VZCZCXYZ0000
PP RUEHWEB

DE RUEHRH #0196/01 0461430
ZNR UUUUU ZZH
P 151430Z FEB 10
FM AMEMBASSY RIYADH
TO RUEHC/SECSTATE WASHDC PRIORITY 2494
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS RIYADH 000196 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR E(YUN), EEB/TPP/BTA, NEA/ARP, NEA/RA 
STATE PASS TO USTR FOR CHRIS WILSON, JASON BUNTIN 
STATE PASS TO DOC FOR STEVEN GARRETT 
 
E.O. 12958: N/A 
TAGS: ETRD ECON PGOV PREL SA
SUBJECT: GULF COOPERATION COUNCIL LOOKING FOR GREATER TRADE 
AND INVESTMENT WITH U.S. 
 
REF: A. 09 RIYADH 1441 
     ¶B. 09 RIYADH 1459 
     ¶C. RIYADH 102 
 
 ¶1. (SBU) Summary: The Gulf Cooperation Council is very 
interested in pursuing closer trade and investment ties with 
the United States, and made a strong pitch for the U.S. to 
consider concluding some kind of agreement with the GCC as a 
whole.  GCC officials noted that GCC rules actually prohibit 
individual member states from signing trade agreements with 
other countries, and argued that the GCC common market offers 
a much more tempting target for a trade partner than any 
single member state.  Finally, they noted that the U.S. runs 
the risk of losing out to its competitors, which have already 
concluded free trade agreements with the GCC.  The GCC is 
also interested in pursuing cooperation with the United 
States on food security, both in coordinating assistance 
policies to food exporting countries and in potential 
investments in the U.S.  The GCC continues to foster greater 
economic linkages among members, and will hold the first 
meeting of the Monetary Council at the end of March, which 
will chart the timetable for monetary union among the four 
interested member states.  End Summary. 
 
¶2. (SBU) On February 13, Assistant Secretary General Mohammed 
Al-Mazrooei and staff of the Gulf Cooperation Council (GCC) 
briefed visiting Treasury A/Assistant Secretary Andrew Baukol 
and EconCouns on their interest in expanding trade and 
investment links with the United States.  Al-Mazrooei made a 
strong pitch that dealing with the GCC as a whole would offer 
the U.S. a much bigger trade and investment market than 
individual states, representing close to 40 million people. 
The GCC has found negotiating as a group to be attractive to 
a number of other partners, with whom it has signed free 
trade agreements.  Al-Mazrooei noted that the GCC is very 
close to finalizing its agreement with the EU (GCC officials 
have told us it is down to two articles).  The GCC 
understands that the U.S. preference is for bilateral 
agreements, but Al-Mazrooei made a strong pitch to consider 
concluding one with the GCC as a whole, which he argued could 
be much faster than trying to get the same advantage by 
negotiating country by country.  He also noted that the GCC 
regulations technically prohibit individual member states 
from signing free trade agreements, precisely because the GCC 
wants these agreements to support its common market. 
 
¶3. (SBU) Al-Mazrooei understood that the Administration 
lacked current authority to enter into new free trade 
agreements.  He said that the GCC would welcome any kind of 
trade agreement, such as a Trade and Investment Framework 
Agreement (TIFA), which would help the two sides boost trade 
and investment.  The GCC officials argued that the United 
States is missing an opportunity that its competitors, like 
India and China, are taking advantage of.  The U.S. could 
find in a few short years that the lack of a free trade 
agreement left it with a smaller share of the GCC market than 
it would otherwise have.  The GCC officials also argued that 
the U.S. should elevate its trade and investment ties to 
match the strong security partnerships it had with the member 
states. 
 
Food Security: 
- - - - - - - - 
 
¶4. (SBU) The GCC has been closely following the issue of food 
security, and the December Summit reviewed a study on the 
effects of the financial crisis on GCC food security.  The 
summit approved the report's recommendations for the GCC to 
adopt a single food security policy for all six members, to 
consider coordinating water use and land permitting policies, 
coordinate education policies to reduce water usage, and to 
consider pursuing joint investments in countries.  GCC 
agriculture ministers will meet in Kuwait in June to follow 
up on these recommendations, as well as to consider how to 
increase the role of agriculture in GDP in a sustainable way, 
and improve the quality and quantity of output, particularly 
of native crops.  In that regard, the GCC would welcome 
cooperation to share technology and know how with U.S. 
organizations on desalination, hydroponics, arid land 
agriculture and irrigation.  The GCC will also coordinate its 
activities with international organizations, such as the FAO 
and IFAD. 
 
¶5. (SBU) Al-Mazrooei noted that the GCC states' shortage of 
 
water will leave them dependent on food imports.  The GCC is 
concerned both about availability and about prices.  Its 
experience in 2007 suggested that there can be significant 
problems with both issues.  Al-Mazrooei said that importing 
food at sky-high prices was not food security.  While several 
member states have concluded agreements with exporters, the 
GCC is concerned that, in case of severe shortage, exporters 
will restrict supplies to make sure their domestic 
populations can eat.  Thus, the GCC is focused on doing what 
it can to secure supplies of nine key staples (such as rice, 
wheat, milk, meat, oil, sugar and lentils).  It is also 
looking to conclude agreements with stable countries, and is 
placing particular focus on the U.S.  The GCC would welcome 
exchanging views with U.S. experts on potential areas of 
foreign assistance cooperation in food-producing poorer 
countries, which might help inform the June meeting of 
agricultural ministers. 
 
Monetary Union: 
- - - - - - - - 
 
¶6. (SBU) Al-Mazrooei noted that, when the GCC started 
discussing a monetary union in 2001, all six members were 
interested.  Oman decided not to proceed "at this stage," and 
the UAE pulled out in 2009.  In 2002, the GCC agreed to set a 
dollar peg, and in 2005, they agreed on the convergence 
criteria they would use to adopt a single currency.  The GCC 
had hoped to launch a common currency in 2010, but ran into 
"technical difficulties," including a lack of coordination 
meetings, that will delay it for some time.  In the December 
2009 GCC summit, the leaders agreed on a charter and the way 
forward for a Monetary Council, which will hold its first 
meeting at the end of March.  Al-Mazrooei explained that the 
Monetary Council will determine the timetable from now on, 
including key benchmarks. 
 
SMITH