SCENESETTER - DEA ADMINISTRATOR TANDY'S VISIT TO

S E C R E T SECTION 01 OF 06 ABU DHABI 003013

SIPDIS

DEA FOR ADMINISTRATOR TANDY FROM AMBASSADOR

E.O. 12958: DECL: 07/07/2015
TAGS: SNAR PTER KTFN EFIN ETTC TC
SUBJECT: SCENESETTER - DEA ADMINISTRATOR TANDY'S VISIT TO
THE UAE


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


1. (C) Administrator Tandy: I would like to welcome you to
the UAE. Your visit comes during a dynamic period in the
U.S.-UAE bilateral relationship. Over the last few years,
relations between the U.S. and the UAE have deepened and
expanded in the economic, military, counter-terror, and
nonproliferation areas. In Abu Dhabi we have requested
meetings for you with Abu Dhabi Crown Prince Mohammed Bin
Zayed (MBZ),Interior Minister Sheikh Seif, and Central Bank
Governor Sultan Nasser Al Suweidi. In Dubai, we have
requested a meeting for you with Dubai Crown Prince Mohammed
Bin Rashid (MBR),and you will be meeting with the U.K.,
Canadian, and Australian drug liaison officers and their
respective Consuls General.


2. (U) Table of Contents:
- 3-5: Government and Economy
- 6-10: U.S./UAE Cooperation and Collaboration
- 11-16: Counternarcotics
- 17-21: Anti-Money Laundering and Counter Terror Finance
- 22: Counterterrorism
- 23-24: Key Discussion Issues
- 25: Interlocutor Bios

Government and Economy
--------------


3. (U) The UAE is a federation of seven emirates founded in
December 1971. Under the constitution, the federal
government has authority for certain areas that affect the
federation as a whole, such as foreign affairs, while the
individual emirates retain authority in areas not
specifically delegated to the federation. In all cases,
however, federal laws and decrees "trump" local laws. In
November of 2004, President Sheikh Zayed al Nahyan passed
away and was succeeded by his eldest son, Sheikh Khalifa bin
Zayed Al Nahyan. The political transition following Sheikh
Zayed's death has been smooth. President Khalifa has ensured
stability by pursuing the same domestic, regional, and
international policy priorities as his father.


4. (U) Over the last 34 years, the UAE has developed into the
second largest economy in the Arab world. It has adopted
progressive economic policies that have helped diversify its
economy away from a dependence on oil and that will continue
to strengthen the UAE's position as the region's pre-eminent
hub for trade, transportation, investment and tourism. We
are in the process of negotiating a free trade agreement that
will advance mutual economic interests and ensure that the
UAE remains among the top ten countries with which the U.S.
runs a trade surplus.


5. (U) Individual emirates maintain ownership of natural
resources within their borders, and as a result, there are
sharp differences in the wealth of the various emirates. The
Emirate of Abu Dhabi, which controls 94% of the oil and gas
reserves in the UAE, is the richest and most powerful
emirate. Lacking Abu Dhabi's vast oil reserves, Dubai has
managed to achieve a strong economy by providing stability,
world-class infrastructure such as the ports and airport, an
openness to foreigners, and a business-friendly climate.
Dubai has become the region's center of tourism, banking and
finance, shipping, air travel, retailing, and free zones.
The five northern emirates are less wealthy, have fewer
resources and fewer economic opportunities, and are highly
dependent on grants from Abu Dhabi emirate and the federal
government.

U.S.-UAE Cooperation and Collaboration
--------------


6. (S) U.S.-UAE cooperation in the security and
counterterrorism fields is robust and the UAE leadership is
actively seeking ways to enhance the relationship. In
particular, the UAE cooperates very closely with the U.S. on
anti-money laundering (AML) and counter terror finance (CFT)
issues. The Central Bank's Anti-Money Laundering and
Suspicious Cases Unit (AMLSCU),which serves as the UAE's
Financial Intelligence Unit (FIU),has a close working
relationship with the U.S. Department of Treasury's FIU
(FINCEN),and these officials are often in daily contact with
one another. The Central Bank has also assisted the U.S. on
a number of criminal cases, including by providing documents
for use in the trial of accused 9/11 associate Zacharias
Moussaoui. (Note: The Central Bank, a member of the Egmont
Group, also cooperates closely with other FIUs around the
world. It has assisted the UK, Germany, Portugal, and Turkey
on AML and CFT investigations. The Central Bank has also
frozen 23 accounts based on information and requests from
other countries, and it has referred 88 cases to counterparts
in other countries for investigation and asset freezing.)


7. (C) To further enhance our robust cooperation in the field
of counterterror finance, Homeland Security Advisor Fran
Townsend proposed establishing a Joint Terrorist Finance
Coordination Committee (JTFCC) to the Central Bank Governor
during her visit to the UAE in February. This committee,
which will be comprised of representatives from each
country,s law enforcement, intelligence, foreign affairs,
and financial regulatory agencies, will set terrorist finance
priorities and long-term strategy, formalize and coordinate
information exchange, and arrange training. Washington is
drafting a proposal to submit to the UAEG. DEA may wish to
consider working through the JTFCC to engage with the AMLSCU
on issues of joint concern (for example, on training bank
examiners and law enforcement officials on techniques to
identify and investigate individuals using hawala to launder
drug proceeds).


8. (C) As Minister of Interior, Sheikh Saif provides
significant support to all U.S. law enforcement agencies in
the UAE, and U.S.-UAE law enforcement cooperation has
increased dramatically over the past year. Both the Abu
Dhabi and Dubai police departments have been responsive to
the Legal Attache's requests for information in furtherance
of U.S. criminal investigations. The Dubai police department
drug section agreed to assist the FBI's investigation of a
local resident suspected of supporting terrorism through
illegal drug activities. While the case was discontinued
prior to undertaking the joint effort, the cooperation in
agreeing to and planning the operation was very positive.


9. (SBU) DHS/ICE has also developed a strong working
relationship with the Ministry of Interior and both the Abu
Dhabi and Dubai Police Departments; working joint criminal
investigations involving many different violations including
money laundering, smuggling, criminal export investigations
(including violations of the Arms Export Control Act),child
pornography, etc. Sheikh Saif has been a strong advocate of
developing a close working relationship with DHS/ICE and has
personally authorized the development of a joint operation
with the Ministry of Interior targeting U.S. and UAE based
Hawaladars willing to move the proceeds of illegal activity.
Additionally, ICE manages the Container Security Initiative
(CSI) in Dubai with four ICE and Customs and Border
Protection (CBP) officers co-located with the Dubai Customs
Intelligence Unit. CSI is a program designed to screen U.S.
bound cargo for conventional weapons and WMD.


10. (C) While informal, working-level law enforcement
cooperation is excellent, formal, judicial cooperation has
been stilted, at best. The UAE has recently begun to block
formal judicial cooperation regarding requests for
information and return of suspects in order to pressure us to
conclude Mutual Legal Assistance (MLAT) and extradition
treaties. Current negotiations for an MLAT are stalled,
however, due to the UAEG's insistence on linking negotiations
to an Extradition Treaty and the UAE's unwillingness to
extradite its own nationals. Historically, there were two
instances where the UAE extradited persons wanted in the
United States. In 2004, the UAE rendered a Bangladeshi
national to Michigan on attempted murder charges, and in 2002
rendered a Russian on kidnapping for ransom and extortion
charges to Los Angeles. However, there have been recent
instances where the UAE's Ministry of Justice released
fugitives wanted by the United States.

Counternarcotics
--------------


11. (U) Although illicit drug use is not viewed a critical
problem in the UAE, recent seizures suggest that drug
trafficking is a growing concern for the country. The UAE
serves as a likely narcotics transshipment point for drugs en
route from major drug-producing countries such as Afghanistan
to Western European and African nations. This is due to its
proximity to major drug cultivation regions in Southwest
Asia, its long (700 kilometer) coastline, and high volumes of
shipping and transportation at UAE ports. The UAE has taken
several recent initiatives to address the menaces of
trafficking and increasing drug use, including cooperation
with the United Nations.


12. (U) UAE authorities have pursued nearly 5,000 narcotics
cases from 1999 to September 2004, with the street value of
drugs seized exceeding $25 million. According to press
reports, the Abu Dhabi Police Anti-Narcotic section handled
171 cases last year, and already has 68 drug cases in the
first five months of this year. Typically, most drug cases
involve hashish trafficking and use, but recent seizures in
Abu Dhabi suggest an increase in the trafficking of heroin.
Authorities seized 39.7 kg of heroin from January to May 2005
in Abu Dhabi alone, compared with only 2 kg in all of 2004.
Hashish seizures in Abu Dhabi fell from 1,233 kg in 2004 to
less than a kilogram during this five-month period.
(Comment: It appears the bulk of hashish seized in 2004 came
from a few significant seizures. End comment.)


13. (SBU) The volume of seizures suggest that traffickers
increasingly use the UAE as a transshipment point for
narcotics from regions in south and southwest Asia (primarily
Afghanistan, Pakistan, and Iran). Small vessels and
powerboats transport cargo containers of hashish, heroin and
opium; some smugglers also use truck and horseback to take
drugs over the UAE land border. The majority of these drugs
go to Western Europe and Africa, while relatively few go to
the United States. The UAE is vulnerable to such trafficking
because of high volumes of shipments, especially in the
emerging trading centers of Dubai and Sharjah, and a porous
land border with Oman. Additionally, some smaller ports in
emirates other than Abu Dhabi and Dubai do not inspect
transshipped cargo as they do other goods entering the
country.


14. (SBU) Rob Walker, Drugs Liaison Officer at the UK
Consulate General in Dubai, has expressed concern that
European organized crime was trying to link up with Afghani
and Pakistani drug traffickers because transiting heroin
through Dubai is one-third as expensive as it is through
Holland. However, Walker also noted that the UAE has taken
major steps to crack down on shipments of drugs destined for
the UAE, as well as those transiting through. Sultan Bin
Sulayem (Chairman of Dubai Ports, Customs, and Free Zones
Authority) recently stated that Dubai Customs does not merely
check containers and seize the drugs they find. Rather, they
launch a full investigation by, for instance, cooperating
with the destination country for the shipment and putting
tracing devices on the containers of the drugs.


15. (U) TO date, the UAE has not faced an overwhelming
addiction problem, although it does exist. The UAE pursues
an aggressive anti-drug policy that includes harsh penalties
for offenders, rehabilitation programs and public awareness
campaigns. Drug offenses are governed by shari,ah law,
according to a 1996 amendment to the Penal Code. Per a 1995
law, drug offenders may receive capital punishment for drug
trafficking. Although no executions have yet taken place, an
Asian woman is in the appeals process after receiving the
death sentence in December 2004. Punishments are markedly
different for UAE citizens than for foreign nationals.
Emirati addicts may turn themselves in to a rehabilitation
center or the police without facing prosecution, and most UAE
nationals arrested on drug charges undergo a two-year
rehabilitation program with family counseling. Third-country
nationals, in contrast, usually serve out severe prison
sentences before being deported.


16. (U) The UAE government actively works with the United
Nations and other countries to stem the flow of narcotics
into and through the UAE. The UAE,s joint work with other
nations to stop trafficking gangs has resulted in arrests in
Yemen, Pakistan, Iran, Australia, Canada and Holland ) in
addition to the arrests for 12 cases in neighboring Oman,
Saudi Arabia and Kuwait. In 2003, the UAE signed a landmark
counter-narcotics agreement with Iran to coordinate efforts
against production, distribution and smuggling across the
UAE-Iran sea border. The UAE agreed to foot the $3 million
bill for the establishment of a UN sub-office on Drugs and
Crime (UNODC),which will open in Abu Dhabi in September

2005. The UNODC will coordinate with the Higher Committee
for Drugs Control in the UAE, similar organizations in GCC
countries, and various non-governmental organizations such as
youth and women,s associations. The UAE is party to the
1988 UN Drug Convention, the 1961 UN Single Convention as
amended by the 1972 Protocol, and the 1988 UN Convention on
Psychotropic Substances. The UAE has signed, but has not yet
ratified, the UN Convention against Transnational Organized
Crime.

Anti-Money Laundering and Counter Terror Finance
-------------- ---


17. (SBU) While the laundering of narcotics funds may take
place in the UAE, potential exploitation of the UAE financial
system by foreign terrorists and terror financing groups has
been the primary concern. Following the September 11
terrorist attacks and revelations that terrorists had moved
funds through the UAE, Emirati authorities acted swiftly to
address vulnerabilities. Both federal and emirate-level
officials have gone on record as recognizing the threat money
laundering activities in the UAE pose to the nation's
security and continue to take significant steps to better
monitor cash flows through the UAE financial system and to
cooperate with international efforts to combat the financing
of terrorism.


18. (S) Law No. 1/2004 (the counter terror law) and Law No.
4/2002 (the anti-money laundering law) form a robust legal
framework to combat money laundering (AML) and terror finance
(CFT). The Central Bank Governor has the authority to freeze
accounts for up to seven days if he suspects that the funds
will be used to fund or commit any of the crimes listed in
the two laws, but the Central Bank must provide evidence to
the Attorney General for prosecution in order to maintain the
freeze beyond seven days. In practice, the Central Bank
holds freezes longer than seven days, even if no evidence has
(or can be) provided to the Attorney General. The Central
Bank Governor is proactive and would rather freeze accounts
extra-judicially than to allow individuals access to suspect
funds. However, the Central Bank has become frustrated when
the USG has asked the Bank to freeze funds and has not
provided evidence that could be used in a court of law.
Central Bank officials have told us on multiple occasions
they are concerned that courts could force them to release
frozen assets based on a lack of evidence, which would
seriously damage the credibility and effectiveness of the
Central Bank. The Central Bank, which has the capability to
examine accounts, follow wire transfers, and ensure banks
follow appropriate Know Your Customer procedures, does not
have the law enforcement expertise or mandate to determine if
there is underlying illegal activity, and thus when they
freeze accounts at our behest, they need releasable
information to use in the courts, as they do not really have
the capabilities to generate their own case.


19. (SBU) The UAE -- and Dubai in particular -- is an
important financial center for the Gulf region, and the
Central Bank takes its job of examining and monitoring the
financial sector very seriously. Banks and other financial
institutions supervised by the Central Bank (exchange houses,
investment companies, and brokerages) are required to submit
suspicious transaction reports (STRs) to the Central Bank's
Anti-Money Laundering and Suspicious Cases Unit (AMLSCU).
Financial institutions are required to follow strict "know
your customer" guidelines, and all financial transactions
over $54,000, regardless of their nature, must be reported to
the Central Bank. By law, all wire transfers in excess of
$545 must be reported to the Central Bank, and individuals
are required to declare cash that they import and export in
amounts greater than $10,800.


20. (SBU) The informal and mostly undocumented "hawala"
remittance system is an effective and inexpensive way for
foreign workers in the UAE to remit funds to their home
country. However, the fact that hawala is an undocumented
and nontransparent system makes it difficult to control and
an attractive mechanism for terrorist and criminal
exploitation. In an effort to regulate hawala dealers
(hawaladars),the Central Bank began registering UAE
hawaladars in 2002. To date, over 160 hawaladars have
registered and now submit quarterly records of all of their
transactions (with names and addresses of remitters and
beneficiaries),but Central Bank officials acknowledge that
they do not know how many unlicensed hawaladars continue to
operate. Governor Al Suweidi has told us that he is
intentionally taking a soft approach to hawaladar regulation
-- there are no penalties for failing to register -- because
he does not want to drive hawaladars further underground. He
has told us that he intends to eventually impose penalties
for failure to register, but he does not seem inclined to do
this in the near future. The UAE considers itself a leader
in hawaladar regulation, and has held three highly successful
international conferences on hawala use and regulation.


21. (SBU) The UAE is noted for its free trade zones (FTZs),
and every emirate (except Abu Dhabi) has at least one
functioning FTZ. The FTZs allow 100% foreign ownership, full
repatriation of profits and no taxes, and firms can import
and export without paying any customs duty. UAE free zones
have attracted approximately 5,000 companies and an estimated
investment of over $4 billion. Companies located in FTZs are
treated as being offshore or outside the UAE for legal
purposes, but they are still subject to UAE criminal law.
The mammoth Jebel Ali Free Zone (JAFZ) has nearly 3000
companies on site, including major multinational firms and
Fortune 500 companies. While JAFZ has a reputation as a
"wild child", it has actually grown into a respectable
"adult", hosting the regional headquarters and distribution
hubs of many reputable companies. The existence or extent of
trade-based money-laundering in the JAFZ is currently
unknown. Some of the smaller free zones, Sharjah or Fujairah
with their closer ties to Russia and Iran respectively, may
be more likely locations for such money-laundering, although
this has not been observed.

Counterterrorism
--------------


22. (C) The UAE is well aware of its vulnerability to
terrorist attacks and has taken a number of steps to enhance
its critical infrastructure and border security along its
porous land and maritime borders. In July 2004, the UAE
strengthened its legal authority to respond to
terrorist-related activity with the passage of an
anti-terrorism law (Law No. 1/2004). The law defines
terrorism, specifically criminalizes terrorist financing, and
sets stiff penalties for violations. UAE law enforcement
agencies -- with U.S. assistance and training -- are also
focusing on how they would respond to a potential attack,
including attacks on critical oil production, power and water
infrastructure, and ports/airports. However, there is still
relatively little coordination within and between the
emirates on counter-terror strategies. The primary federal
decision-makers on counterterror matters are MBZ, Sheikh
Saif, and Sheikh Hazza (Director of the UAE State Security
Organization). Transshipment issues, which primarily involve
Dubai, are handled autonomously through Dubai Customs and the
Dubai State Security Division.


Key Discussion Issues
--------------


23. (SBU) The Emiratis are likely to raise the following with
you:

-- Releasable information. The Central Bank has legal
constraints on asset freezing and thus the USG needs to do a
better job of passing on information that is usable for
prosecution purposes; (Central Bank Governor Al Suweidi)

-- Training. The UAE values U.S. expertise and often
requests additional training for their customs and law
enforcement officers; (Sheikh Saif, Central Bank Governor Al
Suweidi)

-- Saudi Arabia. The Emiratis closely watch developments in
Saudi Arabia, and will be keen to compare views on security
developments in the kingdom; (MBZ)

-- Trafficking in Persons. (Background: Due in large part to
the use of trafficked underage foreign boys in camel races,
this June the UAE was downgraded from Tier Two Watch List to
Tier Three Watch List in the 2005 Trafficking in Persons
(TIP) Report. The Emirati leadership has indicated to us that
they will work diligently on each of the steps suggested in
the TIP action plan.) If this issue is raised with you, you
could reiterate our message that fulfillment of the action
plan will demonstrate significant efforts by the UAEG to
eliminate trafficking and elevate the UAE to Tier Two Watch
List status. (MBZ, MBR, Sheikh Saif)


24. (SBU) It would be appropriate for you to raise the
following points during your meetings:

-- AML, CFT. Appreciate the UAE's significant efforts to
combat terrorism, terror finance, and money laundering; (all
interlocutors)

-- Export Control Law. The UAE's draft export control law is
still in the UAE interagency process. Note that passing an
export control law would give the UAE grater ability to act
against transshipments of controlled items; MBZ, MBR, Sheikh
Saif)

-- CSI and Megaports. Thank Dubai for being the first Middle
East port to join the Container Security Initiative and
Megaports Initiative; (MBR)

-- Law Enforcement Cooperation. Note solid law enforcement
cooperation. (Sheikh Saif, MBR)

Interlocutor Bios
--------------


25. (S) We have requested meetings for you with:

-- Mohammed bin Zayed (MBZ). Sheikh Mohammed bin Zayed Al
Nahyan became the Crown Prince of Abu Dhabi in November 2004,
upon the death of his father, Sheikh Zayed. MBZ is a dynamic
and charismatic leader and an advocate for necessary changes
in the social and political arenas. MBZ is pro-U.S. and has
been supportive of our efforts in Iraq and Afghanistan and in
the war on terrorism. In addition to being Crown Prince of
Abu Dhabi, MBZ serves as the Deputy Supreme Commander of the
UAE Armed Forces. MBZ sees Iran as the UAE's biggest threat,
and he is very concerned about extremism and instability in
Saudi Arabia. MBZ, who speaks excellent English, is very
personable and likes to get to know his interlocutors on a
personal basis. He was born in 1961.

-- Mohammed Bin Rashid (MBR). Sheikh Mohammed bin Rashid Al
Maktoum is the Crown Prince (and de facto ruler) of Dubai.
He is a pragmatic and decisive interlocutor who responds best
to straight talk. MBR and MBZ have developed a good rapport
over the years, and they generally cooperate closely on most
federal-level decisions. MBR is the titular UAE Minister of
Defense, but he plays no role in the decisions, staffing, or
funding of the UAE Armed Forces. MBR is well disposed toward
the United States, and he believes the US military presence
in the Gulf is mutually beneficial by maintaining balance in
the region. MBR advocates a more conciliatory policy toward
Iran, and he often emphasizes Iran's commercial importance
and its desire to play a role in the Gulf. MBR was born in

1946.

-- Sheikh Saif Bin Zayed. Sheikh Saif bin Zayed Al Nahyan
(half brother to MBZ) is the UAE Minister of Interior. He is
also Director General of the Abu Dhabi Police, where he holds
the rank of Lieutenant General. Sheikh Saif is a good friend
of the U.S. and pays close attention to Embassy security.
The Ministry of Interior is responsible for overseeing the
federal police, prisons, and support centers, and it oversees
immigration, and civil defense. Sheikh Saif implemented the
iris-scanning program at UAE ports of entry to prevent
deportees from returning to the UAE. He holds a bachelor,s
degree in political science from UAE University, and he
studied English in the UK where he also attended a training
program for police at Scotland Yard. We was born in 1968.

-- Sultan Nasser Al Suweidi. Central Bank Governor Sultan
Nasser Al Suweidi is a reform-minded Abu Dhabi native who has
become one of the closest contacts of the Embassy. The
Governor has been a key player in our efforts to choke off
terrorist financing since the September 11 attacks, and
privately has initiated unprecedented UAEG cooperation with
Washington on the war on terrorism. Al Suweidi's public
comments often defend the UAE banking system and deny its
shortcomings, but privately he remains collegial and welcomes
frequent contact with U.S. officials. Meeting with him for
the first time, he will be sensitive to any inferences that
we think the Central Bank is not doing all it can to regulate
the formal and informal financial systems. Sultan is a
micromanager -- his staff will not commit the Central Bank to
action, preferring instead to send all matters to the
Governor's office for approval. He makes frequent trips to
the Central Bank's branch offices in other emirates, travels
abroad often to consult with his GCC counterparts, and
frequently accompanies high-ranking UAE officials to the
United States. Governor Al Suweidi was very involved with
forming the Middle East North Africa Financial Action Task
Force (MENAFATF),which is headquartered in Bahrain. Since
its inception in November 2004, the Central Bank has hosted a
number of MENAFATF-sponsored conferences and symposia. Born
in 1953, Al Suweidi studied at San Diego State University.
SISON