A/S WAYNE'S BILATERAL MEETINS IN ABU DHABI

UNCLAS SECTION 01 OF 03 ABU DHABI 000716 SIPDIS SENSITIVE STATE FOR EB, EB/IFD, NEA/ARP E.O. 12958: N/A TAGS: ECON ETRD EFIN PTER ETTC IZ TC SUBJECT: A/S WAYNE'S BILATERAL MEETINS IN ABU DHABI DURING THE IRAQ DONORS' MEETING ¶1. (SBU) Summary: The UAE hosted Iraq Donors' Conference concluded successfully on February 29 with the launch of the UN/WB Trust Funds, which received pledges of about one billion dollars (septel). The UAEG did not pledge the $10 million to the trust fund necessary to join the donors committee, but UAEG officials told A/S Wayne that they were working to get approval to make that pledge. A/S Wayne also held bilateral meetings with UAEG officials, where he thanked the UAEG for its cooperation on Iraq and in fighting terrorist financing. He also explained the TIFA process and pointed out that improving labor rights would be key, not only to "reopening" OPIC, but also for any future trade liberalization. End Summary. -------------- Iraq and the UAE -------------- ¶2. (U) Assistant Secretary Wayne led a U.S. delegation to the UAE-Hosted multilateral donors' committee meetings for Iraq on February 28 and 29. The meetings concluded successfully in confirming that the donors, the UN, and the World Bank were all cooperating on behalf of the Iraqis. The Iraqis explained their development and reconstruction priorities, and the donors launched trust funds to be administered by the UN and World Bank, which received pledges of about one billion dollars. Press coverage was extensive, including interviews with A/S Wayne and Ambassador Raphel. The Iraqis, the World Bank, and the UN took a very public lead in dealings with the press, with the CPA playing a more supporting role. Despite the relatively short notice, the UAE did an excellent job in hosting the event and in providing logistical support to delegations from over 30 countries. In a sidebar meeting, the Director General of the Arab Monetary Fund expressed his interest in future cooperation on Iraqi reconstruction. (Detailed report of donor conference septel.) ¶3. (SBU) In his bilateral meetings with Minister of State for Finance and Industry Dr. Mohammed Khalfan bin Khirbash and MFA Assistant Under Secretary Abdullah Rashid Al-Noaimi, A/S Wayne thanked the UAEG for its cooperation on Iraqi reconstruction and urged them to participate in the donors' group by pledging to the UN/WB Trust Fund. Dr. Khirbash noted that the efforts on Iraqi reconstruction highlighted the multilateral commitment to Iraq. He added that he thought this was the first instance that all of the UN and affiliated agencies were working under one umbrella. A/S Wayne noted that the international community had tried to coordinate efforts in Afghanistan and had learned from the Afghanistan example on how to better coordinate donor efforts. A/S Wayne also explained that the other lesson from Afghanistan was the need for the recipient country to do a better job of coordinating assistance and needs assessments. For that reason, the CPA and the Iraqis were working to have the Ministry of Planning coordinate all donors' activities for the Iraqis. Dr. Khirbash suggested that it would be a good idea if there were regional representatives on the donors' committee and suggested Oman, Qatar, and the UAE. A/S Wayne used that opportunity to press the UAEG to commit its $10 million to the UN trust fund, noting that it could not be a member of the donors' committee until it made a commitment. Dr. Khirbash said that he was working on getting the UAEG to make a commitment. (Note: Al-Noaimi also told A/S Wayne and EconChief that he favored having the UAE commit to the UN trust fund, but that he was still trying to get approval from his superiors.) -------------- Trade issues -------------- ¶4. (SBU) A/S Wayne also discussed the March 15 TIFA signing ceremony and trade issues with Dr. Khirbash and Al-Noaimi. A/S Wayne explained the President's vision for a Middle East Free Trade Area developing over the next ten years. Dr. Khirbash commented that the countries in the region were at different stages of economic development. A/S Wayne explained that, for that reason, the USG preferred to negotiate FTAs bilaterally rather than multilaterally. Dr. Khirbash explained that he thought the UAE could play a catalytic role in regional economic development and, therefore, would be an excellent candidate for a FTA with the U.S. ¶5. (SBU) A/S Wayne stressed that the USG was very interested in working with the UAEG on trade issues. He explained that the TIFA discussions were important steps in identifying any issues that could hinder the development of closer trade relations. He stressed that resolving labor issues was key to reopening OPIC coverage and would also be an important factor in developing closer trade relations between the UAE and the U.S. He urged the UAE to make progress quickly in the area. -------------- Terrorist Financing -------------- ¶6. (SBU) A/S Wayne also met with Central Bank Governor Sultan Nasser Al-Suwaidi and thanked him for the UAEG's cooperation in the fight against terrorist financing. Al-Suwaidi briefly discussed hawalas, explaining that the UAEG was encouraging them to register and become part of the formal financial system. (Note: Over 100 hawalas have registered so far.) He expected to cover more details on hawalas during the 2nd Hawala conference on April 3-4. ¶7. (SBU) Al-Suwaidi also briefly discussed the regulation of charities. He stated that no one wanted money donated for religious purposes to fund criminals. For that reason, it was important to know where the money was going. Efforts to identify remitters and receivers, he said, did not contradict any religious teachings. Al-Suwaidi noted that the Ministry of Labor registered charities and that the Central Bank's Anti Money Laundering and Suspicious Cases Unit (AMLSCU - The UAE's Financial Intelligence Unit) worked with other UAE ministries on internal procedures to prevent diversion of funds from charities. ¶8. (SBU) A/S Wayne also asked whether Al-Suwaidi wanted to raise any outstanding issues with him. Al- Suwaidi stated that he thought most of the outstanding issues were being resolved. For its part, AMLSCU was responding to Fincen's requests for information on a regular basis. "They come in and they go out" by email. He also noted that the AMLSCU was starting to get responses back from the US and other countries. -------------- Greater Middle East Initiative -------------- ¶9. (SBU) A/S Wayne also took advantage of his meetings to explain the Greater Middle East Initiative. He stressed that the U.S. was trying to support the efforts of reformers in the region, not/not to impose its own vision of reform on the Middle East. He asked Al-Suwaidi for his views on how the USG could assist. Al-Suwaidi stated that one of the biggest problems in the Middle East was the limited trade among countries in the region, adding that the best action countries in the region could take would be to lower their trade barriers with each other. Instead of talking about grandiose regional FTAs, he suggested a more practical approach of eliminating tariffs on a small number of commodities. Once they realized the benefits of lower trade barriers on a few commodities, they could progressively reduce trade barriers on more commodities. He also stated that he thought that the countries in the Middle East needed technical assistance in areas such as improving the legal infrastructure and perhaps funding for large infrastructure rather than normal project funding. He noted that there were a number of regional development banks in the GCC and that there was not necessarily a shortage of capital for project funding. What might be useful would be a forum where economic policy could be discussed (including with the World Bank and the IMF) and where technical assistance to support reform could be mobilized, Al-Suwaidi said. ¶10. (SBU) At the Ambassador's reception, A/S Wayne and Dr. Jassim Al-Mannai, Director General of the Arab Monetary Fund, discussed the AMF's work to train Iraqi Central Bank officials and its potential to promote economic reform in Iraq. Dr. Jassim explained that the AMF supported economic reform throughout the region and expressed willingness to cooperate with us on any broader regional efforts. ¶11. (SBU) This message has been cleared by A/S Wayne. WAHBA