IN DUBAI, U/S MCCORMICK HEARS SADNESS, FRUSTRATION ON DPW

S E C R E T SECTION 01 OF 02 DUBAI 001322 SIPDIS SIPDIS STATE FOR NEA/ARPI, EB/IFD/OIA, EB/TPP/BTA STATE PASS USTR FOR DOUG BELL E.O. 12958: DECL: 3/7/2016 TAGS: ECIN ECON PREL PGOV AE SUBJECT: IN DUBAI, U/S MCCORMICK HEARS SADNESS, FRUSTRATION ON DPW CLASSIFIED BY: Jason L. Davis, Consul General, Dubai, UAE. REASON: 1.4 (b),(d),(e) 1.(S) Summary: Sultan bin Sulayem, Executive Chairman of Dubai Ports World (DPW),told David McCormick, Undersecretary of Commerce for Industry and Security, DPW has no choice but to press forward in its US ports deal. SBS said that if Congress prohibited the sale, it would be "devastating" to economic relations between the United States and the UAE - as well as the Arab world - and be a setback in the fight against radicalism. In a separate meeting, Mohammad Al Gergawi, Minister of State for Cabinet Affairs, echoed these concerns. SBS offered to provide the U.S. security access to any port facilities operated by DPW. End Summary. 2.(C) David McCormick, Undersecretary of Commerce for Industry and Security, U.S. Department of Commerce, met with Sultan bin Sulayem (SBS),Executive Chairman of Dubai Ports World (DPW), and Minister of State for Cabinet Affairs Mohammed Al-Gergawi during his visit to Dubai for discussions about strategic trade and export control matters (septel). Ambassador, Consul General, Gabriel Pellathy (Senior Advisor to the Undersecretary),Cherie Loustaunau (Director, Office of Middle East, ITA),BIS agents, and PolEconoff (notetaker) also participated. DPW Must Press Forward on US Ports Deal -------------- 3.(C) Noting (and exhibiting) deep personal sadness at the way the DPW controversy was unfolding in the U.S., SBS told the delegation DPW had no choice but to press forward on the US ports portion of the P&O deal, saying, "We will continue even if it comes to a [Congressional] vote and is stopped." He said DPW had already been approached by US businessmen offering to buy out the controversial American contracts at rates very favorable to DPW, but that selling out was not acceptable on principle. Nor would DPW agree to appoint a U.S. company to run the American ports, as had been proposed. DPW would fight for the right to operate the U.S. terminals just like any other company; if he lost that battle, SBS said with some emotion, he would liquidate all of his investments in the U.S. and walk away; other Arabs would likely to do the same. He noted that Nakheel LLC, the mammoth real estate and tourism property development �00A;firm he leads, was already moving away from a large US deal, partly because of similar concerns. ¶4. (C) SBS said he believes that Americans are only seeking security, but said that if DPW pulls out at this stage, it would set a precedent that corrupt officials and companies in other countries can exploit: corrupt officials, paid by another port investment company, could claim that the U.S. had not allowed DPW to operate American port facilities and that therefore DPW should not be allowed to operate in their country either; it would become impossible for DPW to operate on a level playing field. Economic and Security Implications of Denying DPW Sale -------------- -------------- 5.(C) U/S McCormick asked SBS what he thought about the possibility of a Congressional vote on the DPW deal. SBS said he would understand and accept any special security requirements put upon DPW, but that voting on an issue that had already been approved would send a "bad message." Because of DPW's willingness to implement any security requirements, a vote would be interpreted as the U.S. "does not like Arabs." U/S McCormick reassured SBS of the President's stance supporting the deal. If Congress cancelled the deal, SBS told us it would have "a dramatic effect" on investment in the US from this region, and would be "devastating" to economic relations, though he noted that "in terms of political relations, we will always be with you." 6.(C) SBS stressed the importance of the deal's success because America has few friends in the region and would risk losing Emiratis. He said that it could create a "dangerous situation," in that people already vulnerable to extremist ideas might be further alienated by what they perceive as distrust of even the most moderate of Arab nations. Gergawi: This Makes FTA Unpopular -------------- DUBAI 00001322 002 OF 002 7.(C) In a separate meeting, Mohammad Abdullah Al Gergawi, Minister of State for Cabinet Affairs told U/S McCormick that "this port issue doesn't help us with the UAE business community on the Free Trade Agreement (FTA)." The FTA is already unpopular with many Dubai businessmen; "now they are telling us "so these are your friends?" Gergawi said that he personally was "saddened" by the DPW incident. "Most of us in good positions in the UAE were educated in America, where we learned about the American dream. We brought that dream back with us; everything you see here was the result of our dreams, and our hard work. Entering into the U.S. market is part of that....if we are now hit on the head and told these are the limits of your dream," it would be very difficult. Gergawi said he, too believes Arab investment in the US would diminish if the DPW deal crashes. (Note: Gergawi, as Chairman of Dubai Holdings, is currently undergoing a 45-day CFIUS review himself, related to Dubai Holdings' purchase of Doncaster's Group, a UK company with US subsidiaries that produce military equipment in the US.) SBS Makes a Security Pledge, Asks for Help -------------- 8.(S) SBS spoke at length on security issues and DPW's role at port facilities. He reiterated that the company is willing to submit to any security requirements and then said, "I can go beyond this and give the United States security access to any DPW ports anywhere in the world," adding that such an agreement would need to be kept secret. He said DPW would also be willing to implement programs such as the Container Security Initiative and Megaports Initiative in all DPW port facilities. SBS concluded by asking U/S McCormick for a more vigorous response on the part of the USG to specific criticisms of the DPW deal in the public arena, perhaps via popular news shows. DAVIS