SCENESETTER FOR U/S JOSEPH VISIT TO THE UAE

S E C R E T SECTION 01 OF 04 ABU DHABI 001202

SIPDIS

NOFORN
SIPDIS

STATE FOR US/ISN RJOSEPH, ACTING A/S ISN SRADEMAKER, ISN
PMCNERNEY, ISN/CPI CRUSSELL, NEA/ARP STHORNE

E.O. 12958: DECL: 03/27/2016
TAGS: ETTC PARM PREL IR AE
SUBJECT: SCENESETTER FOR U/S JOSEPH VISIT TO THE UAE

REF: A. ABU DHABI 605

B. SECSTATE 46165

C. 2005 ABU DHABI 4103

D. 2005 ABU DHABI 4224 NOTAL

E. 2005 ABU DHABI 4468

F. USDEL 00007

Classified By: Ambassador Michele J. Sison for reasons 1.4 b and d.


1. (S/NF) Summary. Embassy welcomes you back to the UAE to
secure UAE endorsement the Proliferation Security Initiative
Statement of Interdiction Principles (PSI SOPs) and to
continue the dialogue regarding our concerns about Iran's
nuclear ambitions. Since your visit in October 2005, Embassy
and Washington visitors have frequently engaged UAE leaders
in an effort to gain their active support for our
nonproliferation efforts against Iran. To date, the results
have been mixed. While UAE leaders tell us they are opposed
to Iran's nuclear ambitions, they were recently unwilling to
interdict two containers suspected of carrying dual-use items
to Iran's WMD and/or missile programs. Concern about Iranian
retaliation is possibly among the reasons why the UAEG has
not yet endorsed the PSI SOPs. The UAE's draft export
control law is still in a legislative committee, but UAEG
officials tell us they are hopeful it will be passed by the
summer. On the proliferation finance front, the UAE Central
Bank Governor does not believe he has the legal authority to
freeze proliferators' funds. Embassy is working with the
Central Bank and the Ministry of Foreign Affairs to encourage
them to enact a law (consistent with their obligations under
UNSCR 1540) that would explicitly authorize the freezing of
proliferators' assets. Absent this authority, the Central
Bank Governor has implied that it is possible for him to
close suspect accounts -- vice freezing them. In an effort
to move the UAE forward on these issues, Embassy is working
with the UAEG to schedule meetings of the expert-level
working groups that were proposed during the February 11
meeting of the U.S./UAE Counterproliferation Task Force (CTF).


2. (C) Embassy has requested meetings for you with Foreign
Minister Sheikh Abdullah bin Zayed al-Nahyan (AbZ),Sheikh
Mohammed bin Rashid al-Maktoum (MbR),Ruler of Dubai, Vice
President and Prime Minister of the UAE; and Mohammed
al-Qemzi, Director of Dubai's State Security Organization
(SSO) and the head of the UAE's Counterproliferation Team.
These meetings will give you the opportunity to discuss
cooperation issues with the key UAE leaders and urge them to
make progress on this critical issue on nonproliferation.

No Movement Yet on PSI
--------------

3. (C) Despite repeated efforts by the Embassy and visiting
USG and European officials, the UAE still has not endorsed
the PSI SOPs. Since your October meeting with Deputy Prime
Minister Sheikh Hamdan bin Zayed al-Nahyan, Embassy has
engaged the UAEG at the highest levels to encourage
endorsement of PSI. A/S Rademaker and DASD Jack David gave
presentations during the CTF explaining the PSI SOPs, and
al-Qemzi said that the UAE had no reservations and that a
decision would come soon to endorse. Ambassador raised it
again with AbZ and MinEcon Sheikha Lubna al-Qasimi during a
March 5 meeting with BIS U/S David McCormick. AbZ said he
was expecting to receive a response from the UAE military
General Headquarters "that day." Ambassador followed-up on
March 26 with Yousef al-Otaiba, International Affairs
Director for Abu Dhabi Crown Prince Mohammed bin Zayed
al-Nahyan, who said that there had not yet been movement.


4. (S) Although the UAEG has never provided an explanation
for why it is dragging its heels, Embassy assesses that there
are two possible reasons the UAEG has been hesitant to
endorse the PSI SOPs. First, the UAE tends to not want to
"get out in front" of its Gulf Cooperation Council neighbors.
If you are able to do so, sharing that the UAE's neighbor
Oman has "silently" endorsed the PSI SOPs might help
encourage the UAE to follow suit. When A/S Rademaker was
here, he offered the UAEG the option of a non-public
endorsement. The second -- and perhaps more important --
reason is that the UAEG may fear that publicly endorsing the
PSI SOPs will anger Iran.

Concern about Iran Prompts Inaction
--------------


5. (S) The UAE views Iran as a significant national security

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threat and opposes its nuclear ambitions, but the UAEG is
careful not to anger Iran. Its policy decisions with regard
to Iran have two goals: avoid antagonizing the militarily
superior country, and maintain the robust trading
relationship. Although Iran already occupies three of the
UAE's islands and routinely harasses fishermen near Iranian
territorial waters, the UAEG may be concerned that if the UAE
publicly sides with the U.S. against Iran, it would step up
activities against the UAE.

-- With 30 percent of the UAE's GDP coming from oil and gas
exports (in 2004 it earned over $38 billion in oil and gas
revenues),the UAEG may legitimately be worried that Iran
could blockade the Straight of Hormuz, through which all of
the country's oil exports must transit. Such a blockade
would effectively cripple the UAE economy.

-- Iran is the UAE's third largest export market and largest
non-oil trading partner, and the commercial ties are
especially critical for the Emirate of Dubai. Dubai
officials are likely worried that an angry Iran will decrease
or cease using Dubai's ports as a transshipment point.
(Comment: Embassy's analysis is that Iran needs Dubai, as the
most practical and economical way for goods to reach Bandar
Abbas is for them to be transshipped through Jebel Ali Port.)

-- Emirati officials have told us they are concerned about
Iran's interference in Iraq's domestic affairs and Iran's
expanding influence in the region. Accordingly, the UAEG may
fear that Iran could sponsor terrorist attacks inside the
country as punishment for its pro-western policies.


6. (S/NF) In line with its effort to not antagonize Iran and
maintain trade, the UAE's recent inaction on two USG
interdiction requests for dual-use items in transit to Iran
were political decisions, not legal ones. Sultan bin
Sulayem, Chairman of Dubai Ports World, told Ambassador in a
meeting February 6 that Dubai does not want to "open a front"
with Iran, which it considers a "dangerous enemy." He said
that Dubai had not inspected the two containers because it
did not want Iran to think Dubai was targeting its ships.
Dubai SSO Chief and head of the UAE's Counterproliferation
Team, Mohammed al-Qemzi, told A/S Rademaker during the
February 11 CTF meeting that the UAE was concerned Iran would
complain that the UAE was "targeting" Iranian cargo without
cause, and that Iran might "retaliate" (ref A). "We must
consider the current situation with our neighbors (Iran). It
may not be advisable to take action in some cases without
strong evidence." Noting the important commercial ties
between the UAE and Iran, Ahmed bin Butti, Director of Dubai
Customs, told A/S Rademaker on February 12 that he is
concerned the Iranian companies may hold the UAE liable for
having their products confiscated.


7. (S) UAE leaders are sensitive to the growing international
pressure against Iran, and it makes them nervous. As
international pressure mounts, Iran will likely pressure the
Gulf countries to ally with Iran. We must encourage the UAE
to resist such pressure. While the UAE likely would not
oppose any United Nations Security Council decision regarding
Iran, UAE leaders would prefer that any action target only
certain key Iranian leaders. During the Secretary's February
23 meeting with UAE Vice President/Prime Minister and Ruler
of Dubai Sheikh Mohammed bin Rashid al-Maktoum (MbR),Abu
Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan (MbZ),
and ForMin Sheikh Abdullah bin Zayed al-Nahyan (AbZ),MbR and
MbZ agreed that Iran's nuclear ambitions need to be
countered. However, they stressed the point that they did
not want any economic sanctions to target the Iranian people
(ref F).


Export Control Law Stuck in Committee
--------------


8. (C) The UAE does not have an export control system
comparable with those of members of the international control
regimes. There is no federal or emirate level legislation
establishing export controls, and there is no national
control list. In December of 2004, the UAEG declared (in
accordance with UNSCR 1540) that it had enacted restrictions
on trade in radiological, chemical and biological items. The
UAE also said it expected to enact export control legislation
in the near future. In early 2004, the USG provided a draft
template for an export control law (in English and Arabic).

ABU DHABI 00001202 003 OF 004


The draft law has never been passed, and there appears to be
interagency/inter-emirate disagreement over which entity will
have enforcement authority. A/S Rademaker and BIS U/S
McCormick raised the urgent need for an export control law
during their February and March meetings, respectively. AbZ
told U/S McCormick that he thought the draft law was in a
committee at the Ministry of Economy. Minister al-Qasimi
(who was in attendance at the meeting) said she would look
into the matter.

No Legal Authority to Act Against Proliferation Finance
-------------- --------------


9. (C) Since your October 2005 meeting with the Central Bank
Governor, Embassy officers have continued to emphasize to the
Central Bank and other UAEG officials that UNSCR 1540
obligates member states to adopt measures that -- among other
things -- allow for the freezing of proliferators' assets.
The Central Bank continues to argue that it has no legal
authority to do so, and has indicated that it will not act on
any USG requests to freeze such funds. During the January 24
meeting of the Joint Terrorist Finance Coordinating
Committee, the Central Bank Governor told Treasury U/S Levey
that it is simpler to close accounts, vice freezing them. At
the CTF meeting in February, A/S Rademaker encouraged the UAE
to pass a law (or an amendment to the existing Counter
Terrorism Law) giving the Central Bank the explicit authority
to freeze these funds. The MFA official at the CTF meeting
said he would raise the issue at the next meeting of the
UAE's National Anti-Money Laundering Committee (NAMLC). As
of March 20, the NAMLC had not met, so there has not been any
progress on this issue.


10. (S) In November, Ambassador passed to the Governor your
letter explaining the legal obligations of UNSCR 1540 and how
the U.S. interprets and implements it. Although the Governor
thanked Ambassador for the letter, he said that the UAE
Ministry of Justice and the Attorney General would need to
determine whether the letter would provide sufficient legal
justification to maintain freeze on the accounts of Dina Khan
and North Korea's Tanchon Commercial Bank (refs C-E).
Embassy has not received a formal response from anyone in the
UAEG about the letter, but we note that Central Bank
officials have not raised the indemnification issue since.

Setting up the CTF Working Groups
--------------


11. (S) During the first meeting of the U.S./UAE
Counterproliferation Task Force (CTF) on February 11, 2006,
A/S Rademaker proposed forming three expert-level working
groups: Proliferation Finance, Export Controls, and
Transshipment/Interdiction Cooperation (ref A). A/S
Rademaker encouraged the groups to meet by the end of May.
To date, the UAE has not committed to holding any working
group meetings. The Embassy is working to secure UAEG buy-in
to having the CTF Proliferation Finance working group meet in
late April on the margins of the second U.S./UAE Joint
Terrorist Finance Coordinating Committee meeting.
Additionally, an interagency delegation is planning to come
to the UAE April 29-May 2 to hold the Export Controls and
Transshipment/Interdiction Cooperation working group meetings
(ref B).

Interlocutors
--------------


12. (S/NF) Embassy has requested meetings for you with
Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan (AbZ),
Sheikh Mohammed bin Rashid al-Maktoum (MbR),Ruler of Dubai,
Vice President and Prime Minister of the UAE; and Mohammed
al-Qemzi, Director of Dubai's State Security Organization and
the head of the UAE's counterproliferation team.

-- AbZ. The focus of your meeting with AbZ will be to
discuss Iran. You should also encourage AbZ to give the
Central Bank Governor explicit authority to freeze
proliferators' assets. You should express hope that the
export control law will be passed soon and that PSI will be
immediately endorsed. It would be useful for you to ask him
explicitly why the UAEG has not yet endorsed the PSI SOPs.

-- MbR. You should discuss Iranian proliferation activities,
especially our concerns about Dubai's recent failures to
interdict and inspect containers. Since MbR is now taking an

ABU DHABI 00001202 004 OF 004


active role in federal issues, you should also encourage him
to pass an export control law, endorse PSI, and authorize the
Central Bank to freeze proliferators' assets. He will likely
not be as familiar with these issues, but they are worth
raising with him. MbR may raise the Dubai Ports World issue,
but he will likely seek to assure you that the controversy
will not adversely affect the U.S./UAE relationship in any
way.

-- Al-Qemzi. You should thank al-Qemzi for his role in the
successful launch of the U.S./UAE Counterproliferation Task
Force. You should encourage the Export Controls and
Transshipment working groups to meet in late April or early
May, and let him know that an interagency delegation is
already making plans to come to the UAE. During this
meeting, you should raise transshipment concerns and Iran's
proliferation activities. (Note: Al-Qemzi is well aware of
Congressional concerns about the UAE's questionable history
on nonproliferation enforcement. Al-Qemzi met with SSCI
member Chambliss and HPSCI member Hoekstra during their
recent visits to the UAE.)
SISON