THE YEAR IN REVIEW: KING ABDULLAH MARKS FIRST YEAR

S E C R E T SECTION 01 OF 06 RIYADH 006727

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/23/2016
TAGS: PREL PGOV PHUM PTER PINS PINR ECON EFIN ETRD
KIRF, KISL, PARM, SA
SUBJECT: THE YEAR IN REVIEW: KING ABDULLAH MARKS FIRST YEAR
ANNIVERSARY

REF: (A) RIYADH 5114 (B) JEDDAH 0531 (C) RIYADH 4997
(D) STATE 132101 (E) RIYADH 5747 (F) RIYADH
5136 (G) STATE 132890

Classified By: Deputy Chief of Mission Michael Gfoeller
for reasons 1.4 (b) and (d).

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SUMMARY
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1. (C) August 1 marked the one year anniversary of King
Abdullah's ascension to the throne. The King has generated
considerable popularity by delivering political, economic,
and social programs intended to improve the welfare of Saudi
citizens. Utilizing the windfall from surging oil prices,
the King approved a number of giant infrastructure projects,
including four new mega city projects and a pay-raise for
public servants. The Government improved regulations of
capital markets and governance requirements. (Ref E)
Additionally, he announced the future privatization of the
airline and telecom industries. Stressing the importance of
education, the King unveiled plans for the construction of
new universities and the expansion of existing schools. The
Government launched a new scholarship program, and over 9,000
Saudi students were issued visas to study in the U.S.


2. (C) On political and economic reform, Saudi Arabia
acceded to the WTO after a decade-long quest. In an
unprecedented move, the Government committed to improving
religious freedoms in the Kingdom. It also made greater
allowances for women's participation in government and
non-government organizations and established a new labor
policy to address much-needed employment opportunities for
Saudi women. It is also close to issuing guidelines for the
treatment of foreign domestic workers. Freedom of the press
continued to improve. A nascent literary society is quietly
challenging society's strict moral code. The King reportedly
favors transparent military sales contracts. The Government
paid increasing attention to human rights and formed a
government-run Human Rights Commission to investigate abuses.


3. (S) Saudi leaders received a large number of senior USG
visitors. The military relationship continued to flourish as
the Saudis appear ready for new military purchases. The
U.S.-Saudi Strategic Dialogue (SD),launched in November
2005, continued moving forward, and several SD working groups
met and reported notable progress. That said, as we have
noted in other reporting (Ref F),the King's reforms have
begun to generate a significant backlash, and he will have to
keep an eye on the public mood and proceed carefully in order
to make further progress. Rising tensions in the region and
increasing anti-U.S. sentiment among the Saudi public,
coupled with mounting opposition to reform from religious
conservatives, will challenge the U.S.-Saudi relationship,
since the Saudi government will find it increasingly
necessary to justify to its citizens and neighbors its close
ties to the U.S. End Summary.

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ECONOMIC REFORM
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4. (C) During the past year, Saudi Arabia's continuing
oil-driven economic boom enabled the King to increase
spending on targeted infrastructure construction projects, as
well as health, education, and vocational training programs.
The King views these programs and projects as key to reducing
the number of under-educated, under-employed Saudi youths who
may otherwise be open to extremist influences.


5. (C) The King also strove to distribute new wealth to the
Saudi population to develop an "ownership society" that is
intended to give the average Saudi a larger stake in the
continued stability of the Kingdom. In June 2006, the King
embarked on his first national tour as monarch, traveling to
many regions in the country. He announced major development
projects at each stop and reinforced the State's traditional
role as infrastructure developer. The King also emphasized
the larger role he expects the private sector to play in
economic growth. It was a landmark event and the first such
regal progress made by a Saudi ruler in many years. (Ref A)


6. (C) King Abdullah also shifted FY 06 budget revenues to
social investment programs, including increasing funding to

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the Saudi Credit Bank, which is the primary source of
mortgages for middle-class Saudis, as well as the Real Estate
Development Fund and Saudi Industrial Development Fund. He
also allocated nearly $4 million for housing for low-income
earners.


7. (C) Shortly after ascending the throne, King Abdullah
announced a 15 percent across-the-board increase in public
sector salaries and pensions. In May 2006, the Government
announced health care financing reforms to bolster more
competition, and, in June, issued orders to strengthen
regulation of capital markets and corporate governance
requirements. The Saudi government also opened capital
markets to investment by non-Saudi investors.


8. (C) In December 2005, Saudi Arabia ascended to the WTO
after a decade-long quest. In April 2006, ahead of its WTO
commitment, the Government announced that the Saudi telecom
sector would be fully liberalized by the end of 2006. It also
stated that it would privatize Saudia Airlines and has
proceeded to spin off five subsidiaries of Saudia prior to
privatizing them.


9. (C) In June 2006, the Ministry of Labor announced a new
labor policy intended to create more work opportunities for
Saudi women. The new policy authorized Saudi women to begin
working as saleswomen in women's clothing and cosmetic
stores, but caused considerable backlash from religious
conservatives, who oppose this move. The Labor Minister told
Post that the Saudi government will have to proceed slowly
with reforms concerning women's employment. (Ref B)

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POLITICAL REFORM
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10. (C) Elections: Between February and March 2005, the
Kingdom held its first partial elections for municipal
councils since 1963. Saudi male voters chose 592 members,
half of the seats, of the 178 advisory municipal councils.
In December 2005, the King appointed the remaining council
members so that the councils could begin functioning. Saudi
Ambassador to U.S. Prince Turki (then Saudi envoy to the UK)
was quoted in the press in January 2005 as stating that he
thought that women would be allowed to participate and vote
in the 2009 elections.


11. (C) Women's Rights: Women have made notable gains in
the political arena as their inclusion and participation in
government and non-governmental organizations have increased.
In November 2005, two Saudi women were elected to the Jeddah
Chamber of Commerce Board of Directors. Seventeen Saudi
women contested the elections, and news reports stated that
approximately 100 Saudi women voted in the elections. In
December 2005, one Saudi woman was voted onto the Saudi
Engineers Council Board of Directors.


12. (C) In July 2006, The Majlis al-Shura (Consultative
Council) announced that it would employ six Saudi women
consultants on matters pertaining to women's issues.
According to the Ministry of Foreign Affairs, there are
currently 60 Saudi female diplomats in training. In August
2005, Prince Sultan University opened a new law department
for 40 women, and Saudi radio introduced its first Saudi
women broadcasters.


13. (C) Press Freedoms: Press freedoms continued to
improve in the Kingdom. Controversial issues previously not
openly discussed received increasing media coverage. Topics
included rights for AIDS patients, condemnation of religious
extremism and individuals promoting violence against
non-Muslims, increasing women's rights (driving, employment,
education, participation in public events),criticism of
government agencies for poor service and corruption, frequent
reports of NGO events (seminars and fora) addressing reform
discussions and efforts, frequent reports on religious
curricula and textbook debates and discussions, and
speculation about feuds among members of the Royal Family.


14. (C) Human Rights: In September 2005, the King and
Cabinet approved the creation of the Human Rights Commission
(HRC),a government organization that reports directly to the
King. Its chairperson, Dr. Turki bin Khalid al-Sudairy,
holds the rank of minister. The King reportedly has chosen
the 24-member board, which includes representatives from the

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Shi'a, Sufi, and Ismaili minority groups. Members of the
board will serve four-year terms and advise the King and
Cabinet on policy and regulations.


15. (C) In June 2006, the HRC offered Ibrahim al-Mugaiteeb
(strictly protect),founder and president of Human Rights
First Society (HRFS),a human rights NGO tolerated but not
officially recognized by the Government, a position as head
of its Eastern Province (EP) branch (Ref C). Mugaiteeb will
be responsible for Shi'a and Ismaili issues in the EP and
Najran. In the past, Mugaiteeb has been harassed and jailed
by the Saudi authorities, and the Government has refused to
issue a license to his organization. (Ref C)


16. (C) Royal Pardons: In August 2005, King Abdullah
pardoned three jailed political dissidents, Abdullah
al-Hamid, Matrouk al-Faleh, and Ali al-Demaini, as well as
their lawyer, Abdul Rahman al-Lahem (strictly protect),who
had been arrested for advocating constitutional reform. In
December 2005, King Abdullah pardoned two Saudi teachers
after a religious court convicted them of blasphemy and other
religious violations. During the visit of Philippines
President Gloria Arroyo to the Kingdom in May 2006, the King
pardoned thousands of Overseas Filipino Workers (OFW). During
his national tour, he also granted amnesty to nearly 4,000
prisoners, many of whom had served their jail terms and/or
paid fines but were still incarcerated because they are
unable to pay the debt or blood money to the families of
their victims.


17. (C) Religious Freedom: Designated a Country of
Particular Concern in 2004 by the Secretary, and again in
2005, the Government has taken significant steps to address
religious intolerance in the Kingdom. Ongoing negotiations
over the past year with Ambassador at Large for International
Religious Freedom John Hanford netted, inter alia, pledges
from the Saudi government to halt the dissemination of
intolerant literature and extremist ideology within Saudi
Arabia and around the world, protect both the right to
private worship and the right to possess and use non-Muslim
religious materials in private, curb harassment by the
religious police (mutawwa),and empower the HRC to address
all human rights complaints. (Ref D)


18. (C) Fighting Religious Extremism: The Ministry of
Islamic Affairs continued training and monitoring programs
for imams and dismissed imams whose preaching was considered
too extreme. During the year, the King repeatedly called for
moderation and tolerance of non-Muslims in his many
appearances and speeches. During his national tour in June,
the King delivered a speech on tolerance to 70,000 people in
the Qassim region that was widely seen as a rejection of
calls by religious conservatives to slow down the reform
process. King Abdullah warned Saudis against creating
division in the country by labeling others as secularists,
liberals, extremists, Islamists, or hypocrites, saying such
classifications were against the teachings of Islam and would
weaken the country's unity. The King later told Post that he
"had gone into the lion's den," referring to Qassim's
reputation as a hotbed of religious conservatism, but was
"surprised how well his message was received." (Ref A)


19. (C) Message of Tolerance - Organization of the Islamic
Conference (OIC) Summit: In December 2005, King Abdullah
hosted a ministerial summit of the OIC in Mecca, which
produced the communiqu "A Ten Year Plan of Action for the
Muslim World." Provisions in this communiqu called for
religious tolerance, improved human rights standards, and
state accountability.


20. (C) National Dialogue Fora: In 2003, then Crown Prince
Abdullah initiated a series of National Dialogue fora
sponsored by the King Abdul Aziz Center for the National
Dialogue in response to calls for practical reform in the
Kingdom. In December 2005, the National Dialogue Center held
the Fifth National Dialogue Forum in Abha entitled "We and
the Other: A National Vision for Dealing with World
Cultures." The December 2005 meeting was the culmination of
thirteen preparatory meetings held in Saudi Arabia between
April and November. Both men and women scholars and civil
society members discussed political reform, religious
tolerance, and the role of women and youth in the country.
The Center produced a National Vision Paper, which was
presented to the King. Preparatory meetings for the 6th
Forum are ongoing, and have addressed educational curricula

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reform issues. Additionally, the meetings are broadcast on
state-owned television. Although the Center has increased the
level of dialogue on difficult issues in the Kingdom, critics
of the center complain that none of the recommendations
generated have been implemented by the Government.


21. (C) Trafficking in Persons: Although Saudi Arabia was
re-designated a Tier 3 country in June 2006, the Government
is working to improve protections for foreign domestic
workers in the Kingdom. During the year, the Ministry of
Foreign Affairs appointed a point person on this issue, and
the Government announced a new labor law in September 2005.
In November 2005, it began issuing guideline books on
workers' rights to foreign workers and source country
embassies. The Saudi Embassy in Washington also requested
trafficking in persons training from the U.S. Department of
Justice. The Labor Ministry also issued new guidelines for
hiring foreign domestic workers, and is currently discussing
the approval of new guidelines that will limit the number of
working hours and provide additional benefits for foreign
domestic workers. (Ref B)

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EDUCATION, EXCHANGE AND CULTURAL PROGRAMS
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22. (C) During the year, the Ministry of Higher Education
launched a large-scale scholarship program for Saudi students
to study in the U.S., with the goal of sending 15,000 Saudi
students over the next five years. Since the time of King
Abdullah's ascension, the consular section has issued over
9,000 student visas, as compared to 860 during the same time
period the previous year. In July 2006, the Ministry
announced that it planned to send another 7,500 students on
government grants to various foreign universities. The
Ministry of Interior is helping to vet these students during
the application process.


23. (C) During his national tour in June 2006, King
Abdullah announced the construction of five new universities
and the expansion of 12 existing universities. Most of the
new universities will provide vocational training
opportunities. Although regulations stipulate that the heads
of Saudi universities must be Saudi nationals, it is likely
that an American Muslim will be appointed as president of the
King Abdullah bin Abdulaziz University for Science and
Technology in Jeddah -- reportedly due to Saudi appreciation
for U.S. excellence in science and technology.


24. (C) With a new cultural policy in hand, the Ministry of
Culture and Information has reduced the control of
conservatives over the literary and cultural clubs in the
country. The Ministry has softened its censorship policy and
lifted the ban on several works by Saudi authors, including
the controversial novel "Girls of Riyadh," which gives a
frank and candid portrayal of a woman's life in the Kingdom.
A progressive daily tabloid, "Shams," was launched in the
Kingdom and has pushed the boundaries of social and cultural
news coverage in the Arab world. It was temporarily shut down
in February 2006 when it reproduced one of the controversial
Danish cartoons of the Prophet Muhammed, but was later
allowed to resume publication. The King has instructed the
Ministry of Culture and Information to create more cultural
opportunities for women. Women traveled with the King's
delegation abroad for the first time when the King traveled
to Asia in January 2006. According to a Ministry official,
the King has ordered that that all cultural delegations
accompanying him abroad must consist of at least 50 percent
women.

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U.S.-SAUDI BILATERAL RELATIONSHIP
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25. (C) U.S.-Saudi Strategic Dialogue: In November 2005,
Secretary Rice and the Foreign Minister Prince Saud al-Faisal

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inaugurated the U.S.-Saudi Strategic Dialogue. Conceived by
President Bush and King Abdullah during their summit in
Crawford in April 2005, the Dialogue has sought to strengthen
U.S.-Saudi ties through six working groups created to address
counter-terrorism, military, energy, economic, consular and
political reform issues. Many of these groups have met, and
have reported considerable progress. The Human Development
Working Group, the name given for the sensitive, political
reform group, has met twice for bilateral discussions on

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political reform, women's rights, religious freedom,
trafficking in persons, education, and exchanges.
Discussions have been positive and constructive, with the two
sides agreeing to explore NGO-facilitated exchanges and
training for judges and members of the Shura and municipal
councils and their staffs. (Ref G)


26. (C) Economic: With Saudi Arabia as a WTO member,
policy engagement has shifted to bilateral efforts: starting
discussions on a bilateral investment treaty, a treaty to
avoid double taxation, and convening the Trade and Investment
Council. A major regulatory agency training initiative is
underway, starting with Saudi capital markets and
intellectual property rights regulators. Future regulatory
agency training includes Saudi telecom, insurance, and
financial intelligence unit regulators.


27. (C) Political Military: The King and other senior
princes welcomed numerous military and political military
visitors during the year and re-affirmed the strong
U.S.-Saudi military relationship. King Abdullah appears to
favor transparent Foreign Military Sales (FMS) type contracts
in procuring new military items. This contrasts with past
Saudi military purchases, which tended to favor less
transparency and more illicit personal profits. Flush with
cash, the Saudi military is due to be modernized, and the
King will have ultimate authority over numerous new
purchases, including up to 72 Eurofighter Typhoons, new
refueling tankers, new ships, new helicopters, and much other
equipment.


28. (C) Counter-Terrorism: Saudi Arabia has made
significant progress in the fight against terrorism in the
Kingdom. Although Saudi security forces have degraded
al-Qaeda operations, Saudi leaders still acknowledge that
this war will not be won for many years, as witnessed by the
February 2006 attack on the Abqaiq oil facility. Saudi
leaders recognize that the war on terror is as much a
campaign of ideas and education as it is a military and law
enforcement offensive against extremists. The Saudi
government has continued an ambitious media and public
education campaign to dissuade Saudis, particularly the
young, from accepting the extremist message.

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SAUDI BILATERAL RELATIONS
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29. (C) Strengthening Ties: The King most recently
traveled to Turkey (septel),his fifth official trip abroad
since becoming King. His trip to Turkey follows official
visits to China, India, Malaysia, and Pakistan, where the
King signed political and bilateral agreements to strengthen
Saudi Arabia's ties with significant, non-Western governments
in oil, investment, and defense sectors.

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COMMENT
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30. (C) During King Abdullah's tenure, the Saudis have made
what could be characterized as significant progress, albeit
largely without fanfare and publicity. Notable items were
accension to the WTO and the recent commitments to improve
religious freedom. The Saudi leadership has shown a
remarkable ability to meet, with varying degrees of success,
both internal and external challenges. Leveraging oil
revenues, the Al Saud, exercising tactics of yesteryear, have
rebuilt patronage by subsidizing a generous program of
benefits and economic development programs for Saudis, thus
promoting and maintaining relative internal stability. On
reforms, the King's agenda has been incremental, but
nonetheless cumulatively very significant.


31. (C) The King's popularity stems from his ability to
craft an image as provider and protector of the people. For
instance, the King received overwhelming public support when
he ordered that gas and diesel prices be slashed to lessen
the economic burden on low-income Saudis. The King also
carefully monitors the public mood through his throngs of
advisors and works tirelessly to anticipate and respond to
his critics. He is widely known for his generosity and has
been known to intervene personally and negotiate the
settlement of private disputes, often times paying blood
money from government coffers to the victim's family in order

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to avoid an execution. That said, as regional developments
continue to stir greater anti-western and anti-American
sentiment, coupled with a formidable opposition from
religious conservatives to further reform, the King's ability
to maintain this momentum of change will be extraordinarily
tested. As noted in reftel F, there is already an important
counter-reformation movement under way among the more
conservative segment of society. The King will need to gauge
this factor carefully as he seeks to bring the country
forward.
OBERWETTER