SCENESETTER FOR UNDER SECRETARY JOSEPH'S APRIL 8

S E C R E T SECTION 01 OF 03 MANAMA 000530

SIPDIS

SIPDIS

FOR T, NEA/ARP

E.O. 12958: DECL: 03/28/2016
TAGS: PREL PARM PTER BA BILAT CTR OFFICIALS
SUBJECT: SCENESETTER FOR UNDER SECRETARY JOSEPH'S APRIL 8
VISIT TO BAHRAIN

REF: A. STATE 47881

B. STATE 45386

C. MANAMA 0442

D. MANAMA 0387

Classified by Ambassador William T. Monroe for reasons 1.4
(b) and (d).


1. (C) We warmly welcome Under Secretary Joseph's April 8
visit to Bahrain. The visit comes during a period of
high-level bilateral engagement, which the Bahrainis seek and
appreciate. In the past six weeks, Commerce Secretary
Gutierrez and State Department Counselor Zelikow came to
Bahrain (Ref C). Secretary Rice met with all GCC foreign
ministers, including Bahraini Foreign Minister Shaikh Khalid
bin Ahmed Al Khalifa, in Abu Dhabi. Crown Prince Shaikh
Salman bin Hamad Al Khalifa, accompanied by Shaikh Khalid,
met with the Vice President, Secretary Rice, Secretary
Rumsfeld, Secretary Gutierrez, National Security Advisor
Hadley, Deputy Secretary of State Zoellick, Deputy Secretary
of Defense England, and others during his March 19-22 visit
to Washington (Refs A, B, D). We have requested a meeting
for you with Shaikh Khalid.

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Iran
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2. (S) The issue most on the minds of Bahraini officials is
Iran. Dovetailing with Counselor Zelikow's presentation, the
Crown Prince told the Secretary that the Iranian government
thinks its influence in the region is growing. Iran believes
it is riding on a popular wave of support throughout the
region and is trying to capitalize on the rise of Islamist
parties, growing Islamic conservatism, and the
Israeli-Palestinian conflict. Bahrain feels particularly
vulnerable because 70 percent of the population is Shia while
the ruling family and most of the government leadership is
Sunni. Shaikh Khalid and Deputy Prime Minister Shaikh
Mohammed bin Mubarak Al Khalifa agreed to the Counselor's
proposal of a U.S.-GCC strategic dialogue on regional
security, with a focus on Iran. In Washington, the Crown
Prince requested consideration of a formal U.S. or NATO
security umbrella for Bahrain. Bahrain is a member of the
NATO Istanbul Cooperative Initiative and seeks to strengthen
its ties to NATO.

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PSI
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3. (C) In May 2005, we delivered a demarche on the
Proliferation Security Initiative (PSI) and the Statement of
Interdiction Principles to the MFA. The official said he
would review the materials but the MFA never responded
formally. He mentioned that knowing that other regional
countries had joined the PSI could facilitate a Bahraini
decision to do so. Shaikh Khalid probably knows very little
about the PSI, but he likely will be open to give serious
consideration to a U.S. request for Bahrain's participation.

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Financing
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4. (C) Bahrain has a well-developed financial industry and
promotes itself as an international financial center in the
Gulf region. Over 50 off-shore banks have licenses to
operate in the country. Bahrain has an anti-money laundering
law but has not yet passed a law to combat terrorist
financing. The regulatory authority, the Bahrain Monetary
Agency (BMA),has a strong reputation among Gulf/Arab
countries and Bahrain sees further development of the
financial sector as key to its economic future. The BMA has
frozen assets and closed bank accounts in response to U.S.
requests. However, lack of capacity in the Office of the
Public Prosecutor and the judiciary has hindered the
successful prosecution of anti-money laundering cases.
Officials from the public prosecutor's office and Ministry of
Justice have taken specialized training courses to build
their capacity in financial law. The headquarters of the
Middle East and North Africa Financial Action Task Force
(MENA-FATF) is in Bahrain.

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U.S. Navy
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5. (U) The U.S. Navy has worked closely with Bahrain for
more than fifty years. Bahrain is the only country in the
region that hosts a permanent component command headquarters,
specifically, headquarters facilities for the Commander of
Naval Forces, U.S. Central Command (COMUSNAVCENT).
COMUSNAVCENT directs naval operations in the Arabian Gulf,
Arabian Sea, and Gulf of Aden in support of Operations
Enduring Freedom and Iraqi Freedom, CJTF Horn of Africa, as
well as Maritime Interception Operations to enable freedom of
navigation and to prevent oil smuggling, piracy and various
other operations in support of the Global War on Terrorism.
Bahrain's relatively stable and secure political environment
allows deployed U.S. Navy ships to stop, replenish supplies,
and provide crews much needed onshore rest and recreation
opportunities. In 2004, 421 U.S. Navy ships called at Manama
while 377 ships called in 2005. Additionally, U.S. military
and military-contracted air traffic at Bahrain's
International Airport and other local facilities encompassed
3521 landings in 2004 and 3415 landings in 2005.


6. (U) When the Navy withdrew its dependents from Bahrain in
the summer of 2004, the fate of the DOD-run Bahrain School
was in question. The Crown Prince, who is a Bahrain School
graduate and has two children in the school, visited
Washington that summer and urged that it remain open. The
Defense Department made the commitment to keep the school
open, and the school continues to operate at about half of
its previous size. Defense Department leadership has made a
policy decision to keep the school open, alleviating local
fears that the school might close. The school provides an
American education to a diverse student body of Americans,
Bahrainis, Saudis and many other Arab, Asian, and European
nationalities.

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Military Assistance
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7. (U) The Bahrain Defense Force (BDF) maintains an
infrastructure capable of handling U.S. deployments in
support of our regional policies and forms the first line of
defense for the headquarters of the U.S. Navy's Fifth Fleet.
To continue to be an effective coalition partner, the BDF,
which deployed its navy in support of Operations Enduring and
Iraqi Freedom, must be fully compatible with the U.S.
military. Maintaining this capability has become
increasingly expensive, stressing a BDF budget that is
already insufficient to purchase the advanced U.S. hardware
needed to achieve interoperability. U.S. provided Foreign
Military Financing (FMF) has been declining over the past few
years, making it increasingly difficult for the BDF to meet
its needs. With the advent of a democratically elected lower
house of parliament that requires the BDF to operate within a
budget, funding for purchases under the Foreign Military
Sales (FMS) program have also become scarcer. FMF and
International Military Education and Training (IMET) will
continue to be important for both regional stability and
force protection goals. FMF and IMET funding for 2006 are
$15.593 million and $644,000 respectively. Estimates for
2007 are $15.750 million for FMF and $640,000 for IMET.

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Stinger Missiles
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8. (C) Bahrain procured 70 Man Portable Stinger Missiles in
1988 through the FMS program. Section 705 of the 2000
Security Assistance Act places a one-for-one replacement
limit on Bahrain's Stinger Missile inventory. Bahrain has
not fired 57 of the original 70 missiles and has yet to
demilitarize them although the U.S. Army has determined that
they are beyond their 17-year shelf life. Bahrain has 70 new
replacement Stinger Missiles currently being stored in the
U.S. DOD agencies agree that the new missiles should not be
shipped until Bahrain demils the remaining 57 missiles.


9. (C) Bahrain's response has been two-fold: request
procurement of one Avenger system (HMMWV based Stinger
Missile launch platform) in order to launch the 57 old
missiles, and seek relief from the 70 missile ceiling cap.
Bahrain signed a Letter of Offer and Acceptance to procure
one Avenger system, funded through FMF, which should arrive
by June 2006. Bahrain will not commit to a speedy firing
schedule of the 57 missiles once the system is delivered.
The GOB has sought CENTCOM assistance in explaining their
need to lift the cap to Congress. CENTCOM's reply placed the
onus on Bahrain to show the need for an increased missile
inventory. CENTCOM is staffing a proposal to offer a joint

MANAMA 00000530 003 OF 003


survey team to analyze Bahrain's short range air defense
needs.

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CWC Host Country Agreement
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10. (C) In late February, the MFA informed the Embassy via
diplomatic note that it would sign a Chemical Weapons
Convention Host Country Agreement (HCA) on challenge
inspections with us. We understand that Bahrain will become
the first GCC country to sign an HCA with us. The GOB views
the HCA as a win-win, saying it protects both countries in
the event of a challenge inspection. They are concerned that
Iran may invoke a challenge inspection of U.S. facilities in
Bahrain in an attempt to cause friction between Bahrain and
the United States. The MFA proposed some minor edits and
changes to the text that Washington agencies are now
considering. Depending on Bahrain's preferences for
finalizing the agreement, it could be completed within weeks.

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Counter-Terrorism
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11. (S) Cooperation on counter-terrorism has improved
markedly since Bahrain fumbled the detention of several
Bahrain terror suspects in June 2004, precipitating the
departure of Navy dependents. However, there remain
concerns. The terror suspects are under surveillance pending
resolution of the court case, but the constitutional court,
which is currently reviewing the case, may determine that
they were charged under a law that is unconstitutional. A
counter-terrorism law that addresses conspiracy, among other
issues, is stuck in the parliament and faces broad
opposition. Sunni extremists, though few in number, remain a
concern. We are providing assistance to the Ministry of
Interior to stand up a Joint Counter-Terrorism Center, but
progress has been uneven.

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Guantanamo
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12. (C) There were six Bahraini detainees at Guantanamo
until three were returned last fall. Bahraini press coverage
of the remaining three has been steady and intense, focusing
on allegations of mistreatment and hunger strikes. Foreign
Minister Shaikh Khalid has come under parliamentary pressure
to be a more aggressive advocate for their return, and he has
told the press and parliament that he raises the issue with
senior USG officials at every opportunity.

MONROE