AMBASSADOR MEETS WITH CROWN PRINCE

S E C R E T SECTION 01 OF 02 MANAMA 001618

SIPDIS

NOFORN

E.O. 12958: DECL: 10/24/2014
TAGS: PREL PTER BA
SUBJECT: AMBASSADOR MEETS WITH CROWN PRINCE

REF: A. MANAMA 1489 B. MANAMA 1558

Classified By: Ambassador William T. Monroe. Reason: 1.5 (B)(D)


1. (S/NOFORN) Summary. The Crown Prince told the Ambassador
October 23 that he would make calls to key Congressional
leaders to urge early ratification of the FTA. He defended
his recent labor reform proposals, which were recently
criticized by elements in the business community. He denied
that he had been given a role in the constitutional dialogue,
stressing that his focus would be on the economy and
education. He criticized the British Ambassador for meeting
with opposition leaders who are operating outside of the
constitution and the political system. He acknowledged that
the government's stiff reaction to human rights activist
Al-Khawaja's speech attacking the Prime Minister had
increased Al-Khawaja's popularity, but said this was not all
bad as "Al-Khawaja is very secular." He added that action
against Al-Khawaja (Shia) might make it easier to move
against the four terrorist suspects (Sunni),as "balance is
very important in Bahrain." He expected the four to receive
a prison sentence when they go to trial starting November 1.
End summary.


2. (C) The Ambassador, meeting with Crown Prince Salman Bin
Hamed Al-Khalifa the evening of October 24, began the
discussion by reviewing the state of play on ratification of
the Free Trade Agreement. It was unclear, the Ambassador
said, whether the Congress would be able to get to the FTA
during the lame duck session expected to begin in
mid-November, but USTR reports that it would like to push it
through as soon as possible, perhaps at least beginning the
effort in November and certainly moving early in 2005. The
Crown Prince said that he would contact key members of
Congress to help underscore the importance of the agreement
for Bahrain.


3. (C) The Crown Prince asked the Ambassador how the Embassy
viewed his labor reform proposals, based on a McKinsey and
Company report that recommended incentives to hire Bahraini
workers rather than expatriates (ref a). The Ambassador
applauded the effort to address Bahrain's structural
employment problems, but wondered how a plan that in effect
raised labor costs would impact on Bahrain's export
competitiveness. The Crown Prince said that the plan called
for increasing productivity to compensate for higher wages.
Funds raised from higher fees on expatriate labor would be
poured into training programs for Bahraini workers. The
Ambassador noted press reports that Bahraini business leaders
criticized the plan during a discussion at a prominent
business leader's Ramadan majlis. The Crown Prince
acknowledged the criticism, but said not all business leaders
in Bahrain shared that view. He said that a business group
would issue a statement that evening supporting the plan.
(Note: The first deputy president of the Bahrain Chamber of
Commerce and Industry did issue a statement saying that the
views expressed at the Ramadan majlis on the negative impact
of the labor reform proposals did not reflect the views of
the private sector in the chamber.) The Crown Prince also
noted that Bahrain's economic development would not hinge on
labor intensive industries, but increasingly on the service
sector, where higher wages would have less of an impact.


4. (C) The Ambassador asked if the fact that human rights
activist Al-Khawaja had used the McKinsey Report's critiques
of the Bahrain economy to launch his personal attack on the
Prime Minister (for which he was subsequently arrested) would
affect his efforts to push forward the McKinsey proposals.
The Crown Prince said it would not. He said that Al-Khawaja
case was now in the courts, being handled through legal
channels. The Ambassador noted that, in vigorously pursuing
the case, the government had in fact increased Al-Khawaja's
notoriety and popularity among at least a part of the
population. The Crown Prince acknowledged that this was
true, but said that was not entirely a bad development.
Al-Khawaja is very secular, he observed.


5. (C/NOFORN) The Ambassador asked about the status of the
constitutional dialogue between the government and four
opposition Shia parties who boycotted the last parliamentary
elections. Noting that the government broke off the dialogue
last week after British Ambassador Lamb had met with leaders
of the opposition parties, the Ambassador sought the Crown
Prince's views on where this was headed. The Crown Prince
was highly critical of Ambassador Lamb, saying an ambassador
should not have contacts with the leadership of groups that
are operating outside the constitution and the political
system. It would be like an Ambassador in London meeting
with Gerry Adams at the height of his anti-government
activity in Northern Ireland, he said. It is all right for
lower-level officials to meet them, but not the ambassador.


6. (C) On prospects for re-starting the constitutional
dialogue, which is led on the government side by the Minister
of Labor and Social Welfare, the Crown Prince was dismissive
of its importance, saying that the boycotting opposition
parties will have to work through the parliament if they want
to push for reforms. Asked if he was going to get
personally involved in the constitutional dialogue, as the
King implied in his October 9 speech opening the third
session of the parliament (ref b),the Crown Prince
categorically denied that the King had this in mind or that
he would get involved. "I am sticking to development issues
such as the economy and education," he stated. "I won't
touch the constitutional dialogue issue with a ten-foot pole."


7. (C) The Ambassador observed that the local political scene
seemed somewhat charged these days, citing as examples
Bahrain Human Rights Center (BHRC) former executive director
Al-Khawaja's public criticism of the Prime Minister, his
subsequent arrest (and closing of the BHRC),continuing
demonstrations in support of Al-Khawaja, and the breakdown of
the constitutional dialogue talks. The Crown Prince said he
expected this to be the norm now that the King had initiated
the democratic reform process. The government and the people
will continue to feel their way, exploring the limits.


8. (S) The Ambassador asked for an update on the four
terrorist suspects, who face a court date on November 1. The
Crown Prince said that they would go to trial on November 1
and that he expected they would receive a prison term of no
more than three years (based on the limited evidence),
although in the end it would depend on the decision of the
judge. (Note: Three years is the maximum sentence allowable
under the current conspiracy law.) He expected Yasir Kemal
to get additional time as a result of his escape from the
court room after the hearing in September. The Ambassador
reiterated that it was critically important that the four
receive a prison sentence to send the right message on
terrorism. The Crown Prince said that the action against
Al-Khawaja (a Shia) might actually make it easier to move
against the four terrorist suspects (Sunnis). "Balance," he
said, "is very important in Bahrain."


9. (C) Finally, the Crown Prince asked about Iraq. The
Ambassador described recent positive developments, including
the recontrol of Samara, the apparent decision of al-Sadr to
participate in the political process, and the impending start
of the election registration process. The Crown Prince
stressed that it was critically important that we stay the
course in Iraq and not withdraw prematurely before Iraqi
security forces are capable of maintaining order.
MONROE