KING FOCUSES ON RELATIONS WITH SAUDI ARABIA IN

C O N F I D E N T I A L SECTION 01 OF 04 MANAMA 000024

SIPDIS

EMBASSY RIYADH PASS DHAHRAN

E.O. 12958: DECL: 01/04/2015
TAGS: PREL PGOV ETRD EPET BA
SUBJECT: KING FOCUSES ON RELATIONS WITH SAUDI ARABIA IN
MEETING WITH AMBASSADOR


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

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Summary
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1. (C) King Hamad, in a January 3 meeting with the
Ambassador, expressed his appreciation for his November 29
meeting with the President and reaffirmed Bahrain's
friendship with the United States. The Ambassador thanked
the King for the GOB's continued surveillance of the four
terrorist suspects and urged the government to pursue a
vigorous prosecution. The King recounted his visit with
Saudi Crown Prince Abdulla shortly after the December 20-21
GCC Summit, saying he was not happy with Saudi Arabia's
"unusual behavior" towards Bahrain. The King voiced his
opinion that CP Abdulla believes the U.S.-Bahrain Free Trade
Agreement (FTA) and FTA negotiations with other Gulf States
could lead to the break-up of the GCC. The King said that
Saudi Arabia did not like direct contact between other GCC
members. He explained that after spending $700 million to
expand production of the joint Bahraini-Saudi Abu Saafa
field, Bahrain was actually receiving less oil from Saudi
Arabia than before. He noted that FTA ratification was on
track in the Bahraini parliament, and expressed his
confidence that Bahrain's Shia would participate in elections
in 2005 and 2006. The King hoped that the President would
make a push on the roadmap following Palestinian elections.
End Summary.

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Grateful for Meeting with President
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2. (C) King Hamad told the Ambassador January 3 that he was
happy to have met with the President so soon after the U.S.
election, saying that Bahrain is a small country but it plays
a big role in the region. He said that Bahrain is proud of
its friendship with the United States and has been with the
U.S. "from the beginning." The U.S. role in the region has
been very positive: the U.S. freed Iraq and deters Iran.
The King complimented the Ambassador on his interview that
appeared in the December 29 edition of the Bahrain Tribune
and Al Ayam newspapers.

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Joint Counter-Terrorism Efforts
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3. (C) The Ambassador raised our joint counter-terrorism
efforts, stating that the U.S. appreciates continued Bahraini
surveillance of the four terrorist suspects currently on
trial. The United States, the Ambassador continued, wants
the GOB to pursue the prosecution energetically. The King
replied that Minister of Interior Shaikh Rashed bin Abdulla
Al Khalifa is close to him and is doing well. Shaikh
Rashed's goal is to develop a relationship between the MOI
and the United States that is as close as the relationship
between the Ministry of Defense and the U.S. The Ambassador
responded that the USG is supporting Shaikh Rashed's efforts.

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Saudi Arabia's "Unusual Behavior"
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4. (C) The Ambassador praised the King for his handling of
the December 20-21 GCC Summit in Manama, and asked the King
for his thoughts on Saudi Arabia. The King replied that he
had visited Crown Prince Abdulla shortly after the summit.
He said that Bahrain had always provided counsel to Saudi
Arabia, from the time of Ibn Saud, and Bahrainis are the only
people who are honest with the Saudis. He reported that he
told CP Abdulla that he was not happy with Saudi Arabia's
"unusual behavior" at the GCC Summit. Saudi Arabia is the
backbone of the GCC, and by not participating, something
could go wrong. The King told CP Abdulla that Saudi Arabia
will not get what it wants from the world because of the way
the SAG runs the country. Saudi Arabia needs the Gulf States
as an outlet to the world. Saudi Arabia relies on Bahrain
for much of its banking and insurance requirements, and Dubai
is the destination for Saudi investments in construction and
real estate.


5. (C) The King said that he told CP Abdulla that the United
States appreciates what Saudi Arabia is doing in the fight
against terrorism, but Saudi Arabia should be more forward
leaning in explaining its views. President Bush is a friend
of Saudi Arabia, and the SAG should "help him help you." The
King commented that CP Abdulla is a national guardsman, not a
politician or economist, and he does not know how to use the
media to his advantage.

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Saudi Concern About FTAs
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6. (C) The King continued that CP Abdulla believes that the
U.S.-Bahrain Free Trade Agreement (FTA) and FTA negotiations
with other Gulf countries could lead the GCC to break-up.
The King related that he told CP Abdulla that all GCC
countries are now members of the World Trade Organization
(WTO) except Saudi Arabia, and the SAG did not complain when
they joined the WTO, so why now be worried about FTAs? The
Ambassador noted that U.S. officials had briefed Saudi Arabia
on our FTA plans before announcing our intention to negotiate
with Bahrain, and the Saudis had not objected.


7. (C) The King said that he told CP Abdulla that whoever
was advising him regarding FTAs was not a friend of the
United States. The Gulf States are independent and benefit
from their relationships with the U.S., and Saudi Arabia
should do the same. The King asked CP Abdulla how Saudi
Arabia would market its Jubail industrial complexes if it did
not promote trade with the U.S. and others. Saudi Arabia,
the King continued, is jealous of Bahrain's relationship with
the United States. It also views Bahrain's improved
relations with Qatar, and talk of development of a causeway
linking the two countries, as cutting Saudi Arabia out of the
picture. Saudi Arabia does not like direct contact between
the Gulf States; it prefers to be the broker. The King
stated that he had met with Qatari Emir Hamad and joked that
the two countries previously had to fight over Hawar Island,
but now that this was settled, there should be no border
between them.

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Saudi Cold Shoulder in Washington
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8. (C) The King told the Ambassador that neither Saudi
Prince Bandar nor any other representative of the Saudi
Embassy had met him upon his arrival in the United States,
whereas all the other Arab embassies were present. He met
later with Bandar, who told the King that he was "the most
frustrated man in the world." He is welcomed by the White
House, but he does not have guidance on how to respond when
the President asks him questions. The King commented that
the Saudi leadership is tough in fighting terrorism but does
not see the global picture or how to engage internationally.

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Bahrain's Oil Woes
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9. (C) Turning the discussion to petroleum, the King said
that Saudi Arabia is playing a role in stopping inter-GCC
trade. Qatar wants to export natural gas to Bahrain and
Kuwait, but Saudi Arabia will not give approval for a
pipeline to go through its territory. The King said that he
complained to CP Abdulla that Saudi Arabia had cut off a 50
thousand barrel per day (bpd) allotment that it had given to
Bahrain for five years against Bahrain's share of the Abu
Saafa oil field. He explained that Saudi Arabia and Bahrain
split production from the Abu Saafa field (under a 1950's-era
treaty). Output had been 150 thousand bpd, of which Bahrain
received 75 thousand bpd. In the mid-1990's, however, Saudi
Arabia donated its share to Bahrain, which then received all
150 thousand bpd. And in 1999, Saudi Arabia provided an
additional 50 thousand bpd drawn against its share of future
production from the Abu Saafa field, for a total of 200
thousand bpd.


10. (C) The two countries, the King continued, decided to
boost production of the Abu Saafa field from 150 thousand to
300 thousand bpd. This additional amount would provide
important revenue for the GOB budget and pay for the
government's plans for economic development. The King
claimed that Bahrain borrowed $700 million for the expansion
of the field. Now that the field is producing at the higher
rate, Saudi Arabia is giving Bahrain only its 50 percent
share (150 thousand bpd) and has stopped the 50 thousand bpd
loan. So Bahrain is receiving less oil than before (150
versus 200 thousand bpd) and must pay off its investment of
$700 million. The King said that Saudi Petroleum Minister
Nuaimi announced recently that Saudi Arabia has 2 million bpd
of extra capacity. He complained that Bahrain wants only 50
thousand of this 2 million, but cannot get it. He recalled
that some years ago the American Ambassador in Riyadh had
intervened on Bahrain's behalf, and wondered if the U.S.
could get involved now.

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"Radio Silence" From Riyadh
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11. (C) The King noted that Saudi Arabia had stopped its
exports of sand (used in construction) to Bahrain, Kuwait,
and Qatar because of Bahrain's reforms and the FTA. (Note:
The Saudi Ambassador in Bahrain told the Ambassador
previously that the sand exports stopped because of a dispute
over contracts and concerns about environmental degradation
at sand "quarries." End Note.) When Bahrain asks Saudi
Arabia about the oil, sand, and gas pipeline from Qatar, it
gets only "radio silence."

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FTA Ratification on Track
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12. (C) The King told the Ambassador that the Bahraini
parliament will soon take up ratification of the FTA and will
approve it. The Bahraini people are happy with the FTA.

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Shia Participation in Elections
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13. (C) The Ambassador noting that Lebanese Shia cleric
Mohammed Hussein Fadlallah had given an interview to Al Wasat
newspaper and advised Bahrain's Shia to participate in
elections, asked if the King was optimistic about them
participating in the next elections. The King expressed
confidence that the opposition parties would participate in
the elections. The majority had done so in 2002, he said,
but the government wants all Shia to do so in the future.
(Note: Municipal elections will take place in fall 2005 and
parliamentary elections in fall 2006. End Note.)


14. (C) The King said that the best Bahrainis who had been
in exile in London had returned. He spoke highly of Al Wasat
editor-in-chief Mansour Al Jamry, who "speaks in a modern way
and says what is right and wrong." Majid Al Alawi, the
Minister of Labor and Social Affairs, was very good but the
oppositionists are upset with him because he is "one of the
family." The King said that he had met Saeed Al Shehabi of
the Bahrain Freedom Movement in London and invited him to
return to Bahrain, but he "is more comfortable in London."
The Shia boycotters are not those who were in the UK, but
those who follow Iran's orders. He noted that Shia
opposition society Al Wifaq had organized a conference to be
held January 4 "with the support of the government." Al
Wifaq had invited former Lebanese PM Salim Al Hoss and
Kuwaiti thinker Al Rumaihi to participate, and these are the
kinds of people the government wants involved, not "radicals
from Qom."


15. (C) The King noted that Iranian President Khatemi's wife
would visit Bahrain soon at the invitation of the King's wife
Shaikha Sabika, and she would see a lifestyle much more
cosmopolitan than that in Iran. The King joked that Khatemi
is a moderate, but a terrorist; Khamenei is a religious
cleric, but a terrorist; and Rafsanjani is a businessman, but
a terrorist.


16. (C) The King noted that he would travel to Kuwait
January 4 to have lunch with Shaikh Jaber and brief him on
the GCC Summit. He commented that Kuwait is under pressure
from the Salafis in parliament and because of the presence of
American troops, and needs support from Bahrain and the U.S.

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Push on the Roadmap
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17. (C) The King stated that he had just returned from
vacation in Sharm El Sheikh, Egypt, where he had met
President Mubarak and UK PM Blair, who was also vacationing
there, and he had spoken with Jordanian King Abdullah. They
had all discussed the opportunity for movement on the
Palestinian situation. The King hoped that following the
Palestinian election, President Bush would make a push on the
roadmap. The King recounted that he had told Blair that the
Palestinians had supported Saddam's invasion of Kuwait and,
"like President Bush," he does not trust the Palestinians.
However, we must help them during this period.

MONROE