GCC CRISIS? MINISTERIAL FOUNDERS ON BAHRAIN FTA

C O N F I D E N T I A L MANAMA 001829 SIPDIS STATE PASS USTR/NOVELLI E.O. 12958: DECL: 12/08/2014 TAGS: PREL ECON BA GCC SUBJECT: GCC CRISIS? MINISTERIAL FOUNDERS ON BAHRAIN FTA ISSUE REF: MANAMA 1814 Classified By: Ambassador William T. Monroe. Reason: 1.4 (B)(D) ¶1. (C) The December 7 meeting of GCC Ministers of Foreign Affairs and Finance, aimed at preparing for the 25th GCC Summit in Manama December 20-21, ended in failure over Saudi insistence that all discussions of FTAs with the United States stop, Deputy Foreign Minister and Minister for Foreign Affairs Shaykh Mohammed bin Mubarak Al-Khalifa told the Ambassador December 8. His account paralleled what Kuwait Foreign Minister Dr. Mohammed Al-Sabah told an embassy source before departing back to Kuwait today. ¶2. (C) According to Shaykh Mohammed, the Saudis at the Ministerial insisted that bilateral discussions with the United States on FTAs stop until there is first agreement among the GCC countries. If this movement on FTAs is not stopped, they said, Saudi Arabia would withdraw from the GCC Customs Union. The FTA issue was the first item on the agenda. Shaykh Mohammed said that when he tried to move the discussion on to other issues, such as Iraq or Iran, the Saudis declined. The FTA issue was left on the table unresolved, with delegations agreeing to consult in their capitals. GCC Foreign and Finance Ministers will depart for Rabat this weekend for the December 11 Forum for the Future meeting. Shaykh Mohammed expected to have further bilateral discussions on the issue while in Rabat. The King's position on this is clear, he said. If the FTA issue is not removed from the agenda, he will cancel the Summit. Shaykh Mohammed said he would not call it a deadlock at this time, but he did term it a crisis. ¶3. (C) King Hamad had traveled to Riyadh December 7 to discuss the issue with King Fahd and Crown Prince Abdullah (reftel),but Shaykh Mohammed said that the King was unable to raise the issue during his meetings with them. Kuwait's Dr. Mohammed said he was told that, when the King raised it, his Saudi interlocutors declined to enter into a discussion, saying there were too many people in the room. ¶4. (C) Shaykh Mohammed said that the King's position on the FTA with the U.S. remains firm: Bahrain has signed it, and it will respect its signature. He noted that the EU has been negotiating unsuccessfully for 15 years to get a free trade agreement with the GCC, and Bahrain will not sacrifice its interests to wait for a common GCC position (in other words, when the Saudis are ready). ¶5. (C) Comment. The Bahrainis are perplexed by the sudden Saudi hardline on the FTA, which has long been well-known to the Saudis. Shaykh Mohammed said that the Saudis had raised a general concern in multilateral fora from time to time, but never bilaterally. Finance Minister Abdullah Seif suggested to the Ambassador that perhaps the Saudis only became concerned when they recognized that other GCC countries were starting to follow Bahrain's lead and negotiate their own bilateral FTAs. He wondered what could be done to help move the Saudis forward on WTO and FTAs. Other observers have speculated that the real target of the Saudis is the U.S.; the Saudis are alarmed that the U.S. influence among the other GCC countries is growing at Saudi expense, and Bahrain is the softest and easiest country on which Saudi Arabia can exercise its leverage. Clearly, it is in our interest to support Bahrain and other GCC countries who wish to negotiate FTAs with the U.S. This issue will no doubt come up on the margins of the Forum for the Future meeting, and GCC countries (especially Bahrain) will be seeking U.S. reaction. MONROE