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