Identifier
Created
Classification
Origin
06JEDDAH541
2006-08-14 14:03:00
CONFIDENTIAL
Consulate Jeddah
Cable title:  

AMBASSADOR SPEAKS WITH REPRESENTATIVES OF AMERICAN

Tags:  ECON KISL PREL SA 
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ZNY CCCCC ZZH
P 141403Z AUG 06
FM AMCONSUL JEDDAH
TO RUEHC/SECSTATE WASHDC PRIORITY 9423
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEHLO/AMEMBASSY LONDON PRIORITY 1497
RUEHFR/AMEMBASSY PARIS PRIORITY 1576
RUEHRH/AMEMBASSY RIYADH PRIORITY 6745
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/DIA WASHDC PRIORITY
RHEHAAA/NSC WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 03 JEDDAH 000541 

SIPDIS

SIPDIS

RIYADH, PLEASE PASS TO DHAHRAN; DEPARTMENT FOR NEA/ARP;
PARIS FOR WALLER; LONDON FOR TSOU; NSC FOR PANDITH

E.O. 12958: DECL: 08/13/2016
TAGS: ECON KISL PREL SA
SUBJECT: AMBASSADOR SPEAKS WITH REPRESENTATIVES OF AMERICAN
BUSINESS COMMUNITY IN JEDDAH

REF: JEDDAH 466

Classified By: Ambassador James C. Oberwetter,
for reasons 1.4 (b) and (d).

C O N F I D E N T I A L SECTION 01 OF 03 JEDDAH 000541

SIPDIS

SIPDIS

RIYADH, PLEASE PASS TO DHAHRAN; DEPARTMENT FOR NEA/ARP;
PARIS FOR WALLER; LONDON FOR TSOU; NSC FOR PANDITH

E.O. 12958: DECL: 08/13/2016
TAGS: ECON KISL PREL SA
SUBJECT: AMBASSADOR SPEAKS WITH REPRESENTATIVES OF AMERICAN
BUSINESS COMMUNITY IN JEDDAH

REF: JEDDAH 466

Classified By: Ambassador James C. Oberwetter,
for reasons 1.4 (b) and (d).


1. (C) SUMMARY: On August 9, the Ambassador breakfasted
with three members of the American business community. All
three reported that Lebanon was creating wide-spread
hostility towards the United States among the Saudi
population, both Sunnis and Shi'as. A Raytheon official
reported a promising future for the company. A manager of a
naval ship repair facility described difficulty in recruiting
and retaining qualified personnel and a systemic problem with
Saudi procurement policy shorting maintenance support for
sophisticated weapons systems. An official of the Islamic
Development Bank (IDB) advocated the Consulate General expand
its monitoring of American Muslims during pilgrimage and
recommended that the United States develop a cooperative
relationship with the IDB in one of its major scholarship
programs. The group also criticized customer service
supplied by Saudi businesses and recommended that American
manufacturers make an effort to promote product services as a
method of winning market share. END SUMMARY.


2. (C) On August 9 the Ambassador, accompanied by Jeddah
Pol/Econ Chief and Commercial Attach breakfasted with three
members of the American business community in Jeddah. One
attendee was a manager of the PANNESMA shipyard responsible
for repair of Saudi naval vessels, one was a senior manager
of Raytheon, and the third was a Muslim-American employed by
the Islamic Development Bank. All are members of the
Executive Committee of the American Businessmen of Jeddah and
long-time contacts of the Consulate General.

LEBANON SOLIDIFYING HOSTILITY TO AMERICA


3. (C) All three sources reported a troubling rise in
anti-American sentiment in the wake of the Israeli incursion
into southern Lebanon. Whereas in earlier instances, they
had noted that the attitude of the Saudi elite differed
significantly and was more moderate than that of the average

Saudi "man in the street," the sources all reported that
contacts at every level of Saudi society were expressing ever
intensifying hostility to the United States, because of its
position concerning Lebanon. One reported that, in some
respects the elite were exhibiting greater hostility toward
the U.S. than were the common people. They also noted that
Lebanon had bridged the often wide divide between Shi'a and
Sunni in Saudi Arabia as no other issue in the recent past.
The three stressed that this hostility was still focused on
U.S. policy, rather than Americans generally, but they
conveyed a sense that Saudi animosity was spreading and
threatened to become hardened in a general anti-American
attitude.

PROMISING FUTURE FOR RAYTHEON


4. (C) The Raytheon executive offered an optimistic
assessment of the company's future in Saudi Arabia. He
opined that the diversification of the company would enable
it to increase its activities in the Kingdom over the coming
years. Raytheon provides services in support of a variety of
defense and industrial products, and the company is confident
that it will obtain contracts for upgrades to existing and
sales and training for a number of new defense systems.

PANNESMA PLAGUED BY PERSONNEL PROBLEMS


5. (C) The PANNESMA manager reported that his biggest
problem was difficulty in recruiting and keeping competent
foreign-trained staff. He told the Ambassador that a
significant proportion of positions that are designated for
classified American or European staff are not filled at all
or are filed by unqualified Saudi personnel. Given the
difficult conditions under which American and European
personnel labor in Saudi Arabia, the salary and incentives
offered by the company are insufficient to attract qualified
personnel. He further complained that the Saudi government
has not been supportive, failing to solve visa problems that
resulted in the departure of some European staff and
restricting by administrative fiat, the salary grade at which
positions could be filled.

JEDDAH 00000541 002 OF 003



SAUDIS INDIFFERENT TO PROPER MAINTENANCE SUPPORT


6. (C) This led the source to observe that the Saudi
authorities are indifferent, or at least insufficiently
attentive, to the importance of maintenance in the long-term
operation of sophisticated defense systems, such as warships.
He began by complaining that the Saudis wanted new ships
without wanting to pay for their maintenance, with the result
that ships did not survive their proper life-span. He
revealed that his facility is frequently unable to purchase
or import vital spare parts and often resorts to
cannibalizing parts and systems from one ship to make another
seaworthy. He asserted that the Saudi negotiating acumen
when developing contracts frequently manifested itself in
reducing the maintenance support for a project, causing a
persistent maintenance and repair deficiency. This, he
asserted, could impair the reliability of the system and
tarnish the manufacturer's reputation unfairly.


7. (C) He cited the example of the Saudi Navy's French-built
frigates, one of which was seriously damaged in a grounding
incident nearly two years ago and is still, and in all
probability will remain, unfit to return to service. In his
opinion, the diminished reputation of the French defense
industry resulting from these trouble-plagued ships, is not
entirely deserved. He said that the unreliability of the
French vessels was the consequence of insufficient
maintenance and repair being built into the contract. He
suspected that this situation existed in many Saudi defense
procurement contracts.

IDB GROWING ISLAMIC INTERNATIONAL INSTITUTION


8. (C) The IDB official reported that his institution was
rapidly growing and increasing in importance in the Islamic
community, confirming a conversation the Ambassador had the
previous day with the President of the IDB (septel). He
described a variety of programs that the IDB sponsors
throughout the Islamic world. Reiterating comments he had
made in an earlier conversation with Pol/Econ Chief (reftel),
he dismissed the OIC as an ineffectual organization that is
financially supported by the IDB, but does little more than
talk and promote useless policy statements.

IDB SCHOLARSHIPS FOR STUDY AT AMERICAN UNIVERSITIES


9. (C) The IDB official is anxious to promote interaction
between the U.S. and Muslim countries and suggested to the
Ambassador that this could be done by American colleges and
universities becoming involved in IDB-sponsored scholarships.
The IDB sponsors a number of scholarships for students from
IDB member countries. These scholarships are very
prestigious, attracting the brightest students and post
graduate fellows. The Bank pays all fees and expenses and
provides a stipend. The alumni of these scholarships include
many people who have risen to positions of importance
throughout the scientific, business and political sectors.
The IDB allows these scholarships to be used at institutions
anywhere in the world.


10. (C) He suggested to the ambassador that it would be
beneficial to the U.S. image and to the scholarship itself,
if some of these scholarship students could be guaranteed
admission to leading American universities. The Ambassador
agreed that this could be a beneficial relationship and hopes
to pursue practical discussions in instituting such a
partnership. (Note: Pol/Econ Chief has had preliminary
discussions with another IDB official involved in the
scholarship program, who was equally receptive to the idea of
arranging some scholarships to American colleges, see septel.
End note.)

ENGAGING AMERICAN PILGRIMS


11. (C) The Bank official further suggested that the
Consulate General obtain passenger lists from the travel
firms that conduct U.S. pilgrims to Saudi Arabia for haj and
umrah. Then, he recommended, the Consulate General, in
cooperation with the local Muslim American community, set up
an information and hospitality site at the airport during haj
in order to better serve the American pilgrims. He observed

JEDDAH 00000541 003 OF 003


that offering visible assistance to America's pilgrims would
enhance the U.S reputation among Muslims who are vocal in
their criticism of many nations whose pilgrims arrive in
Arabia without adequate knowledge about the haj and are left
to their own devises and often get into difficulty.

AFTER SALES SERVICE KEY TO INCREASED MARKET SHARE


12. (C) In discussing American products in the Saudi market,
they all recommended, on the basis of many unhappy personal
experiences, that American manufacturers should make a
concerted effort to promote product repair and customer
service as part of their planning in Saudi Arabia. One
suggested that it would be advisable for manufacturers to
establish their own independent service centers in the
Kingdom, since Saudi agents could not be relied upon to
provide adequate service for products they sell.

Gfoeller