
region.  Concerned about regional proliferation, the UAE has been 
responsive on export control issues and we engage on that front 
regularly (including a recent review of efforts by a dedicated 
bilateral Counter-proliferation Task Force).  As Abu Dhabi pursues a 
peaceful nuclear power program -- a sign of its ambitions and a real 
need for electricity to meet development goals -- it has taken clear 
steps to cooperate with the US (including signing a Section 123 
Agreement) -- and to prevent proliferation, offering a clear 
regional counterpoint to Iran's nuclear model. 
 
¶6.  (SBU) UAE support for Iraq continues to grow, in the forms of 
debt relief, reciprocal visits, dispatching an Ambassador, and 
ongoing efforts to use their political influence to bring about 
stability.  Similar focus on shared interests with regard to 
Lebanon, Israel-Palestinian peace, Afghanistan, Pakistan and 
elsewhere keep our two nations closely engaged in daily strategic 
diplomacy.  Recent visits by Special Envoys Senator Mitchell and 
Richard Holbrooke underscored the importance we place on 
coordination with the UAE on issues as important as Middle East 
peace and stability in Pakistan/Afghanistan. 
 
Economy, and the World Crisis 
 
¶7.  (SBU) In the past five years, the UAE has emerged as an economic 
powerhouse in the region (our largest export market in the Middle 
East, with $15.74b in total exports in 2008) and has attained a 
commensurate level of political influence.  Over 700 U.S. companies 
operate here in a broad array of fields, with some 550 being based 
in Dubai and its free zones.  Regional leaders look to Abu Dhabi and 
Dubai for assistance and political support, while Washington and 
other Western capitals increasingly seek the UAE's views.  The 
strength of relations with the U.S. is evident in the string of high 
level USG visitors -- including the President in January 2008, as 
well as multiple cabinet-level visits and senior Congressional 
 
ABU DHABI 00000322  002 OF 002 
 
 
delegations. 
 
¶8.  (SBU) The individual emirates retain significant economic 
autonomy, which Dubai asserted over the last several years to its 
benefit.  Sheikh Mohammed bin Rashid al Maktoum, UAE Vice President, 
Prime Minister and Ruler of Dubai, has deliberately pushed Dubai to 
develop as a "regional model" of business-friendliness and social 
moderation.  Dubai leveraged its limited oil wealth (only 3-4 
percent of its GDP) to build the infrastructure to grow and 
diversify the economy -- Dubai is the regional air transportation 
hub, and its Jebel Ali port is the 7th largest in the world by 
container traffic.  Dubai has focused on real estate development, 
infrastructure, trade and transportation, knowledge-based 
industries, tourism, and finance to sustain its high growth rates of 
recent years.  Dubai has also been the clear leader among the UAE's 
seven emirates in encouraging direct foreign investment through 
innovative free zones and a range of business-friendly practices and 
regulations.  Dubai has welcomed and courted US businesses, and 
hosts many regional headquarters for non-oil, non-defense sector 
companies (including GE, GM, Microsoft, Ford, Caterpillar, Boeing, 
and Citicorps). 
 
¶9.  (SBU) Despite its resource wealth and exponential growth, the 
UAE has been affected by the international economic crisis.  Stocks 
have been battered, liquidity is tight and consumer confidence has 
declined; Dubai, with its non-oil, more globalized economy, has been 
particularly hard hit.  The UAEG has taken a number of steps to 
restore confidence: insuring bank deposits, creating a bank 
liquidity fund, and reassuring the public that the government was 
ready and willing to support the economy.  Despite these steps, 
investors remain concerned about local market conditions, 
particularly Dubai's financial situation and the sharp correction in 
Dubai's large, overheated real estate sector, which had provided the 
financial engine for much of that emirate's recent development.  A 
recent $20b bond issue by Dubai, with the UAE Central Bank 
immediately purchasing $10b, has helped stabilize the emirate's 
finances and to restore some confidence that the UAEG will address 
the downtown on a national basis. 
 
¶10.  (SBU) For its part, Abu Dhabi's investment portfolio, including 
the world's largest sovereign wealth fund, the Abu Dhabi Investment 
Authority (ADIA), has taken a multi-billion dollar hit in recent 
months, although a rapid pace of development continues with key 
projects going forward.  The highest profile investments continue to 
be driven by wholly or partly state-owned entities, with the weaker 
private sector largely benefiting from the government's largesse. 
Most here remain optimistic about the UAE's economic future, partly 
in view of their optimism that U.S. economic fundamentals will 
remain strong and a close U.S.-UAE relationship will stand them in 
good stead. 
 
Social Transition 
 
¶11.  (SBU) We also engage the UAE on human rights, women's 
empowerment, trafficking-in-persons, education, and participatory 
governance.  Progress in these fields is notable, with more work to 
be done in each arena; based on its Tier 2 rating in the Department 
of State's annual Trafficking in Persons Report, the UAEG is 
farthest along in the region in addressing this persistent problem. 
The UAE is justifiably proud of opportunities for women (there are 
four in the UAE Cabinet, including influential Minister of Foreign 
Trade Sheikha Lubna al Qassimi).  More than 90 percent of female UAE 
high school graduates attend university; UAE women are increasingly 
educated, assertive, and free to be choose jobs as diverse as 
piloting planes or working in the judiciary.  That said, family 
constraints and tradition still limit the choices of some.  A very 
conservative government approach to civil society also puts 
constraints on NGO activity.  The UAE is focused on revamping 
education, and is working closely with both the USG and US 
consultants toward that end; all UAE universities teach in English. 
The UAEG hopes to nurture and train a more skilled national 
population to support its emergence as a moderate, tolerant, and 
ambitious state with a clear Islamic identity; these social forces 
will continue to interact in a dynamic evolution as the nation 
defines its future course. 
OLSON