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Identifier
Created
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05ABUDHABI5168
2005-12-21 14:16:00
UNCLASSIFIED
Embassy Abu Dhabi
Cable title:  

EXBS ADVISOR VISIT TO UNITED ARAB EMIRATES OCTOBER 2005

Tags:   ETTC  MNUC  PARM  PREL  KSTC  KNNP  JO 
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Cable 
Text:                                                                      
                                                                           
      
UNCLAS        ABU DHABI 05168

SIPDIS
CXABU:
    ACTION: POL
    INFO:   P/M ECON RSO DCM AMB MEPI

DISSEMINATION: POL
CHARGE: PROG

APPROVED: CDA:MQUINN
DRAFTED: EXBS: JIRVINE
CLEARED: DCM:MQUINN, CG:JDAVIS, ICE:WWALLRAPP, ECON:OJOHN, COM:MOBRIEN

VZCZCADI936
RR RUEHC RUEHAM RUEHMS RUEHYN RUEAIIA RUEKJCS
RUCPDOC RHFJUSC RUETIAA RULSJGA RHEBAAA RUEAHLC RUEKJCS RUENAAA
RUETIAA RUEATRS RUCNEXC
DE RUEHAD #5168/01 3551416
ZNR UUUUU ZZH
R 211416Z DEC 05
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 2893
INFO RUEHAM/AMEMBASSY AMMAN 0603
RUEHMS/AMEMBASSY MUSCAT 0475
RUEHYN/AMEMBASSY SANAA 1371
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC
RUCPDOC/USDOC WASHDC
RHFJUSC/US CUSTOMS SERVICE WASHDC
RUETIAA/DIRNSA FT GEORGE G MEADE MD
RULSJGA/COMDT COGARD WASHINGTON DC
RHEBAAA/USDOE WASHDC
RUEAHLC/DHS WASHDC
RUEKJCS/JOINT STAFF WASHDC
RUENAAA/SECNAV WASHINGTON DC
RUETIAA/NSA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCNEXC/ECRBS COLLECTIVE
						UNCLAS SECTION 01 OF 08 ABU DHABI 005168 

SIPDIS

DEPT FOR ISN/ECC - B.PIKOULAS, J.COLLINS, K.CROUCH, P.VAN SON
DOC FOR D. CREED
US COAST GUARD FOR USCG ACTIVITIES/MIO EUROPE M. BEE
US CUSTOMS FOR P. WARKER, W. LAWRENCE
USDOE/NNSA FOR T. PERRY, W. KILMARTIN


E.O. 12958: N/A
TAGS: ETTC MNUC PARM PREL KSTC KNNP JO
SUBJECT: EXBS ADVISOR VISIT TO UNITED ARAB EMIRATES OCTOBER 2005


I. SUMMARY. During the period October 9-23, 2005, EXBS Advisor
met with Emirati officials, principal Embassy and Consulate staff
and representatives of the Center for International Trade and
Security, University of Georgia, to discuss the current state of
Export Controls and Related Border Security in the United Arab
Emirates (UAE). Advisor met with senior representatives of the
Ministry of Foreign affairs, Federal Customs Authority, Dubai
Customs, Dubai Ports Authority, Ports Customs and Free Zone
Corporation, Jebel Ali Free Zone Authority, Sharjah Airport
International Free Zone, Federal Express International Inc., and
Gulf Pharmaceutical Industries. The Emirate of Dubai is a
participant in the U.S. Container Security Initiative (CSI)
Program. The implementing Emirati agency for CSI is Dubai
Customs. Emirati officials are anxious to receive EXBS
assistance in training. There are close trading relations
between the UAE and Iran and Iran is the UAE's largest re-export
market. END SUMMARY.


II. MEETINGS SUMMARIES.



1. Several times during the period October 9-23, EXBS Advisor
met with principal US Embassy and Consulate staff to discuss the
state of EXBS in UAE. Salient points of subsequent conversation
were as follows:



A. UAE has unique challenges with implementation of EXBS
principles due to the structure of the federal government system,
which preserves the independence of the Emirate-level governments
in many issues, including customs.



B. Additional EXBS training events can be used by the Emirati
officials as defacto 'proof' they are moving forward in
implementation of EXBS, thus deflecting attention from the
primary need to move forward in establishing an effective export
control system based on new or revised law.



C. All sectors of the Emirati society, including police, armed
forces, etc., reflect the general demographics of the UAE, i.e.,
third country nationals outnumber the Emirati people. Many of
these foreign workers and laborers are citizens of Pakistan and
India and the number of Iranian nationals is estimated to be
300,000. Omani officials may not be concerned about stopping
this illegal flow of immigrants since they are transiting Oman
for UAE. The population doubled in the last six years.
Projections forecast the population will double again in the next
five years.



D. UAE leadership in general is supportive of EXBS, especially
programs such as the CSI and MEGAPORTS initiatives, which Emirati
officials see as trade facilitators.



E. A telling comment made by several Emirati officials to
principal members of U.S. staff was the oft-repeated question,
"Do Hong Kong and Singapore have EXBS programs?" In order to
increase Emirati support to EXBS, we need to couch the concept of
"facilitating secure trade" in terms of what officials are doing
in Hong Kong and Singapore.



F. Diversion of strategic goods is fostered by the desire of
individuals to do business. Diversion does not appear to be
sanctioned by any of the governments in UAE; however, they may
enable diversion by absence of an export control system similar
to those used by the U.S. and the EU or even Hong Kong and
Singapore.

ADVISOR NOTE: Commercial ties with Iran are so pervasive and
deep-rooted; it is the opinion of the Advisor this relationship
will not change in the near future. The best one can hope for is
the establishment and effective administration of a viable export
control system that prevents the illicit transfer of controlled
dual-use items and related technology. Deterrence will occur
only following consistent and meaningful enforcement and
implementation of appropriate monitoring and detection elements

consistent with an effective EXBS system. If such a system is to
be effective, it must, as was noted by principal staff, be
supported by all the Emirates after enactment by the federal
government. Advisor realizes this is no small task and may be
the greatest individual challenge facing the UAE with respect to
EXBS.



2. On October 11, EXBS Advisor accompanied Mary O'Brien, Export
Control Officer, U.S. Embassy, Abu Dhabi while she conducted pre
and post shipment licensing checks in Dubai, UAE. This activity
allowed the EXBS Advisor to gain a first-hand appreciation for
the extensive commercial ties between the UAE and its gulf and
regional neighbors, especially Iran, Pakistan and India. Nearly
all sectors of the Dubai and UAE economy are linked to these
neighbor states. Trade is extensive and uses both air and marine
routes for movement of goods and persons. Iranian companies
located in Dubai are numerous and involved in shipping, export
and import of diverse goods and commodities, and banking. These
commercial connections between UAE and Iran in particular have
long historical roots and are not likely to change in the near
future. There are few export controls to regulate the movement
of the majority of goods transiting the gulf between UAE and
Iran.



3. During the period October 12-19, 2005, when EXBS Advisor met
with Emirati and U.S. officials, analysts from the Center for
International Trade and Security, University of Georgia (CITS)
accompanied Advisor. These CITS analysts visited UAE to conduct
an official in-country review of the UAE export controls system.
CITS will provide this report to State Department under separate
cover before spring 2006.



4. On October 15, EXBS Advisor met with Yacub Yoysif Alhosani,
Director of Organizations and International Conferences
Department, Ministry of Foreign Affairs, United Arab Emirates.
Salient points of subsequent conversation were as follows:



A. In general, the historical focus of UAE customs
organizations has been one of revenue collection rather than
export or import controls.



B. General awareness among customs inspectors concerning dual-
use and related technology is lacking.



C. (Companies dealing in dual-use items have files on their
transactions maintained by relevant UAE or Emirate government
Ministries, Agencies or Departments. These files identify the
`End-User.' Federal Customs, as appropriate, shares
investigative and/or historical information with appropriate
security and law enforcement elements.



D. No specific export control law exists at present. Criminal
law addresses "dangerous items." The 2004 Anti-Terrorism law has
a section that deals with the transfer of WMD and Components for
use by terrorist organizations.



E. An inter-ministerial committee (including representatives
from the Ministry of Foreign Affairs, Ministry of Interior,
Customs, Police and others) has completed an initial review of
the concept of export controls. This committee meets
irregularly, but has drafted an export control law. This draft
law is currently under review by senior decision makers before
being forwarded to the cabinet. (Note: during the week prior to
Advisor's visit, Ministry of Interior asked cabinet to make
passage of this law a priority.)



F. UAE anticipates use of established control regimes lists to
identify controlled items and technology.



G. The CWC acceptance law is in legislative committee. UAE
anticipates implementing the regime list and says that it plans
to adhere to MTRC, Wassenaar and NPT.



H. UAE says it supports the Proliferation Security Initiative
(PSI) in concept but has yet to declare publicly or privately its
agreement to the principles of PSI. The UAE is open to the idea
of participating in a regional conference on PSI and
Nonproliferation, so long as sufficient lead-time exists before
such an event to ensure attendance of the right individuals.



5. On October 16, EXBS Advisor toured the ports of Jebel Ali
and Rashid located in Dubai, UAE and met with the following
officials of Jebel Ali Free Zone Authority (JAFZA) Dubai Ports
Authority (DPA) and Ports, Customs & Free Zone Corporation
(PCFC): Ibrahim M. Al Janahi, Vice President-Commercial Sales,
JAFZA; Abdalla Al Banna, Senior Manager-Marketing, JAFZA and
Shehab Al-Rahma, Commercial-Sales, DPA and Feras Dahlan, Business
Relations Officer, Public Relations, Promotions & Exhibitions
Department, PCFZC. The Ports, Customs and Free Zone Corporation
is the parent organization of the Dubai Port Authority and the
Jebel Ali Free Zone Authority, as well as Dubai Customs. Salient
points of subsequent conversation and observations were as
follows:



A. CSI is at the port of Jebel Ali and MEGAPORTS is in the
process of implementation. Officials support both these
initiatives because the officials view them as trade facilitating
programs.



B. The port of Jebel Ali is self-funding, has 65 operative
berths and nearly 15km of frontage. At present, 125 major
shipping lines call at Jebel Ali. By 2007, Jebel Ali port will
have a "paperless clearance system" including Customs clearance,
payment of fees and freight forwarding documentation. By 2020,
the port expects to have expanded to over 120 gantry container
cranes and well over an hundred berths and additional deep-water
anchorage.



C. JAFZA, located adjacent to the port of Jebel Ali, hosts over
5,000 companies including many global conglomerates such as Sony,
which has located its second largest distribution hub after Japan
in JAFZA.



D. JAFZA serves the greater GCC, Iran, the Indian subcontinent
and east Africa. Recently, over 600 companies opened in JAFZA
focused on providing goods and services to Iraq. (NOTE: JAFZA
does not allow movement of scrap metal from Iraq into its port
facilities.) JAFZA has access to two billion customers and
potential consumers mostly in the aforementioned states and
regions. In regards to shipments through JAFZA, 60+% are
transshipments, 20+% are imports and the remainders are exports.



E. The Dubai Port Authority is an investor or manager of 18
other major ports including ports in Djibouti, Morocco and
Malaysia. DPA also manages numerous free zones in India,
Australia and South America. DPA also manages two terminals in
Hong Kong.



F. Dubai Police is the primary law enforcement organization
serving JAFZA. It has a local station at the free zone and
handles smuggling cases. Dubai Customs handles customs-related
issues. Federal Customs does not have a presence in the zone.



G. JAFZA issues three types of business licenses: Trading,
Manufacturing and Service.



6. On October 16, EXBS Advisor met with the following officials
of the Federal Customs Authority (FCA), UAE: Mohamed K. Al
Mehairi, Director General and Ahmed Mohamed Al Bakr, Director of
Legal Affairs Department. Salient points of subsequent
conversation were as follows:



A. FCA has no existing rules or standards for risk management,
but has the ability to review shipments and tasks the various
Customs authorities to conduct searches of specific
shipments/cargo when and if needed.



B. FCA would like to establish an academy or regional center
for customs training. This training would establish common
standards and procedures for the UAE and the region.



C. A draft for a comprehensive export control law exists and is
under review by senior decision makers.



D. In 1971, when the UAE was formed, the Emirati constitution
allowed the emirates to retain their own customs authorities.
The constitution, however, includes a reference to move to
"Customs unity" at a future date, thus providing a constitutional
basis for the establishment of the Federal Customs Authority in


2003. FCA would like to accelerate this process of customs
unity, but there is resistance at the Emirate level. Since 1981,
the UAE has had a Customs Council composed of the Head of Customs
of each of the seven Emirates. The Committee has elected one
among the seven to serve as the head of federal customs.



E. FCA views its current and future role as one of supervising
emirate-level customs authorities, setting rules and regulating
customs procedures throughout the UAE.



F. While admitting their view is probably not shared by the
free zone authorities throughout the UAE, FCA is of the opinion
that the only legal exemption inside the free zones is that which
protects foreign ownership from taxation; all other UAE laws
regarding labor, customs, etc., apply to both companies and
individuals. (Note: the UAE Federal Customs Authority imposed a
tax on scrap metal dealers in Jebel Ali Free Zone. According to
press reports, the initial response from JAFZA was to direct the
dealers to the FCA. After several days, the Federal Customs
Authority withdrew its demand for the free zone companies to pay
an export tax. End Note)



G. FCA is working on a national control list and would like to
see a common GCC control list.



7. On October 17, EXBS Advisor met with Rashid Sultan Hamad Al
Roum, Director of Customs and Border Protection Service (CBPS),
Dubai Customs, UAE. Salient points of subsequent conversation
were as follows:



A. CBPS estimates 90-95% of all goods entering the ports of
Jebel Ali and Rashid originate outside the UAE. Of these goods,
80-85% transit UAE via land routes or maritime transshipments.
In 2004, Dubai handled/shipped 6.2 million containers.



B. CBPS customs processing system is completely automated.



C. In 2004, CBPS established Risk management practices,
including automated review protocols. Inspectors have received
training in interview and non-verbal assessment skills.
Inspectors still screen closely historical areas and actors of
interest. CBPS maintains its own version of a `watch list' and
routinely coordinates with Interpol and WCO on matters of mutual
interest.



D. Consistent with regional practices, CBPS gives special
attention to shipments involving weapons, explosives, hazardous
materials and other items identified on special control lists
developed by governmental entities such as the Ministries of
Agriculture and Interior.


E. In accordance with its specific laws and regulations, CBPS
has the authority to open "civil" customs cases, levy fines,
seize property and make arrests. When a customs case crosses
over into criminal jurisdiction, CBPS coordinates with Dubai
Police to determine which organization will take the
investigative lead.



F. CBPS prevents potential corruption by providing an excellent
salary and benefit package to employees, many of which are third
country nationals who would risk jail and deportation if
convicted of wrongdoing. Customs employees attend an academy
course lasting six months, three of which are at the Dubai Police
Academy. This basic training is followed by site and location
specific training, interview and screening skills, and use of
field tools and equipment, e.g., hand-held chemical and
radiological sensors and various optical inspection scopes.



G. Illegal immigration via maritime routes is the jurisdiction
of the Coast Guard.



H. CBPS has expertise and experience dealing with medical,
dental and oil industry radiological sources.



I. In addition to uniform customs officers, CBPS has a K-9 unit
and individuals embedded in select organizations and areas of
port and JAFZA operations.



J. CBPS reports trends and operational statistics to the
Federal Customs Authority.



8. On October 17, EXBS Advisor met with members of the
Container Security Initiative (CSI) team located in Dubai, UAE.
CSI enjoys an excellent working relationship with Dubai Customs.
Dubai uses a NUCTEC X-Ray scanning system produced by China.
Members of the CSI team claimed this system was better than other
models they have used. One major feature enhancement was
software that allows the operator to shift and alter the color
spectrums with greater variety than other versions of similar
equipment and this made it easier for the operator to conduct
better and quicker analysis of cargo. The Chinese trained the X-
Ray equipment operators and CSI team members evaluated this
training as excellent. CSI maintains local trend analysis and
profiling data.



9. On October 17, EXBS Advisor visited the Dubai Creek Dhow
Harbor located in Dubai, UAE. Salient points and observations of
this visit were as follows:



A. Dhow traffic is pervasive, involves a great variety of
consumer goods and does not appear to be regulated or controlled
by any governmental agency. Access to the wharf is completely
open.



B. Controls on persons and cargo appear non-existent.



10. On October 18, EXBS Advisor toured the Dubai Hub, Federal
Express International Inc. (FEDEX), Dubai, UAE and met with the
following officials of FEDEX: Tayssir Hassan Awada, Managing
Director-Operations & Customer Service, Middle East, Indian
Subcontinent, Africa, Central Asia & Turkey; Vivek Ashoka,
Manager-Hub & Ramp Operations, Dubai Hub; Ahmed M. Abu Hamraa,
Airport Coordinator & Government Liaison Representative Hub &
Ramp Operations, Dubai Hub; Peter DeBenedictis, Manager, Dubai
Operations and Ray Cole, Manager-International Security, Europe,
Middle East & Africa. Salient points of subsequent conversation
and observations were as follows:



A. Dubai Customs has authority on all goods entering Dubai.
Dubai Police have authority over all goods transiting the hub.
Dubai Police scan goods to identify flight safety hazards.
During these scans, police do not have in their possession
customs paperwork on parcels and packages and therefore cannot
screen packages to determine if stated content matches actual
content image. Police are not trained to recognize `dual-use'
items and would not likely discern a problem of this nature so
long as the parcel contents did not overtly appear to be a threat
to the safety of FEDEX aircraft.



B. FEDEX does not "service, support or facilitate" trade with
Iran or any parties or entities identified as having connections
to Iran.



11. On October 18, EXBS Advisor visited Port Khalid, the Sharjah
Airport International Free Zone (SAIF-Zone) located in Sharjah,
UAE and met with Saqer R.H. Al Qassemi, Deputy Director General,
SAIF-Zone. Salient points of subsequent conversation and
observations were as follows:



A. Customs has jurisdiction over movements of goods in and out
of SAIF-Zone. All goods entering the zone are logged with
Customs. If they are transferred to another company in the zone,
the transaction is recorded and maintained by SAIF-ZONE and
Customs. All goods moving in and out of the zone are checked
against this general transaction ledger.



B. Some ministerial oversight of select business activities and
products does occur within the zone, i.e., Ministry of Health
regulates some pharmaceuticals.



C. SAIF-Zone's port is the largest bulk cargo hub in the region
and the airport is the largest for movement of air cargo. Status
of the airport is due in large measure to the fact Lufthansa's
largest cargo hub outside of Frankfurt is located in Sharjah.



D. SAIF-Zone grants a trade license to all "investors" resident
in the zone and monitors compliance with SAIF-Zone regulations
and laws of Sharjah and the UAE. Any infraction of the laws is
referred to Sharjah Police and or the Ministry of Interior. In
the last five years, two or three companies have closed due to
criminal activity or infraction.



E. Main sectors in the zone are bulk textiles for end-use
consumers and aviation supply and maintenance.



F. SAIF-Zone issues three types of business licenses:
Industrial, Trading and Service. The Sharjah government has
asked SAIF-Zone to suspend licenses when conditions warranted
such action. SAIF-Zone has also suspended licenses unilaterally
when investors failed to pay fees or to abide by regulations by-
laws of the zone.



G. SAIF-Zone has 2,000 companies and annual growth of 30-35%.
India has more companies in the zone than any other country.



H. In contrast to laborers employed outside of free zones,
laborers in the SAIF-Zone are sponsored by the zone, not the
company for which they work. Ministry of Interior runs a
"security check" on each potential employee before hire.



I. Saudi Arabia is the largest regional trade partner for
Sharjah.



12. On October 19, EXBS Advisor visited the plant facilities of
Gulf Pharmaceutical Industries (GPI) located in Ras Al Khaimah,
UAE and met with Said Ibrahim, PhD, Manufacturing Director, GPI
and Syed Imtiaz Haider, PhD, Quality Affairs Director, GPI.
Salient points of subsequent conversation were as follows:



A. GPI has four plants in UAE and one in Germany. In December
2004, USFDA certified GPI manufacturing processes. GPI ships 95%
of its product outside the UAE, most of which goes to GCC
neighbors and North Africa. Plant employees are from 18
different countries. The majority of these employees are
citizens of Pakistan, India or Syria.



B. When GPI ships product, it obtains four documents fro the
Chamber of Commerce of Ras Al Khaimah: Certificate of Analysis,
Certificate of Origin, Airway bill and Invoice. Typical routing
and means of product shipment include marine or land conveyance
to Jordan, by air to GCC neighbors and marine conveyance to
Yemen.



C. Psychotropic drugs require additional controls and UAE
clearance when shipped. The Ministry of Health audits these
transactions monthly.



D. GPI does import some chemical precursors for their
manufacturing. These chemicals originate from Europe. The
Ministry of Interior audits these transactions and visits the
plant monthly. Ministry representative provide updates to
controlled items lists.



E. The Ministry of Health certifies plant operations by
conducting unannounced site inspections. GPI complies with `best
practices' and pharmaceutical standards established by the
European pharmaceutical industry. GPI also complies with World
Health Organizations communiqus.



F. GPI is associated with The International Center for Genetic
Engineering & Biotechnology located in Trieste, Italy. This
relationship began in the context of GPI's production of
synthetic hormones to stimulate formulation of human red blood
cells. GPI imported equipment for this production line from
Amersham Phamicia (General Electric HealthCare) located in
Austria and Taylor Warton located in the United States. (NOTE:
GPI claimed older equipment such as dryers, etc., were stored on
the premises and accounted for in annual audits or sold to
government-approved end users. Some specialized equipment such
as incubators was subject to non-movement and no re-sale
agreements.)



13. During the period October 20-23, EXBS Advisor waited for
authorization from UAE officials to visit land border crossings
between the UAE and Saudi Arabia. UAE officials did not grant
permission for this visit despite repeated requests from the U.S.
Embassy.



14. On October 22, EXBS Advisor in company with a Senior U.S.
Immigration & Customs Enforcement Representative toured the Dubai
Creek-Dhow Harbor located in Dubai, UAE. Salient points of
subsequent conversation and observations were as follows:



A. Dhow traffic is supposed to stop at the entrance to the
creek harbor to declare and clear goods with customs. This does
not appear to occur. Even if Dhows did stop to declare goods,
the design of the vessel does not allow inspection of cargo at
point of entry. No customs officials appeared engaged on the
wharf in verifying cargo against manifests.



B. The variety of cargo and product containers, i.e., boxes,
crates, 50-gallon drums, plastic bottles and barrels, etc.
provide many different ways to smuggle dual-use items in or out
of the port. Post notes however that in the last three years no
known diversion of US origin goods (of which there have been
many) has occurred via dhow, due in no small part to the lack of
export controls and the excellent transportation available to a
variety of countries of concern.



C. Dhow traffic routinely shuttles between Dubai and Iran as
well as other ports in India and through the greater Gulf region.

ADVISOR NOTE: Diversion of WMD components and production
capabilities via Dubai has occurred with some frequency.
Authorities have focused greater attention on the ports of Jebel
Ali and Rashid and the international airport; however, little
attention appears to have been given to the Dhow harbor and its
connections to Iran. The Dhow harbor will be extremely
attractive as an operational venue for individuals trained in
classic incursion, infiltration or diversion operations,
particularly if an export control system were established in the
UAE to scrutinize cargo traveling on more traditional modes of
transportation. The setting and environment facilitates passage
of materiel and illegals both ways.


III. ADDITIONAL INFORMATION CONCERNING UAE.

For additional information concerning UAE and the current state
of its export controls and related border security system, see
ABU DHABI 3346.


IV. RECOMMENDATIONS FOR EXBS VISIT 2006.

Following meetings, tours and extensive discussions with Emirati
and U.S officials, Advisor recommends the following actions
during Advisor's first visit to UAE in 2006:



1. Visit and observe land border crossings between UAE and
Saudi Arabia.



2. Visit bunkering port facility of Fujairah.



3. Meet representatives of the Coast Guards of Abu Dhabi,
Dubai, Sharjah and Fujairah.



4. Visit `traditional' smuggling ports along the UAE coast.



5. Visit the ports and northern coast of the Musandam
Peninsula. (NOTE: Advisor can do this during either the visit
to Oman or UAE.)



V. Any questions or comments can be directed to Joseph C. Irvine,
EXBS Advisor to Jordan & the Middle East, Telephone:(962 6) 590-
6550/6558, Fax: (962 6) 592-7653, Email: IrvineJC@state.gov.