ONE MORE CRACK IN THE GCC - UAE/SAUDI BORDER

S E C R E T SECTION 01 OF 02 ABU DHABI 003008

SIPDIS

E.O. 12958: DECL: 07/06/2015
TAGS: PBTS PREL PHSA EPET ENRG TC GCC
SUBJECT: ONE MORE CRACK IN THE GCC - UAE/SAUDI BORDER
DISPUTE

REF: ABU DHANI 2946

Classified By: Ambassador Michele J. Sison, for reasons 1.4 (b) and (d)
.


1. (S) Summary. Tensions between UAE and Saudi Arabia over a
border dispute have broad implications for intra-Gulf
Cooperation Council (GCC) relations and the long-term
viability of the GCC. UAE officials view Saudi objections to
a planned causeway to link the UAE and Qatar as Saudi
Arabia's attempt to prevent the other GCC states from
deepening ties independent of Saudi Arabia. President
Khalifa is taking a vigorous personal interest in resolving
this dispute favorably for the UAE. UAE Deputy Prime
Minister and Minister of State for Foreign Affairs Sheikh
Hamdan bin Zayed al Nahyan (HbZ) will travel to Riyadh in
mid-July to continue discussions with Interior Minister
Prince Nayef bin Abdul Aziz and other key leaders. UAE
officials have told us that if the discussions do not go
well, the UAE will "turn up the heat" on the Saudis. End
summary.

Revival of Old Border Dispute
--------------


2. (S) Earlier this year, tension emerged between Saudi
Arabia and the UAE and Qatar, when Saudi Arabia objected to
UAE plans to build a causeway over the Khor Al Odeid waters
that would directly connect the UAE to Qatar. The UAE
insists that under a 1974 border treaty, it gave up the
onshore stretch of land at Khor Al Odeid, but not the
territorial waters, and UAE leaders have used this incident
to reinitiate long-standing objections to the 1974 treaty.
According to a close aide of Abu Dhabi Crown Prince Mohammed
bin Zayed (MbZ),President Khalifa is "furious" with the
Saudis and is taking a personal interest in resolving the
dispute to the UAE's advantage.


3. (C) Former President Zayed signed the 1974 border
agreement three years after the UAE's independence in order
to obtain Saudi recognition, but the UAE never actually
ratified the treaty. According to the terms of the
agreement, Saudi Arabia dropped its claim to the Buraimi
Oasis region (located on the eastern edge of UAE territory
near Al Ain),in return for Abu Dhabi giving up a 25 km strip
of land at Khor al-Odeid that linked it to Qatar.
Additionally, the two nations agreed that full control over
any existing or future discoveries of cross-border
hydrocarbons would be granted to the country controlling the
majority of the field. As such, the UAE gave up its claim to
the Zararah oil field. The Zararah field (known in Saudi
Arabia as the Shaybah oilfield) spans the UAE-Saudi border in
the Rub al-Khali (or Empty Quarter) and contains 15 billion
barrels of proven oil reserves and 25 trillion cubic feet of
untapped gas reserves. Although 10 to 20 percent of the oil
reserve lies within UAE territory, Saudi Arabia has economic
rights to the entire reservoir under terms of the 1974
agreement. Saudi Interior Minister Prince Nayef bin Abdul
Aziz visited the UAE on June 19 and met with HbZ to discuss
the border dispute. Nothing was resolved, and HbZ intends to
travel to Riyadh in mid July to press UAE's points once
again. He and his aides have told us that they are "not
optimistic" about successful resolution of the issue during
the visit.

It's Not About Oil, It's About the GCC
--------------


4. (S) Contrary to press reports suggesting the UAE wants to
exploit the Zararah oil field, our interlocutors tell us that
the UAE's primary concern is having sovereignty over its
territorial waters, and the implications this has for the
UAE's independent relations with its neighbors. According to
MFA U/S Abdullah Rashid al Noaimi, the border dispute arises
out of Saudi Arabian concern over losing influence over the
smaller Gulf states. The causeway is the UAE's redline
issue, according to al Noaimi. During a 26 June meeting
between HbZ and PDAS Liz Cheney, HbZ stated that that the UAE
would not accept joint sovereignty over the maritime border
"no matter what the consequences" (reftel).


5. (S) UAE leaders believe Saudi opposition to the causeway
linking UAE and Qatar stems from the Saudi's objection to
Gulf countries having ties independent of Saudi Arabia. The
Saudis had interfered on a number of issues important to
other GCC states -- the Qatar-UAE gas pipeline and the
Qatar-Bahrain causeway, and to Gulf states signing bilateral
free trade agreements with other countries. During his
meeting with PDAS Cheney, HbZ predicted that the Saudis'
efforts to block commercial cooperation, economic
development, and health issues would doom the GCC.

Turning Up the Heat
--------------


6. (S) UAE officials view HbZ's mid-July visit to Riyadh as a
critical juncture in the border discussions. Al Noaimi told
us recently that UAE officials believe the Saudi objections
are "gut" reactions and not strategic, coordinated policies.
Thus, HbZ intends to meet with key Saudi leaders Crown Prince
Abdullah, Deputy Prime Minster and Minister of Defense Sheikh
Sultan, Interior Minister Prince Nayef, and Minister of
Foreign Affairs Saud al Faisal to gauge their level of
engagement. Both Al Noaimi and HbZ are pessimistic about the
outcome of the Riyadh meetings, and according to Al Noaimi,
"if there is no progress, we will try other things to turn up
the pressure on them." According to MbZ's senior aide, if
the Riyadh meetings go poorly, the UAE is considering
withdrawing the UAE Peninsula Shield Rotation Brigade from
Hafr Al Batin. (Comment: Since the 1991 Gulf War, every GCC
country has provided troops to Hafr Al Batin in order to
protect Saudi Arabia from Iraqi invasion. Although the
argument could now be made that the troops are no longer
necessary, UAE removal of its troops would send a clear
signal to the Saudis of the UAE's unhappiness with the
relationship between the two countries. End Comment.)


7. (S) Although the UAE has not mobilized additional troops
to the border regions, it has taken small steps to impress
upon the Saudis the seriousness of this dispute. According
to a senior executive of the Abu Dhabi Company for Onshore
Oil Operations (ADCO),two months ago President Khalifa
instructed him to send an ADCO team to the border along the
Zararah oil field to "indicate a UAE presence." He and his
team were surprised to find an army presence already at the
Saudi border. The Vice President of Occidental Middle East
told Ambassador that last year, the UAEG had asked Oxy if it
would be interested in producing part of the Zararah oil
field, but the UAEG decided to not pursue production because
of Saudi objections. Abdullah Nasser al Suweidi, Deputy CEO
of ADNOC, told Embassy officers last week that ADNOC was
simply waiting for the "go ahead" and it could immediately
begin drilling on the field. He opined, however, that the
UAE was not likely to secure the right to exploit Zararah,
and that it was using this as a negotiating point.


8. (S) During his meeting with PDAS Cheney, HbZ stressed that
he raised the border issue to inform of the issue and not as
a request for action yet. However, MFA U/S Al Noaimi has
reiterated twice this past week that the UAE may come to us
for assistance after HbZ's meetings in Riyadh. He stated that
the UAE might ask the U.S. to encourage the Saudis to resolve
the issue, out of concern for Gulf security and stability.
SISON