BAHRAIN: IMPLEMENTATION OF BOYCOTT STATUTES

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 000829

SIPDIS

SIPDIS

STATE FOR EB, NEA, AND L
COMMERCE FOR BIS/OAC
PASS USTR FOR JBUNTIN

E.O. 12958: DECL: 05/10/2016
TAGS: KBCT ABLD PHUM PINR ETRD ETTC PREL BA REGION
ECTRD, POL
SUBJECT: BAHRAIN: IMPLEMENTATION OF BOYCOTT STATUTES

REF: A. STATE 66895

B. MANAMA 362

Classified By: Ambassador William T. Monroe, reasons 1.4 (b) and (d)

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SUMMARY
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1. (U) The Government of Bahrain does not require
participation in or cooperation with the Arab League Boycott
(ALB),nor does it request that U.S. firms comply with
boycott requirements. Post is unaware of any ALB compliance
on the part of the Embassy's suppliers, venders, and service
suppliers. Although the boycott law of 1963 remains on the
books, Bahrain ceased to observe the secondary and tertiary
aspects in 1994. The sole vehicle for enforcement of the
primary aspect, the boycott office, was closed in September

2005. Random residual contractual boycott enforcement
requests are typically remedied quickly. Post recommends
that Bahrain be removed from any and all USG lists regarding
secondary and tertiary boycotts. End Summary.

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COMMITMENT TO WTO REAFFIRMED
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2. (SBU) Bahrain eliminated all aspects of the secondary and
tertiary boycotts in 1994, following the GCC's announced
policy of non-adherence to those aspects. There has been a
tremendous reduction in the number of Bahraini uses of
boycott language in business documents over the past decade
(Ref. B). Outdated tender documents in Bahrain still
occasionally refer to the secondary and tertiary aspects of
the boycott, but such instances have typically been remedied
quickly.


3. (SBU) Minister of Finance Shaikh Ahmed bin Mohammed Al
Khalifa September 5, 2005 sent a letter to USTR Portman
reaffirming that the secondary and tertiary boycotts of
Israel have been abolished. He also sent a memorandum to all
government ministries reminding them of that fact and
instructing them to ensure that tender offers and government
contracts did not refer to the boycott. (Note: There were
nine prohibited boycott requests in 2005. In view of the
aforementioned circumstances, Post takes the view that these
requests were random residual occurrences and not a matter of
policy or practice. End Note.)


4. (SBU) Shaikh Ahmed's letter noted that "Bahrain recognizes
the need to dismantle the primary boycott of Israel and is
beginning efforts to achieve that goal." The letter also
stated that "As founding members of the World Trade
Organization (WTO),the Kingdom of Bahrain is fully committed
to complying with WTO requirements. Bahrain has no
restrictions whatsoever on American companies trading with
Bahrain, regardless of its ownership or relations with
Israeli companies."

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BOYCOTT OFFICE CLOSED
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5. (SBU) Shaikh Ahmed sent a second letter to USTR Portman
September 17, 2005, informing him that "the Boycott of Israel
Office in the Kingdom of Bahrain is now closed." Although
the primary boycott law continues to exist in Bahrain,
closure of the boycott office (the only entity responsible
for enforcing the boycott) has been widely acknowledged as
tantamount to lifting the primary boycott. (Note:
Israeli-labeled products are reported to be found
occasionally in the Bahraini market and the Finance
Ministry's recent purchase of office equipment from Israel
received wide press attention. End Note.) Bahrain does not
require that U.S. firms provide information regarding ALB
compliance.

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REGIONAL ALB COOPERATION CURTAILED
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6. (C) Bahrain did not attend the November 2005 Arab League
Boycott meeting in Damascus. MFA Director for Bilateral
Affairs Dhafer Al Umran told Pol/Econ Chief March 11 that the
Organization of the Islamic Conference (OIC) had invited
Bahrain to its meeting on the boycott, but when Bahrain

MANAMA 00000829 002 OF 002


declined to attend, the OIC rescinded its invitation, saying
Bahrain should not have been invited because it has no Israel
boycott office and so has no reason to be at the meeting.

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RECENT COMPLIANCE TEAM VISIT
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7. (SBU) A Commerce Department anti-boycott compliance team
visited Bahrain February 14-15 and met with government
officials and business people concerning the boycott of
Israel (Ref. B). Finance Ministry Director of Economic
Planning Yusuf Humood confirmed that the GOB had closed the
Israel boycott office in 2005 and that enforcement of the
primary boycott in Bahrain was not possible. This move was
in keeping with the long term policy of removing the direct
presence of the government from the economy. Ministry of
Commerce trade official Eman Al Dossary said that Bahrain was
fully committed to its WTO obligations, including permitting
trade with all other WTO members (read Israel).


8. (SBU) The team also spoke with representatives of Parsons
and Black and Veatch, two American companies with a presence
in Bahrain. The Parsons executive said that his insistence a
few years ago on removing any boycott language from
government contracts may have contributed to his lack of
winning new business for a period. For the past 18 months,
however, he has won several contracts and government
officials have responded favorably to any requests to alter
language in contracts.

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COMMENT
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9. (C) Given that the GOB clearly does not follow a policy or
practice of requiring contracts to include boycott language,
Post recommends that Bahrain be removed from any USG lists
regarding secondary and tertiary boycotts. Post is unaware
of any ALB compliance on the part of the Embassy's suppliers,
venders, and service suppliers.

MONROE