AMBASSADOR AND CROWN PRINCE DISCUSS FTA AND IRAN

1. (C) In their February 19 meeting, Crown Prince Shaikh
Salman told the Ambassador that he would deliver a speech at
the February 27 conference on the U.S.-Bahrain Free Trade
Agreement (FTA), at which Commerce Secretary Gutierrez also
will speak. The CP said the government was still
considering, if necessary, using "expedited powers" to ensure
quick parliamentary approval of the final pieces of FTA
implementation legislation. The CP guaranteed a July 1 entry
into force for the agreement. He noted that he would visit
Washington in late March or April. Regarding Iran, he said
that regional countries were worried about being trapped
between two nuclear powers, Iran and Israel. Some
governments, in particular Egypt and Saudi Arabia, were under
pressure from their citizens to pursue nuclear technology.
Bahrain is interested in formalizing its relationship with
NATO or concluding a public agreement for NATO protection in
case of a nuclear threat. The West should deal with Iran by
"taking away its rights," such as travel visas. Military
confrontation should not be an option; the region has already
faced too many major wars. End Summary.



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CP Confident on Passage of FTA Implementing Legislation


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2. (C) To open their February 19 meeting, the Ambassador
informed Crown Prince Salman bin Hamad Al Khalifa that
Commerce Secretary Carlos Gutierrez would visit Bahrain
February 26-28 to participate in a conference on the
U.S.-Bahrain FTA and to hold meetings with Bahraini
officials. The CP had been briefed on the conference by
Economic Development Board (EDB) CEO Shaikh Mohammed bin Issa
Al Khalifa and said he would deliver a keynote speech at the
conference lunch. He will address FTA implementation in the
speech. Bahrain still needs to complete some intellectual
property rights legislation and regulations before the FTA
can enter into force, and he wants to use the speech to
emphasize the need for quick passage of the laws. He said he
was considering, if necessary, having the government use
"expedited powers" to push the laws through parliament. The
CP assured the Ambassador that the legislation would be
passed before parliament starts its summer break, well ahead
of a July 1 implementation date.



3. (C) The CP said that the EDB's profile in the country was
rising. Parliament would vote within the next week or two on
legislation establishing the Labor Market Regulatory
Authority, which will oversee implementation of the country's
labor reform initiative. In this regard, the CP mentioned
that many members of parliament do not want housemaids to be
covered by the provisions of the labor reform bill (which
will establish a fee payable to the government by employers
of foreign workers). Shaikh Salman said that one way or
another, a loophole for housemaids would need to be closed.
He noted that the EDB had also launched its education
initiative and had secured additional capital for the Bahrain
Development Bank.



4. (C) Shaikh Salman said he planned to visit Washington in
late March or April, depending on King Hamad's schedule. If
he comes in April, the available dates are April 1-10 or
after the 23rd.



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Iran on My Mind


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5. (C) The CP said he had been speaking publicly about Iran
lately. Echoing Foreign Minister Shaikh Khalid's February 7
comments to the Ambassador (reftel), the CP stated that
Bahrain and other Arab countries are worried about being
trapped between two nuclear powers, Iran and Israel. A
dangerous arms race in the region must be prevented.
Political pressure is growing on governments in the region,
in particular Egypt and Saudi Arabia, because people "feel
exposed and left behind, and want to follow suit" by building
a nuclear reactor. Because of the high price of oil,
governments have the resources to devote to nuclear
technology.



6. (C) Shaikh Salman said that Bahrain, and probably other
regional countries, were interested in formalizing their
status with NATO or concluding a public agreement for NATO
protection in the case of a nuclear threat. The Ambassador
briefed the CP on the $75 million U.S. initiative to
broadcast into Iran and to support the development of Iranian
civil society and education. The CP replied that Iran sees
itself as a great nation and must be "treated like an
egomaniac." He referred to the recommendations of an
analysis he read, which said that the way to get Iran's
attention is by "taking away its rights," such as by denying
Iranians visas to travel.



7. (C) The CP said that he wants leaders to move away from
talk of a military response to Iran's nuclear program. The
region has faced three major wars in the past 20 years and
does not want a fourth. Within Bahrain, sectarianism is a
huge problem with no easy solutions. The situation would be
exacerbated by increased tensions with Iran. The forces of
moderation in the region have suffered for the past several
years, with their agenda confined to "the boardrooms and
ballrooms." The extremists have the upper hand and there
will be a delicate balance over the next decade. He stated,
however, that the United States has many good friends in the
region who want to see the situation improve.

MONROE