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