WHAT'S BEHIND THE UAE-SAUDI BORDER DISPUTE

S E C R E T SECTION 01 OF 04 ABU DHABI 003851 SIPDIS DEPT FOR NEA/ARPI, L, INR/NESA, INR/G E.O. 12958: DECL: 09/21/2015 TAGS: PREL PBTS EPET PGOV ETRD SA TC SUBJECT: WHAT'S BEHIND THE UAE-SAUDI BORDER DISPUTE REF: A. ABU DHABI 3700 ¶B. STATE 152459 ¶C. ABU DHABI 2946 ¶D. JEDDAH 2802 ¶E. DUBAI 3985 ¶F. ABU DHABI 3272 ¶G. ABU DHABI 3008 ¶H. 04 ABU DHABI 4655 Classified By: Ambassadors James C. Oberwetter and Michele J. Sison for reasons 1.4 (b) and (d). This is a joint Embassy Riyadh - Embassy Abu Dhabi Cable. ¶1. This is an Action Request. Please see para. 15 ¶2. (C) Summary: In response to the rising volume of private and public sniping between the UAE and Saudi Arabian governments over the status and meaning of their 1974 Agreement on the Delimitation of Boundaries (refs),Embassies Abu Dhabi and Riyadh recently met to exchange perspectives and identify the various issues underlying this war of words. This joint cable briefly outlines the text of the 1974 Agreement. It then examines some of the underlying issues: onshore issues (the Shaybah Zarrah oil fields, trade, and the Buraimi/Al-Ain Oasis),offshore issues (the causeway, the Dolphin Project, and oil and gas exploration),and political issues of GCC unity. Posts request, for their own internal understanding, any guidance Department can provide on certain legal issues (para 15). End summary. The 1974 Agreement: What Does it Say? -------------- ¶3. (U) The text of the Agreement on Border Delimitation, signed by both heads of state in 1974: -- Drew the land border between the UAE and Saudi Arabia; -- In drawing the land border, gave Saudi Arabia a fifteen-mile coastline along the Arabian Gulf, between Qatar and the UAE, that cut off any direct connection between the UAE and Qatar; -- Gave UAE control over the Al Buraymi Oasis on the border of Abu Dhabi and Oman, which Saudi Arabia had claimed until the Agreement,s signing; -- Granted Saudi Arabia sovereignty over Huwaysat Island in the Arabian Gulf and the UAE sovereignty over all the other islands opposite its coast in the Gulf; --Granted the UAE,s permission for Saudi Arabia to construct &any general installations8 on the offshore islands of al-Qaffay and Makasib; and -- Granted all hydrocarbons in the Shaybah-Zarrah oil field, crossed by the new land boundary, to Saudi Arabia, which was given the right to engage in further exploratory drilling in the field. ¶4. (U) Specific language in the Agreement is pertinent to the current tensions and the two sides, positions. Under Article 5 of the Agreement: -- both parties &shall have joint sovereignty over the entire area linking the territorial waters of the Kingdom of Saudi Arabia and the high seas(8; and -- the parties will act to delimit their offshore boundaries on a &basis of equity as will ensure free and direct access to the high seas from the territorial waters of that part of the territory of Saudi Arabia adjacent to the territory of the UAE( in such a manner as to take account of suitability for deep water navigation between the high seas and Saudi Arabia.8 -- The parties further defined Article 5,s use of the term &joint sovereignty8 in an exchange of letters conveyed simultaneously with the 1974 Agreement,s signing. According to these letters, &joint sovereignty over the entire area linking the territorial waters of the Kingdom and the high seas does not extend to ownership of the natural resources of the seabed and subsoil, inasmuch as these resources continue to be owned by the United Arab Emirates alone(8 Despite the apparent clarity of the Agreement, however, the two sides now have very different views on the meaning of these provisions and their legal rights. Offshore ) It,s about the Causeway -------------- ¶5. (S) The current round of tension between the two Gulf neighbors was triggered by the UAE and Qatar,s announcement of interest in building a causeway connecting the two countries. The most likely route is one that would run through waters offshore of the Saudi coastal strip granted in the Agreement. The Saudi and UAE Governments have radically different views on the UAE's legal authority to build this causeway. The text of the Agreement grants "joint sovereignty" over the coastal waters and a right of passage for Saudi Arabia to international waters. UAEG officials have stated that the UAE did not give up control over territorial waters (only the land border). The Saudis object to the causeway because it violates what Riyadh maintains was the Agreement,s grant to Saudi Arabia of full access to international sea-lanes from its coastal strip and &joint sovereignty8 over the waters. As joint sovereigns, Riyadh,s view is that neither state can take action in the face of objection from the other. (Note: We have only heard reference to a proposed "causeway" project. Could the Saudi concern about access to international waters be addressed via a bridge-tunnel configuration such as the Chesapeake Bay Bridge-Tunnel, which combines bridges and tunnels over two widely separated shipping channels? End note.) ¶6. (C) There are two other issues related to the maritime boundaries: a) access to offshore oil and gas reserves and b) the Dolphin Project to pipe gas from Qatar to Abu Dhabi. (Comment: Embassies Riyadh and Abu Dhabi do not believe that these factors are actually influencing the two sides. End Comment.) Although the UAE (specifically the Emirate of Abu Dhabi) owns the sub-sea natural resources under the letters exchanged with the Agreement, it does not appear to be attempting to produce oil or gas in the "disputed" waters. The edge of the Emirate of Abu Dhabi's existing oil concessions does not go directly to the strip of land granted Saudi Arabia by the agreement, but parallels the coastline in a way that appears to concede -- at least some -- territorial water to the Saudis. The exact distance from the coast to the concession borders is unclear. There is no evidence of Saudi interest in the subsurface resources and Riyadh has conceded that those resources, under the Agreement and letters, belong to the UAE (ref D). As far as posts can ascertain, access to offshore subsurface resources has not been a source of contention. And although one press report cites the planned Qatar-UAE Dolphin Project pipeline as a source of tension, Occidental Petroleum's regional general manager has stated that no one has raised it as an issue with the company. The proposed path of Dolphin's pipeline would take it well outside any Saudi territorial claims. Onshore: It's About Oil( -------------- ¶7. (U) The 1974 Agreement established a new land boundary between the two states that crossed the mammoth Shaybah-Zarrarah oil field, leaving approximately eighty percent of it on the Saudi side of the border. Article 3 of the Agreement states that all hydrocarbons in the field &shall be considered as belonging to the Kingdom of Saudi Arabia8 and that the UAE would not engage or permit any exploration or drilling for hydrocarbons in that part of the field within its new border. Article 3 also gave Saudi Arabia the right to engage in exploration and drilling on that part of the field within the UAE and the &two states shall subsequently reach agreement on the manner in which the Kingdom of Saudi Arabia shall engage in such activities.8 Since the Agreement was signed, the field has turned out to be among the largest oil producing formations in the world. Estimates in the trade press of its potential oil reserves have risen from 15 billion barrels to 20 billion barrels, most of it highly valued light crude. There is also twenty-five trillion cubic feet of associated gas in the field, according to Saudi Aramco. The field is now a centerpiece of Aramco,s announced plans to expand total production over the next several years; current plans call for an increase in production from the field of 250k-300 bpd by 2009, over the current 500,000 bpd. ¶8. (S) At this point, neither side has publicly challenged the provisions on the Shaybah field in the Agreement, which effectively gave one hundred percent of the Shaybah field,s wealth to the Saudis. The UAE has, thus far, abided by the agreement and is not producing oil out of its 20% of the field. Senior UAEG officials have stressed that the dispute is more about control over territorial waters than about the oil field. Given the size of the prize, however, we cannot discount that the oil field remains an issue. The UAE was the only GCC state that did not attend the opening of the Shaybah field complex in 1999. Embassy Abu Dhabi's contacts in the oil industry have also said that the Abu Dhabi National Oil Company (ADNOC) is prepared to develop the field quickly if there is any change in UAE policy. ¶9. (S) The agreement also states that Saudi Arabia and the UAE will also undertake to refrain from exploiting hydrocarbons in areas where the fields are "primarily located" in the territory of the other state. This appears to be another potential source of tension. Saudis are likely concerned that Abu Dhabi will discover new fields that they will claim are "unrelated to" Shaybah. Oil company officials in Saudi Arabia have suggested to Embassy Riyadh that there is increased activity on the UAE side of the border. In fact, Abu Dhabi is producing in other fields near the border, including in the Shah field, which lies approximately 18 miles from the Shaybah field and directly on the border. The Saudis recognize that new oil discoveries have been made on the UAE side of the border, unrelated to the Shaybah field, and appear not to dispute that they belong to the UAE (Ref D). Oil company executives in the UAE have told Embassy Abu Dhabi that exploration continues in the border region as a way of "marking territory" and ensuring that Abu Dhabi's equities are protected. (Ref G) And about the Oasis(. -------------- ¶10. (C) One impact of the boundary delimitation that benefited Abu Dhabi was that Saudi Arabia formally abandoned its claims to the Buraimi Oasis that is shared between the UAE and the Sultanate of Oman. This oasis lies about 120 miles away from the current Saudi-UAE border and was a long standing subject of dispute as the tribes in the region shifted allegiances. In 1952, King Abd Al-Aziz ibn Saud sent a force to reassert claims over the oasis. After three years of failed negotiations and arbitration between the British (as the protectors of Abu Dhabi) and the Saudis, forces loyal to the Sultanate of Oman, the Ruler of Abu Dhabi, and the British (the Trucial Oman Scouts) recaptured the Oasis. Sheikh Zayed Al-Nahyan was the Amir's representative in Al-Ain (Buraimi) at that time and Al Ain is considered an important part of the Al-Nahyan's territory. Old press reporting and majlis chat style the renunciation of Saudi claims to the Oasis as the trade-off for the Saudi grant of a coastal strip. And the Saudi FM recently indicated that the Saudis view giving up their claim to the Oasis as the quid pro quo Riyadh paid for gaining control of the Shaybah field and access to the coastal strip. The FM stated that if the UAE reopens the border and sea-lane issues, Riyadh would &renew its claim to the oasis (Ref D)." So far neither side has publicly raised the Oasis issue, but it was a key component of the Agreement in 1974, and as the Saudi FM,s comments suggest, revision of the Agreement risks reopening what had been a strong irritant between the two sides. (And About Trading Leverage -------------- ¶11. (C) Right now, commercial traffic from the UAE to Qatar must cross Saudi territory. Although items from within the GCC are supposed to circulate duty free, goods from the UAE's many free zones do not count as part of the GCC for customs purposes. UAE officials and businesses have periodically complained about long delays for imported non-GCC goods at the Saudi border and customs check points. The fact that commercial traffic between the UAE and Qatar must cross through Saudi land and are subject to Saudi controls gives Riyadh some leverage over both its smaller GCC neighbors. This is one of the reasons that the UAE and Qatar are looking at building a causeway. For the Saudi side, to acquiesce to the UAE position is to lose the leverage the coastal strip provides it over a portion of the commercial traffic between its two smaller neighbors and potentially with trade between all three of its smaller neighbors as Bahrain and Qatar have also discussed building a causeway. Other Underlying Issues - the GCC and Emirati Pride -------------- -------------- ¶12. (C) A likely issue for both sides is how the interpretation and future of the 1974 Agreement shapes their economic and political relations, bilaterally and within the GCC. There have been tensions between the Kingdom and its smaller GCC neighbors for some time (Ref G). The dispute over the 1974 Agreement is the latest in a series that included a public Saudi-Bahraini "blow-up" over Bahrain's signing a free trade agreement with the U.S. Government, private expressions of Saudi irritation over the UAE's negotiations on a free trade agreement with the U.S. Government, and Emirati irritation over the way Riyadh "handled" the Bahrain dispute (Ref H). Embassies Abu Dhabi and Riyadh concur that, for both sides, the outcome of the dispute over the Agreement will play into the shifting relations between Saudi Arabia and the UAE and the larger GCC. A meaningful revision of the Agreement -) either regarding offshore rights or division of the Shaybah field -) would signal a new balance between the Gulf states. If that revision included letting the UAE physically connect to Qatar, it likely would spark progress on an additional Qatar-Bahrain causeway. All of this would enhance the rapprochement between the small GCC states, perhaps at the expense of Saudi Arabia,s traditional leadership role in the Gulf. ¶13. (C) Emiratis have also argued that the agreement was made at an earlier time and does not reflect the current situation in the GCC, in which Saudi Arabia is (or should be) less dominant in the GCC than heretofore. Many in the UAE have argued that the Saudis took advantage of the UAE's weakness as a new nation to force it to accept unfair territorial concessions. Some Emiratis apparently still complain that the Saudis did not treat then UAE President Sheikh Zayed with respect. The Saudis, in turn, do not accept the contention that the balance of relations between the two states has sufficiently changed since 1974 to justify reopening the Agreement. As the Saudi FM rhetorically asked recently, &Are they any stronger now?8 (Ref D) The Status of the Agreement: Is it in Force? -------------- ¶14. (C) In addition to the Agreement,s substance, the parties differ over the status of the Agreement. The Saudis, who registered an &official8 text of it with the UN Treaty Office in 1993, appear to view the treaty as being in full effect, no doubt relying on Article 9, which states, &This Agreement shall enter into force immediately on signature.8 But UAE officials have taken the position the Agreement is not in effect because the UAE has not ratified it in accordance with the UAE constitution. Thus far the two sides have not engaged in a public debate over whether the Agreement is valid, but the issue is hanging fire and may be a card played by the UAE should the dispute develop further. Action Request for L and/or INR/G: Fundamental Legal Questions -------------- -------------- ¶15. (C) Embassies Abu Dhabi and Riyadh agree that a welter of political, economic, and territorial issues lie above ) and below ) the surface of this border dispute. Resolving them will likely turn on pragmatic trade-offs between the two sides, not the strength of either side,s position under international treaty or maritime law. That said, however, posts believe that if the U.S. Government is at some point asked to engage with the parties about this dispute, it will be important to have an understanding of the fundamental legal questions over which the two sides differ. These legal questions relate in large part to the status and meaning of the 1974 Agreement. Posts request any initial Department guidance that can be provided on the questions below and specifically on the U.S. Government,s current position regarding the status of the 1974 Agreement and its delimitation of land and sea borders. Questions for Clarification: -- Is the 1974 Agreement in legal effect for both parties? What effect, if any, under international treaty law does the lack of ratification by the Federal Supreme Council of the UAE, as required under UAE law, have on the Agreement,s validity? -- What is the impact that other subsequent agreements have on the 1974 Agreement? In particular, what is the effect of the Convention on the Law of the Sea, which the Saudis have signed and ratified, and the UAE has just signed, on an earlier agreement such as this? ---What is the Meaning of the Treaty,s Terms? At the heart of the two sides, differing interpretations of the 1974 Agreement is Article 5,s grant of &joint sovereignty over the territorial waters.8 Is joint sovereignty possible under international maritime and treaty law? If the concept is recognized, does it prohibit one joint sovereign from taking action in the territorial waters without the concurrence of the other joint sovereign? The two sides were also accorded sovereignty over specific islands in offshore waters, with Saudi Arabia accorded full sovereignty over one island and given permission to erect structures on two specific islands. Does the allocation of rights on these islands create obligations that would prohibit either side from taking actions in the offshore waters? ---Is There a Right to Revoke Treaty Commitments? The UAE believes it signed an unfair agreement under pressure from its larger neighbor. If it decides to renounce the Agreement, is there any principle under international treaty law that would recognize such an action on grounds of &unfair duress8 or some other principle? SISON