MINISTER OF INDUSTRY AND COMMERCE DISCUSSES NEW

C O N F I D E N T I A L MANAMA 000145

SIPDIS

STATE FOR NEA/ARPI BERNS AND EB JFINN
STATE PLEASE PASS USTR BUNTIN
COMMERCE FOR ITA/MAC/ONE LOUSTAUNAU AND HOFFMAN

E.O. 12958: DECL: 01/29/2015
TAGS: ECON ECIN ENRG EPET PREL BA
SUBJECT: MINISTER OF INDUSTRY AND COMMERCE DISCUSSES NEW
CABINET PORTFOLIOS, OIL PRICES, BILATERAL RELATIONS.

REF: MANAMA 0064

Classified By: Ambassador William T. Monroe for reasons
1.4 (b) and (d).


1. (C) Summary. On January 29, Ambassador and Minister of
Industry and Commerce Hassan Fakhro discussed cabinet
portfolios after the recent shake-up, the impact of the Saudi
cut-off of its 50,000 barrel per day oil grant, and
U.S.-Bahrain relations. Fakhro said that, for now, the
Minister of Finance would remain in charge of the FTA. End
Summary.

Cabinet Portfolios
--------------


2. (C) Fakhro said in the old cabinet the Ministry of
Finance and National Economy (MOFNE, now just the Ministry of
Finance) oversaw many aspects of the economy, despite the
contradictory goals of conservative budgetary policies and
liberal economic growth. In the new cabinet, appointed by
the King on January 14, the plan is for the Ministry of
Finance to work on purely treasury issues, with
macro-economic planning falling under the Economic
Development Board, with micro-economic strategy eventually
being folded into the Ministry of Industry and Commerce. The
Minister also stated that responsibility for the various
industrial companies formerly under MOFNE, including aluminum
company Alba, would eventually be passed to Industry and
Commerce. It was still unclear what would happen with the
Ministry of Oil, and the companies under its purview. One
option under consideration had been to merge it with
Industry. Another possibility would be to put it with
Electricity and Water to form a Ministry of Energy.

Free Trade Agreement
--------------


3. (SBU) The Ambassador asked who would have responsibility
for the free trade agreement now that National Economy was
moving out of Finance. The Ambassador stressed that it would
be important to have an FTA point of contact as we moved
towards ratification. Fakhro indicated that the point had
not been addressed, and promised to get back to the
Ambassador with an answer. The next day, Fakhro called to
say that, for the time being, responsibility for the FTA
would remain with Finance (that is, new Minister of Finance
Shaikh Ahmed bin Mohamed Al Khalifa).

Oil Fields and Prices
--------------


4. (C) The Minister said the GOB is still trying to reverse
Saudi Arabia's decision to discontinue the 50,000 barrel per
day oil grant to Bahrain (reftel). He stated that, a recent
report by the McKinsey group calculated that Bahrain requires
a net price of $33 per barrel (roughly $37 gross - cost of
oil and transportation) to have a balanced budget. This is
significantly higher than the $25 needed by Saudi Arabia and
the $17 per barrel required by the UAE and Kuwait. Fakhro
dwelled at some length on the hardship the loss of 50,000 bpd
was causing the government, and welcomed any help from the
USG in convincing the Saudi's to restore the grant.

U.S.-Bahrain Relations
--------------


5. (C) The Ambassador briefed the Minister on the state of
play with the Bahrain School, saying that he expected to
deliver a letter shortly to the Crown Prince reaffirming its
continued operation as a DOD school, but asking for financial
help to cover this budget year's shortfall. Fakhro told the
Ambassador that in terms of U.S. public relations efforts,
the best program we had going was the Bahrain School. He
also noted that the Crown Prince and the King have expressed
interest in bolstering U.S.-Bahraini relations through public
activities that serve to highlight how Bahrain benefits from
the relationship. When asked, Minister Fakhro also said he
would happily support the newly-formed AmCham by speaking at
and/or attending events.
MONROE