SCENESETTER FOR USDOC ASSISTANT SECRETARY LASH

UNCLAS MANAMA 000028

SIPDIS

USDOC 4520/ITA/MAC/AMESA/OME/NWIEGLER -- FOR ASSISTANT
SECRETARY LASH FROM AMBASSADOR NEUMANN

SIPDIS

E.O. 12958: N/A
TAGS: BEXP ECON PREL BA IZ
SUBJECT: SCENESETTER FOR USDOC ASSISTANT SECRETARY LASH
VISIT TO BAHRAIN

REF: USDOC 6511


1. Our team at Embassy Manama welcomes the upcoming visit of
Assistant Secretary Lash to Bahrain. I regret that I will
not be here to meet you, but we are arranging an excellent
program in my absence. Your visit will further strengthen
ties between the Commerce Department and Bahrain, building
the recent visit by Secretary Evans and Deputy Secretary
Bodman last October and Deputy Secretary Bodman's visit in
March 2002. The Bahrainis want closer economic relations and
want also to expand regional trade. Your visit will be very
welcome.


2. Overall U.S.-Bahraini relations are excellent. Our
security relationship, centered around the longstanding U.S.
Navy's presence in Bahrain, is the cornerstone of our
bilateral relationship. In addition, through the Middle East
Partnership Initiative we are engaging with nascent
democratic and civil society institutions, including
Bahrain's new Parliament. We also are funding ABA work with
the Bahrainis on commercial law reform.


3. More and more we are focusing on the bilateral economic
relationship. The U.S. is Bahrain's largest trading partner.
Our exports to Bahrain in 2003 were approximately $330
million; we imported approximately $456 million of Bahraini
products as well -- textiles, aluminum, and petrochemicals.
U.S. companies with subsidiary operations in Bahrain include
American Express, Citibank, Chase Manhattan Bank, Chevron,
and Great Lakes Dredging.


4. In dollar terms, however, trade has been growing only
slowly. The Bahraini Government recognizes that enhanced
trade flows are a means of addressing its serious
unemployment problem. For that reason the King and the Crown
Prince seek a Free Trade Agreement (FTA) with the United
States. Under USTR leadership, the FTA negotiations will
begin here on January 26. We anticipate that textiles and
services will be the toughest issues in the negotiations.


5. The Bahraini Government and business sector, meanwhile,
are keenly interested in developments in Iraq. The
Government is anxious to see Iraq stabilized and friendly
with its neighbors. The Bahraini business sector has hoped
that with the end of the war and the reconstruction of Iraq
there would be many new business opportunities. So far,
Bahrain companies' experience has not been positive. One of
Bahrain's flagship companies, telephone service provider
BATELCO, was not successful in its bid for a GSM operating
license in Iraq. Another flagship company, Gulf Airlines,
still awaits the reopening of airports in Baghdad and Basra.
Other Bahraini firms, including construction firms and
trading companies, hope for new contract opportunities. You
will be able to address these kinds of opportunities during
your meeting with the Bahrain Chamber of Commerce and also
during your meeting with the Bahraini press.


6. Finally, we would like you to give us a hand with the
establishment of the new American Chamber of Commerce in
Bahrain (AmCham). For years there was an existing group of
American businessmen in Bahrain, but it excluded non-American
citizens -- thus leaving important American company
subsidiaries such as Citibank, Federal Express, and American
Express without representation in this group. A different
group is now organizing a formal American Chamber of Commerce
in Bahrain. King Hamad and Crown Prince Salman are
enthusiastic about the AmCham concept. A number of American
companies have been invited to the reception we are giving in
your honor on January 13th and we would appreciate your
encouraging them to link up with the new AmCham.


7. Again, we look forward to seeing you in Bahrain.
NEUMANN