SHEIKHA LUBNA ON PRIMARY BOYCOT AND FTA ISSUES

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 000849

SIPDIS

SIPDIS

STATE FOR NEA, NEA/ARPI, EB/TPP/BTA, NEA/RA
STATE PASS USTR FOR AUSTR DONNELLY
COMMERCE FOR U/S MCCORMICK

E.O. 12958: DECL: 03/06/2016
TAGS: KBCT KMPI ETRD IS AE
SUBJECT: SHEIKHA LUBNA ON PRIMARY BOYCOT AND FTA ISSUES

REF: ABU DHABI 730

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



1. (U) This is an action request. Please see para 8.


2. (C) Summary: On March 5, in response to a question from
CNN's Wolf Blitzer, Minister of Economy Sheikha Lubna
Al-Qasimi agreed that the UAE would lift its Arab League
primary boycott of Israel if the UAE had an FTA with the
U.S.. It is unclear whether she exceeded her "talking
points." In fact, this statement would be a significant
advance on what she told USDOC U/S McCormick and Ambassador
in a earlier joint Foreign Minister/Economic Minister meeting
with BIS U/S McCormick, where she only committed to resolving
remaining problems with the secondary and tertiary aspects of
the boycott. Also on March 6, Ministry of Economy A/US for
International Cooperation sent DoC/BIS draft boycott language
in an effort to comply with U.S. anti-boycott regulations.
Sheikha Lubna explained that the current DP World controversy
only reinforced the UAE's concerns about dispute settlement
provisions in the FTA, the need to receive assurances about
security of assets, and the need to protect natural
resources. End summary.


3. (U) During a March 5 CNN news "Late Edition" interview
with MinEcon Sheikha Lubna Al-Qasimi on DP World's purchase
of P&O's U.S. operation, Wolf Blitzer asked about the UAE's
adherence 4QQD boycott, which affect U.S. companies, and
noted that the UAE does not implement this aspect of the
boycott. In regard to the primary boycott (i.e., trade with
Israel) she added "in the framework of the FTA at the moment,
basically part of the process is actually lifting the ban."
Blitzer asked whether the UAE would eliminate the boycott of
Israel if it had an FTA with the U.S. Sheikha Lubna replied
"Absolutely, yes."


4. (U) Blitzer recounted his interview with DP World CEO
Mohamed Sharaf, who stated that DP World was dealing with
Israeli companies and that ZIM, the largest Israeli shipping
company, called at Dubai and other DP World managed ports.
Blitzer asked, therefore, why the UAE didn't lift the boycott
immediately, since DP World was already trading with Israel.
Sheikha Lubna responded that lifting the boycott was a
"process" the UAE needed to go through.


5. (SBU) Earlier that day, in response to BIS Under Secretary
David McCormick's urging to eliminate remaining secondary and
tertiary boycott requests, Sheikha Lubna said that the UAE's
goal was to resolve these remaining problems. MinEcon A/US
for International Cooperation Abdullah Al-Saleh said that
after the February 18 DOC/State anti-boycott visit, the
Ministry had prepared draft language that it believed would
meet both U.S. and UAE regulations, and he was preparing to
send this language to the USG for comment. U/S McCormick
offered continued technical assistance to assist the UAE in
complying with the U.S. anti-boycott regulations. (Note:
Later that day, Al-Saleh sent a copy of the UAEG's proposed
draft language to DoC/BIS, Econchief, and NEA/RA, with a
request that the language be reviewed. If the language
complies with U.S. regulations, the UAEG will begin
implementing it immediately. Econchief has forwarded the
e-mail to Desk and USTR. End Note.)


6. (C) After UAE Foreign Minister Sheikh Abdullah bin Zayed
Al-Nahyan (AbZ) joined the meeting with U/S McCormick,
Sheikha Lubna explained that, in response to the DP World/P&O
controversy, the UAE private sector was questioning the UAE's
decision to negotiate an FTA with the United States. She
claimed they are questioning why the UAE should open up its
markets, since the UAE's investments in the U.S. may be
blocked. She noted that a U.S. company (Eller and Company)
had already filed suit to block DP World's purchase of P&O
and noted that the DP World controversy only reinforced the
UAE's concerns about "dispute settlement" provisions in the
FTA and desire for a "comfort letter" on security of assets.
She stated that the UAE was waiting for USTR to present it
with a "promised" OFAC comfort letter on security of assets
and needed to receive the letter before the March 13 start of
the 5th round. Lubna also said that the UAE was not getting
"the right message" from USTR, especially on the UAE's
critical concern about natural resources. She said that she
understood the U.S. Congressional argument about protecting a
sensitive national security asset (ports),because it was the

ABU DHABI 00000849 002 OF 002


same argument that the UAE was using to protect natural
resources. She worried, however, that proposed legislation
restricting investment could discourage foreign direct
investment in the U.S. by raising barriers to entry.


7. (C) Comment: Sheikha Lubna's statement to CNN--that
appears to commit to eliminate the primary boycott of Israel
in the context of a U.S.-UAE FTA--represents a significant
step forward from previous UAE commitments. Her comments
were in response to Blitzer's question, and it is unclear
whether she exceeded her mandate or has the approval of the
UAE's leadership to lift the primary boycott (if there is an
FTA). Her ministry's efforts to ensure that the UAEG's
boycott language (on the secondary and tertiary boycott)
comply with U.S. regulations does reflect UAEG policy. The
Commerce/State team met with Al-Saleh on February 18 to
discuss language that the legal requirements of both the UAE
and the U.S. (reftel). The DP World controversy has
strengthened the UAEG's concerns about security of assets,
protecting oil/gas, and dispute settlement provisions. End
Comment.


8. (SBU) Action Request. Post has contacted USTR to try and
facilitate getting the OFAC comfort letter to the UAE before
the March 13 start of the next round of negotiations. Please
follow up with USTR and -- if necessary -- OFAC on this
issue. End Action request.
SISON