Identifier
Created
Classification
Origin
04ABUDHABI932
2004-03-31 12:15:00
UNCLASSIFIED
Embassy Abu Dhabi
Cable title:  

OPIC VISIT READOUT

Tags:  ELAB PREL PHUM PGOV SOCI CVIS TC 
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Diana T Fritz 03/15/2007 03:01:00 PM From DB/Inbox: Search Results

Cable 
Text: 
 
 
UNCLASSIFIED

SIPDIS
TELEGRAM March 31, 2004


To: No Action Addressee 

Action: Unknown 

From: AMEMBASSY ABU DHABI (ABU DHABI 932 - ROUTINE) 

TAGS: ELAB, PREL, PHUM, PGOV, SOCI, CVIS 

Captions: None 

Subject: OPIC VISIT READOUT 

Ref: None 
_________________________________________________________________
UNCLAS ABU DHABI 00932

SIPDIS
CXABU:
 ACTION: POL 
 INFO: AMB DCM P/M RSO ECON 

DISSEMINATION: POL
CHARGE: PROG

APPROVED: AMB:WAHBA
DRAFTED: POL:SRADDANT
CLEARED: DCM:RALBRIGHT POL:JMAYBURY ECON:OJOHN POL/ECON:MCARVER

VZCZCADI329
RR RUEHC RUEHDI RUEHZM RUCPDOC
DE RUEHAD #0932/01 0911215
ZNR UUUUU ZZH
R 311215Z MAR 04
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 3769
INFO RUEHDI/AMCONSUL DUBAI 3904
RUEHZM/GCC COLLECTIVE
RUCPDOC/USDOC WASHDC
UNCLAS SECTION 01 OF 04 ABU DHABI 000932 

SIPDIS

STATE FOR NEA/ARP, NEA/RA, DRL AND EB/CBA
STATE PASS OPIC/OPIC INTERNATIONAL POLICY DEPARTMENT FOR
VIRGINIA GREEN AND CONSTANCE SHINN
USDOC FOR ITA/MAC
STATE PASS USTR FOR JASON BUNTIN AND DOUG BELL

E.O. 12958: N/A
TAGS: ELAB PREL PHUM PGOV SOCI CVIS TC
SUBJECT: OPIC VISIT READOUT


UNCLAS SECTION 01 OF 04 ABU DHABI 000932

SIPDIS

STATE FOR NEA/ARP, NEA/RA, DRL AND EB/CBA
STATE PASS OPIC/OPIC INTERNATIONAL POLICY DEPARTMENT FOR
VIRGINIA GREEN AND CONSTANCE SHINN
USDOC FOR ITA/MAC
STATE PASS USTR FOR JASON BUNTIN AND DOUG BELL

E.O. 12958: N/A
TAGS: ELAB PREL PHUM PGOV SOCI CVIS TC
SUBJECT: OPIC VISIT READOUT



1. SUMMARY: A delegation from the Overseas Private Investment
Corporation (OPIC) visited the UAE February 27 to 29 to assess
progress on labor rights issues. They met with representatives
from the Ministries of Finance and Industry, Labor, Foreign
Affairs, and the Central Bank, as well as U.S. banking and
business representatives. The Ministry of Labor told the
delegation that it expects the revised labor law and related
amendments to be passed in June or July. While OPIC was
impressed with the progress the UAE has made regarding labor
conditions since it suspended coverage in 1995, the delegation
told the UAEG that OPIC would need to review the proposed labor
law, once it is ratified and implemented, before it could
consider re-opening in the UAE. OPIC pushed to have the revised
law ready to be announced at the June ILO meeting in Geneva. END
SUMMARY.


2. OPIC Executive Vice President and Chief Operating Officer
Ross Connelly, Deputy Chief of Staff and Senior Advisor to the
President Dulce Zahniser, and Vice President of the Office of
Investment Policy Virginia Green met with Minister of State for
Finance and Industry Dr. Mohamed Khalfan bin Kharbash, Labor
Ministry U/S Dr. Khalid Al Khazraji, MFA Assistant U/S for
Political Affairs Abdullah Rashid Al Noaimi, and Central Bank
Governor Sultan Nasser Al Suwaidi. The delegation also met with
Bank of New York Vice President and Regional Representative Hani
Kablawi, and Manager of the Abu Dhabi office of Occidental
Petroleum David Scott. Green also met with Philippine Embassy
Labor Attach€Annabella Oliveros, had lunch with members of the
American Business Group, and traveled to Dubai to meet with
representatives from Citibank and with the Head of Financial
Institutions at the Dubai International Financial Center, Sandy
Shipton.

--------------
HISTORY
--------------


3. OPIC suspended coverage in the UAE in 1995 due to its lack of

compliance with internationally recognized worker rights
standards. Since then, the UAE has taken a number of important
steps to conform with international labor norms, including
ratifying ILO conventions 100 (Equal Remuneration),105
(Abolition of Forced Labor),111 (Discrimination),138 (Minimum
Age),182 (Worst Forms of Child Labor),and 81 (Labor
Inspections). The UAEG has also implemented ILO bio-hazard
rules on occupational health and safety. Although the UAEG is
considering ILO conventions 87 and 98 on the rights of
association and collective bargaining, it has yet to ratify
them. The OPIC delegation stressed the importance of ratifying
these conventions and protecting through legislation workers'
rights in these areas, in addition to passing labor reform
legislation.

--------------
FINANCE AND INDUSTRY MINISTRY
--------------


4. OPIC met with the Minister of State for Finance and Industry,
Dr. Mohamed Khalfan bin Kharbash. MFA Assistant U/S for
Political Affairs Abdullah Rashid, Finance U/S Khalid Bustani,
the DCM and Poloff (notetaker) were also present. Kharbash
stressed the importance the UAE places on reinstating OPIC
coverage, and asked what could be done to speed up the process.
Connelly said that he would like nothing more than to resume
business in the UAE. However, problems in the human rights
arena remain unresolved, and OPIC will only be able to reopen in
the UAE after it sees significant progress in labor rights
implementation, he said. He emphasized that prospective reforms
would not be enough for OPIC to restore coverage. Kharbash
stated that he understood OPIC's position, and discussed
measures the UAE is taking to comply with international norms,
including the proposed labor legislation currently under
consideration. However, he said that negotiations shouldn't get
"stuck" while waiting for the proposed labor law. Dialogue must
be on-going, since both the UAEG and U.S. companies will benefit
from OPIC reinstatement. Connelly responded that Kharbash was
"preaching to the choir," and that increasing business and
opening financial institutions in this part of the world was a
priority for the U.S., not only to profit the businesses, but
also to assist in Iraqi reconstruction. Once worker rights were
ensured, OPIC would be ready to open for business. Green added
that this could happen by the end of this year.


5. Bustani pointed out that time was key, and that several fast-
moving projects could miss out on coverage. Kharbash added that
there is no such thing as a perfect solution to the labor issues
the UAE faces, however, the UAE and U.S. must be able to work
through the issues and strengthen their strategic relationship.
Abdullah Rashid said that the UAE wants to see more U.S.
businesses open soon, especially in the oil industry. He hoped
that labor issues would not hinder this kind of development.


6. Connelly responded to all these points by stating that OPIC
has laws and Congressional mandates to follow, and that other
institutions contribute to OPIC's decision to reopen. He said
that he must provide those institutions with information on the
UAE's progress so that all parties can jointly make an informed
determination. The DCM also asked the Emiratis to encourage the
Ministry of Labor to accelerate the passage of the proposed
labor legislation and the related amendments. The meeting
adjourned with all parties agreeing to keep the lines of
dialogue open.
--------------
MINISTRY OF LABOR
--------------


7. At the Ministry of Labor, the delegation met with Labor U/S
Khazraji. Connelly explained that the final determination of
whether OPIC reopens in the UAE rests with the State Department
and ILO in addition to OPIC. He said that the main issue that
will determine how fast the agency can reopen is labor rights.
Once the key areas for improvement are resolved, the parties
will be able to make a decision to reinstate OPIC coverage.


8. Green and Khazraji discussed the UAE - ILO cooperation and
the new draft labor law. Khazraji explained that the proposed
law does not address some areas of concern, such as the use of
underage camel jockeys and the creation of labor organizations.
However, while the federal Cabinet considers the proposal, the
MOL is working on amendments to cover these areas. He said that
all the issues cannot be tackled at once, but the MOL has been
working with the ILO for two years on the labor law and other
labor issues, balancing the need to conform to international
norms with the UAE's areas of concern, including its extremely
high proportion of foreign workers (estimated at up to 98% of
the private workforce). Khazraji said that all issues must be
studied before moving to the next stage, since the Ministry
wants to "do this right." But he emphasized that the process is
moving forward, and the UAE is working on all the issues the ILO
has pointed out as "weak areas." He said that he hoped that the
proposals would be reviewed soon, however, the Cabinet has other
issues on its agenda as well, and a final decision might be
three to four months away.


9. Khazraji urged OPIC to look at the overall picture when
making its determination. He said the UAE does not have large
problems with its labor force. There are some disputes, but no
child labor. Safety laws exist. Labor rights are protected,
even without unions and under the old labor law. Many people
still want to come to the UAE to work, and this would not be the
case if laborers were treated poorly, he said. Connelly
recognized that the UAE's potential was tremendous. However,
the few outstanding labor problems are all that is preventing
OPIC from reopening.

---
MFA
---


10. During a separate meeting with U/S Abdullah Rashid, Connelly
requested that he use his political clout to push the labor law
to the "front of the line" of legislation waiting for Cabinet
review. He also said that he hoped that, like Qatar, the UAE
would be able to announce the new legislation at the June ILO
conference in Geneva.

--------------
BANKING AND BUSINESS SECTORS
--------------


11. The OPIC team rounded out its visit with meetings with the
Bank of New York (BONY),Occidental Petroleum (OXY),and the
Central Bank of the UAE. While the delegation explained the
necessity to improve labor conditions before it could reopen,
conversations quickly drifted away from labor issues and onto
increasing business and banking opportunities in the UAE and in
Iraq. At BONY, Vice President and Regional Representative Hani
Kablawi and Connelly discussed how they could work together in
the future to increase business opportunities, especially in the
lesser-developed Northern Emirates. BONY said that it might be
more comfortable financing investments in the Northern Emirates
using OPIC's risk mitigation and term credit finance services.


12. At OXY, Abu Dhabi Office Manager David Scott said that his
organization is anxious for OPIC to reopen. He gave the team a
Dolphin Project overview, and said that OXY primarily wants to
involve OPIC for the comfort of financiers who may not otherwise
be comfortable investing in this part of the world. The Dolphin
Project needs financing as soon as possible. OXY has a June
deadline to either go with OPIC or look elsewhere. Connelly
said that OPIC is also eager to open in the UAE and Qatar,
however, it cannot do so without a change in labor conditions,
backed by law. Since the ILO and State Department were key in
the decision to end coverage in 1995, OPIC has decided to rely
heavily on their judgement before reopening, Green said. She
said that international labor standards have risen since 1995.
The UAE's standards currently are "good," but additional work is
needed on implementation. Scott expressed his concerns about
relying too heavily on the ILO's opinion, since, in his view,
the ILO has had a historically bad relationship with the UAE and
may not be completely objective.


13. At the Central Bank, Governor Al Suwaidi and Connelly
discussed business opportunities and challenges in Iraq,
Afghanistan, and the UAE. Suwaidi said that, despite the
difficulties of investing in Iraq and Afghanistan, the Gulf
region is the best place to provide banking support, and the UAE
was the best place in the region to provide this support, due to
increased stability and fewer sensitivities.


14. Green met separately with the American Business Group,
including President John Velliquette of Raytheon, and members
Charles Laubach of Affridi & Angell Law Firm, Frank Wayne of the
Abu Dhabi Investment Authority, Michael Tomalin and David
George, both of the National Bank of Abu Dhabi. The group
consensus was that labor conditions were no longer poor and
should not be a deterrent. They also said that business
conditions for U.S. investors in the UAE is excellent, and any
smart investor who knows the region should not require an OPIC
safety net. If someone is basing a decision to open a business
here on OPIC coverage, the group said that that person should
just look elsewhere and leave the potentially excellent business
opportunity for a more savvy investor.

--------------
LABOR ATTACHE MEETING
--------------


15. Philippine Embassy Labor Attach€Annabella Oliveros
explained that about 170,000 Filipinos work in the UAE.
However, she said that the 18,000 Filipinas working as domestic
servants faced the most problems, since they are not covered by
the labor law. She handled approximately 500 cases of non-
payment of wages last year. She said that the UAEG is generally
responsive, but too often sides with the employer, since the
maids usually run away from their sponsors before the problems
are resolved. The employer then trumps up charges against the
maid, who is then arrested, deported, and never paid. She said
that she handles about 100 rape cases per year. Of the
approximately 150,000 workers who are not domestic servants,
approximately 5% go unpaid regularly.

--------------
DUBAI MEETINGS
--------------


16. In Dubai, Green and the Consulate's Pol/Econoff met with
five Citibank representatives to discuss Citibank's plans to
provide services and assistance in Iraq. Green also met with
the Head of Financial Institutions at the Dubai International
Financial Center (DIFC) to discuss banking and DIFC's role as an
"off-shore banking center" for the Middle East, and potential
OPIC projects. She also invited DIFC representatives to give
their presentation in Washington during its "road show" this
summer.


17. COMMENT: It was clear from the meetings that the UAE has
made great advances in improving labor conditions for workers
since OPIC withdrew its services in 1995. However, the sticking
points remain the still-pending labor legislation update, and
the unratified ILO conventions on the rights of association and
collective bargaining (87 and 98). The OPIC delegation left no
doubt that the implementation of a labor law that protects the
rights of all workers, including the non-citizens who comprise
approximately 98% of the UAE private sector workforce, was the
beginning point in determining if the UAE has made enough
progress to warrant reinstatement of OPIC coverage. The
proposed labor law, and proposed amendments to the law, will
have to be passed and implemented, then studied by OPIC and
other organizations with a say in whether OPIC re-opens here.
While the UAE meets with the ILO regularly, has implemented a
number of ILO conventions, and is addressing ways to allow
freedom of association and collective bargaining while balancing
the UAE's security concerns, the OPIC delegation made it clear
that there is still work to do before OPIC will reinstate
coverage in the UAE. END COMMENT.


18. Members of the OPIC delegation did not have the opportunity
to clear on this cable.

WAHBA