AL-HASA BUSINESSMEN SEEKING GREATER INVESTMENT,

C O N F I D E N T I A L RIYADH 000082

SIPDIS

SIPDIS

DHAHRAN SENDS
PARIS FOR ZEYA, LONDON FOR TSOU

E.O. 12958: DECL: 01/04/2016
TAGS: ECON PGOV EINV SA
SUBJECT: AL-HASA BUSINESSMEN SEEKING GREATER INVESTMENT,
INDEPENDENCE FROM DAMMAM

REF: 2005 RIYADH 1338 (NOTAL)

Classified by Acting Consul General Ramin Asgard for reasons
1.4 (b) and (d).


1. (SBU) Businessmen in Al-Hasa, a governorate in the
Eastern Province (EP) that comprises a large oasis and
extensive, oil-rich desert areas, told Acting CG and PolOff
repeatedly over the course of a day-long visit on December 27
that Al-Hasa needs new investment, especially in
infrastructure. "Look at our roads," Mohammad Al-Ali
commented, "we are in desperate need of improvements." Our
business interlocutors said that, if the government did start
to invest more money in Al-Hasa to create a more attractive
business environment that benefited local businesses rather
than those with special connections to Dammam and Riyadh,
they would welcome the prospect of partnerships with American
firms specifically. They said that at the present time
European companies were active in the market but American
firms were nowhere to be seen, citing as an example a recent
contract for supplying water meters awarded to a German
company. "The Germans came, they met with the people at the
utility and at the governorate, and they got the deal," one
businessman related.


2. (C) If EP residents feel that too much of the EP's oil
wealth goes to Riyadh and never comes back, Hasawis feel this
sentiment even more strongly. Our business interlocutors
noted that almost all of Saudi Arabia's onshore oil comes
from Al-Hasa governorate, but any new investment in the EP
usually is directed to the Dammam/Khobar area by the Emir,
Prince Mohammad bin Fahd. "As long as Al-Hasa is part of the
EP, we will never get any new projects," noted Saeed
Al-Khars, a municipal employee recently made secretary
general of Al-Hasa's municipal council. "If Al-Hasa becomes
its own province, we will control our own resources and
budget and not have to rely on Prince Mohammad," he
continued. He cited the last-minute disqualification of a
Shi'ite candidate in the Al-Hasa municipal elections (reftel)
as one example of the Emirate's meddling in Al-Hasa.


3. (C) Comment: Hasawis consistently tell us that their
governorate is neglected, especially relative to its
contributions to Saudi Arabia's economy, and needs more
investment in infrastructure. They are certainly right that
Hufuf, the main town in Al-Hasa, is less developed than
Dammam or Khobar and that most of Saudi Arabia's onshore oil
comes from Al-Hasa. But although there is frustration, there
does not appear to be desperation in Al-Hasa. A drive
through Hufuf reveals a small city humming with commercial
and industrial activity, albeit at a small scale, and our
interlocutors do not report that unemployment is a major
problem, as it is in Qatif. We have heard rumors that the
SAG is considering splitting the EP into three provinces,
giving Al-Hasa its independence from Dammam and Prince
Mohammad. Hasawis would welcome this split, if indeed it
occurs, as a necessary step toward unlocking their area's
full potential. End comment.

(APPROVED: ASGARD)
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