MOVING THE FTA FORWARD-- NATURAL RESOURCES

C O N F I D E N T I A L ABU DHABI 000452

SIPDIS

STATE FOR NEA, EB, NEA/ARPI
STATE PASS USTR FOR AUSTR DONNELLY AND DOUG BELL

E.O. 12958: DECL: 02/08/2016
TAGS: ETRD ECON EPET AE FTA
SUBJECT: MOVING THE FTA FORWARD-- NATURAL RESOURCES

REF: ABU DHABI 235

Classified By: AMBASSADOR MICHELE J. SISON FOR REASONS 1.4 (B & D).


1. (U) This is an action request. Please see paragraph 5.


2. (C) The issue of ownership of natural resources is one of
the biggest stumbling blocks to moving FTA negotiations with
the UAE forward. Senior UAE officials, including Abu Dhabi
Ruling Family Member, Sheikh Abdullah, have stressed that
ownership of natural resources is a "red line." UAE
negotiators' concerns about ownership of natural resources
have stalled progress in the investment chapter. At the
suggestion of the UAE lead negotiator, the issue of ownership
of natural resources was moved to "the political level." It
is not clear, however, that Abu Dhabi's political leadership
completely understand what the U.S. is asking for.


3. (C) During a February 7 visit to the Embassy, UAE
Washington Commercial Attache Reem Al-Hashemi told Ambassador
and Econchief that ownership of natural resources was a
strategic necessity for the UAE. She understood, however,
that a blanket exclusion of the natural resources sector was
a non-starter for the U.S. Based on our conversations, we
are not sure that the UAE really understands what we want in
natural resources. Al-Hashemi asked, for example, whether
the U.S. was focused on expropriation, or on some services
related to oil, such as accounting (which she didn't think
needed protection). It would be useful if we could help them
focus their attention on what really matters to them and to
us. The UAE already allows upstream participation in the oil
industry and has a significant foreign presence here.
Although the SPC has not yet made the decision public, it
just approved Exxon/Mobil's bid for a 28% stake in the Upper
Zakum offshore field with a 20 year concession agreement.
The onshore concession runs until 2014 and the other offshore
concession runs until 2018.


4. (C) Proposed Action Plan - Ambassador has requested a
meeting next week with UAE Information Minister Sheikh
Abdullah bin Zayed Al-Nahyan (who has the FTA account for the
Abu Dhabi ruling family) in an effort to move it forward. If
Abu Dhabi leadership better understands what we are most
interested in, it should help them focus on what they really
want to protect. Currently, we are concerned that their
understanding is limited to a fear that the U.S. is
interested in "taking the patrimony." Based on the outcome
of the meeting with Sheikh Abdullah, we would suggest a
conference call between senior USTR, State, and Embassy
officials and Sheikh Abdullah to have a more complete
discussion of the natural resources issue. (The UAE may want
to bring the Abu Dhabi National Oil Company into the
discussion to help it clarify its concerns.) Based on the
outcome of the call, Ambassador can pursue the issue with
other members of the Abu Dhabi ruling family.


5. (C) Action Request. We request specific points from USTR
by COB Washington Time Friday that would help us clarify to
the UAE the specific issues related to natural resources.
End Action Request.
SISON