NEW CABINET REFLECTS CONTINUED REFORM; PM'S BASE

C O N F I D E N T I A L SECTION 01 OF 03 MANAMA 000068

SIPDIS

E.O. 12958: DECL: 01/15/2015
TAGS: PGOV PREL PINR BA
SUBJECT: NEW CABINET REFLECTS CONTINUED REFORM; PM'S BASE
OF SUPPORT ERODES FURTHER

REF: MANAMA 0050

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

--------------
Summary
--------------


1. (C) The new cabinet announced January 14 by King Hamad
has two new ministers and six ministers from the former
cabinet covering new portfolios. Five ministers in the
previous cabinet, formed in November 2002, were dropped, four
of whom have new positions as advisors to the Prime Minister
or King. Members of the Al Khalifa family now hold nine of
20 ministerial slots, up from eight of 23 in the former
cabinet. The tone of the new cabinet is younger, more
reformist and technocratic than the previous group. Foreign
Minister Shaikh Mohammed bin Mubarak Al Khalifa told the
Ambassador that the new cabinet was a "move toward the
future" and a transition away from a system where ministers
would "remain in place for twenty years." Within the cabinet
are fewer ministers beholden to the Prime Minister, who has
been in office since 1971, and the shake up could result in
an erosion of support for the PM and augur restricted freedom
to maneuver on policy issues. End Summary.

--------------
New Cabinet Sworn in January 15
--------------


2. (SBU) After four days of speculation in Bahrain's press
and majleses, and intensive consultations within the royal
family and cabinet, King Hamad bin Isa Al Khalifa announced a
new cabinet the evening of January 14. The cabinet was sworn
in at noon on January 15 and held its first session on
January 16. Two new ministers joined the cabinet, five
former ministers were moved out, six ministers are now
responsible for new, additional, or smaller portfolios, and
two ministries were merged, one split, and another renamed.
A second woman joined the cabinet and the number of Al
Khalifa family members in the cabinet, including Prime
Minister Shaikh Khalifa bin Salman Al Khalifa, increased from
eight (of 23, 35 percent) to nine (of 20, 45 percent). The
shuffle represents the biggest change since the cabinet was
appointed in November 2002 following the first parliamentary
elections since the early 1970s.

--------------
New Cabinet A "Move Toward the Future"
--------------


3. (C) In a January 11 conversation, Deputy Prime Minister
and Foreign Minister Shaikh Mohammed bin Mubarak Al Khalifa
told the Ambassador that the cabinet was a "move toward the
future" and a reaffirmation that "the process of reform
continues." He suggested that the focus should not be on
specific personalities but rather on the formation of a new
government structure. The cabinet was being downsized to
improve efficiency and to respond better to the demands of
the parliament. He said that King Hamad wants to bring "new,
young faces" into the cabinet. The King recognizes that
Bahrain needs to change, and prefers to implement incremental
change in the cabinet rather than do it all at once.
Ministers should no longer remain in place for twenty years -
"like me," he joked.


4. (SBU) The cabinet newcomers are Minister of Social
Affairs Dr. Fatima Al Belooshi, the former dean of the school
of education at the University of Bahrain, and Minister of
Finance Shaikh Ahmed bin Mohammed Al Khalifa, the former
Governor of the Bahrain Monetary Agency (BMA - central bank).
(See bios paras 13-14.) Dr. Al Belooshi joins Health
Minister Dr. Nada Haffadh as the second woman in the cabinet.
Shaikh Ahmed has a strong reputation as a technocrat from
his four years as BMA governor, 2001-05, and four years as
director of the Bahrain Stock Exchange, 1997-2001.

--------------
Five Move Out, Six Have New Duties
--------------


5. (SBU) Moved out of the cabinet are Minister of Cabinet
Affairs Mohammed Mutawa, Minister of Finance and National
Economy Abdulla Saif, Minister of Information Nabeel Al
Hamer, Minister of Justice Jawad Al Arayyed, and Minister of
State Abdul Nabi Al Shoala. All but Al Shoala were named
advisors to the Prime Minister or King with rank of minister;
Al Shoala is rumored to be named ambassador to Thailand.
Mutawa is Advisor to the Prime Minister for Cultural Affairs;
Saif is Advisor to the PM for Economic Affairs; Al Hamer is
Advisor to the King for Information; and Al Arayyed is
Advisor to the PM for Legal Affairs.

6. (SBU) Six ministers from the former group remain in the
cabinet but with altered responsibilities. Minister of
Industry Hassan Fakhro is now Minister of Industry and
Commerce. Minister of State for Foreign Affairs Mohammed
Abdul Ghaffar retains his current position and adds Minister
of Information. Former Minister of Commerce Ali Saleh is now
Minister of Municipalities and Agricultural Affairs. Former
Minister of Municipalities and Agricultural Affairs Mohammed
Al Sitry is now Minister of Justice. Former Minister of
State Abdul Hussein Mirza was named Minister of Cabinet
Affairs. Minister of Labor and Social Affairs Majid Al Alawi
was named Minister of Labor (with Dr. Al Belooshi picking up
the Social Affairs portfolio).


7. (SBU) From the institutional perspective, the Ministries
of Industry and Commerce were merged and the Ministry of
Labor and Social Affairs was split into two. The Ministry of
Finance and National Economy was renamed Ministry of Finance.
(Note: It is yet unclear whether lead responsibility for
implementation of the U.S.-Bahrain free trade agreement (FTA)
will remain with the Ministry of Finance or will move to the
Ministry of Industry and Commerce. End Note.)

--------------
Erosion in PM's Base of Support
--------------


8. (C) The greatest impact of the cabinet shuffle is that
the PM's power and influence within the cabinet is further
constricted. Mutawa, Saif and Shoala were long-time members
of the cabinet loyal to the PM. Mutawa was known as the PM's
strong-armed (but urbane) enforcer. Shoala had no defined
set of responsibilities, but was the PM's utility infielder
for special projects. Both Mutawa and Shoala had reputations
for ensuring that the PM was included in business deals of
any meaningful size on the island. Saif is best known to us
as the technocrat negotiator of FTA, but in the Bahraini
domestic context, is infamous for presiding over the General
Organization for Social Insurance during a time of
significant financial irregularities. Saif was called before
the parliament in early 2004 for questioning about his
potential role in the scandal.

--------------
Technocrats and Reformers
--------------


9. (C) As a group, the ministers in new positions have
reputations for being honest reformers who are friendly to
the United States and the west. Minister of Industry and
Commerce Fakhro is very close to the King and presides over
ministries with significant control over major sectors of the
economy. Minister of Cabinet Affairs Mirza was brought into
the cabinet in 2002 to conduct public tenders in a
rules-based, transparent manner. Though some problems remain
in public tendering, he is generally considered to have been
very successful. It is not yet clear whether he will retain
these responsibilities in his new position. Former Cabinet
Affairs Minister Mutawa was the PM's "whip" to ensure the
ministers lined up behind the PM's policies; Mirza will
likely take a more technocratic approach to cabinet affairs.


10. (C) Minister of Justice Al Sitry received his Masters
and Ph.D. in administration from the University of Southern
California. He is a traditional Shia leader from an
important family who was not associated with political
activism during the turbulent 1990s. Minister of State for
Foreign Affairs/Minister of Information Abdul Ghaffar is a
former ambassador to the United States, in Washington from
1994 to 2001, and a frequent interlocutor of the
Ambassador's. While he is a steadfast Bahraini patriot,
Abdul Ghaffar is a good friend of the United States and
understands and promotes United States policies within the
cabinet. He has been our point person on sensitive issues
such as Bahraini detainees at Guantanamo and Article 98.

--------------
What Did Not Happen
--------------


11. (C) During the four days between the first leaks of a
cabinet change (January 10) and the formal announcement
(January 14),rumors were flying about who would take what
job. Of the changes that were floated but not acted upon,
most important was speculation that Minister of
Transportation (and PM son) Shaikh Ali bin Khalifa Al Khalifa
would add deputy PM to his responsibilities. It did not
happen. Also, there were reports that Ministry of Labor and
Social Affairs Assistant Under Secretary Shaikha Hind bint
Salman Al Khalifa would resign in protest at the appointment
of Dr. Al Belooshi as Minister of Social Affairs. Shaikha
Hind denied the reports the following day, saying that the
new cabinet was already at the limit of the "quota" of Al
Khalifa family members in ministerial positions. (Comment:
This is the first we have heard of such a quota. She may
have said this as a face-saving way to explain why she was
not made minister. End Comment.) The Ministries of Justice
and Islamic Affairs were not reunited under one minister (Al
Sitry); one press report suggested that this was because of
objections to placing Islamic Affairs under a Shia.

--------------
Comment
--------------


12. (C) The tone of the new cabinet, particularly in
contrast with the previous one, is younger, more western
educated, and reform oriented. The increased presence of
honest technocrats in key positions, particularly related to
the economy, demonstrates the King's focus on further
modernizing the economy and taking advantage of the potential
benefits from the U.S.-Bahrain FTA. If this cabinet truly is
a first step in the transition from an old to a new political
paradigm, we would expect the next step to come after the
October 2006 parliamentary elections. The King may not
choose to take on his uncle the Prime Minister in a direct
showdown at that time, but he clearly is implementing a long
term plan designed to erode the PM's support within the
cabinet and constrict his freedom of maneuver on policy
matters. We do not, however, count the PM out. Since 1971,
he has been the ultimate survivor, and will look for friends
and allies in the new cabinet to help promote and extend his
influence. End Comment.

--------------
Bio Notes
--------------


13. (U) Minister of Social Affairs Dr. Fatima Al Belooshi:
Dr. Al Belooshi was dean of the school of education at the
University of Bahrain, where she worked from 1996 to the
present. She received her Ph.D. in instructional technology
and media from Columbia University in New York in 1992. She
was an Eisenhower Fellow in 1996. She is married and has
four children, ages seven to 18.


14. (U) Minister of Finance Shaikh Ahmed bin Mohammed Al
Khalifa: Shaikh Ahmed was Governor of the Bahrain Monetary
Agency from 2001 to the present. He was director of the
Bahrain Stock Exchange from 1997-2001. He also worked at the
Ministry of Finance and National Economy and the Ministry of
Commerce. He received both his MBA (1986) and BA (1984) in
accounting and finance from St. Edwards University in Austin,
Texas. He was born in 1961, is married and has three
children.

MONROE