ABU DHABI CROWN PRINCE SENIOR ADVISOR REVIEWS

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 001377

SIPDIS

SIPDIS

E.O. 12958: DECL: 08/16/2017
TAGS: PREF ETRD IZ AE
SUBJECT: ABU DHABI CROWN PRINCE SENIOR ADVISOR REVIEWS
IRAN, IRAQ, INVESTMENT ISSUES WITH CODEL GRAHAM

REF: ABU DHABI 1367

Classified by Charge d'Affaires Martin Quinn, reasons 1.4 (B)
and (D).

Summary
--------------


1. (C) CODEL Graham (Sen. Lindsey Graham, Rep. Henry Wood,
and Rep. Robert Ingilis -- all R-SC) discussed Iran, Iraq,
and economic issues August 12 with Yousef al-Otaiba,
International Affairs Director for Abu Dhabi Crown Prince
Mohammed bin Zayed (MbZ). Citing the mutual benefits of UAE
investment in the U.S. market, al-Otaiba hoped that any
congressional action designed to curb foreign investment
(such as that from China) would not hurt UAE outlays. He
noted the UAE's need to market itself as a trustworthy
financial partner -- one with a big investment portfolio and
a wholesome appetite for high returns. Al-Otaiba said a team
had recently visited Baghdad to look at options for reopening
an embassy, cautioned against a U.S. troop withdrawal that
would invite "full scale civil war," and warned of the
spill-over effects of such a conflict.


2. (C) Acknowledging that weapons sales under discussion
with the U.S. were primarily designed to help the UAE meet
the missile threat from Iran, al-Otaiba nonetheless reminded
his interlocutors that the UAE would be "discreet" in public
statements regarding that threat. Differing GCC perceptions
of the magnitude of the Iran threat argue in favor of
bilateral, not multi-lateral, discussions with the U.S. (for
example in the context of the Gulf Security Dialogue). He
said the Iranian President may be "leading the charge," but
not "calling the shots" in setting Iran's international
agenda. Al-Otaiba reiterated Emirati fears that Iran might
attack its proximate neighbors if provoked by a more distant
power. End summary.

The UAE as a Friendly Investor
--------------


3. (C) In a broad-ranging conversation that began with
economic topics, al-Otaiba emphasized the mutual interests
the UAE and the U.S. share in facilitating investments. The
UAE's goal in investment in the U.S. market, including from
UAE sovereign wealth funds, for example, is purely financial,
and the UAEG seeks to avoid becoming "collateral damage" in
any congressional measures designed to limit Chinese or other
attempts to dominate portions of the U.S. market. The sour
experience in 2006 with Dubai Port World (DPW) is part of a
"learning experience for both of us," said al-Otaiba, noting
that it would take time and effort to help America see the
mutual interests involved; for its part, the UAE learned the
importance of engaging Congress early and often regarding
significant investment that might be subject to CFIUS review.
Rep. Ingilis noted that some were caught up in the
fast-burning "forest fire" of DPW. Al-Otaiba cited
UAE-commissioned post-DPW polls indicating that 30% of
Americans had a positive impression of the UAE, 30% a
negative impression, and 40% no impression at all. These
numbers offered the UAE an opportunity to convince a full 70%
of America that it is a friendly partner.


4. (C) Investment policy is in fact a "driver" of UAE
foreign policy, said Yousef, with dominance in the investment
sectors in Egypt, Algeria, Morocco, and Tunisia, for example.
While UAE investment in these nations is well received, the
U.S. sends "mixed messages" about its comfort with Arab
investment. The sheer volume of UAE investment resources may
be daunting to the U.S., but UAE intentions are "only
financial." Senator Graham noted that Chinese investments
often raised concern in the Congress, largely due to threats
to the U.S. manufacturing sector; the UAE was advised to
wisely choose U.S. partners to ensure a "win-win" investment
scenario, seek out states with supportive congressional
delegations (like South Carolina, which he claimed has the
highest per capita foreign direct investment in America),and
invest to strengthen the U.S. manufacturing sector rather
than drawing manufacturing jobs overseas. Al-Otaiba said Abu
Dhabi's large investment organs (including the Abu Dhabi
Investment Authority, ADIA) channel funds through U.S.
investment houses and use no self-identifying brand or logo
that might draw negative attention to them (or their over
billion dollars already invested in the U.S. and its markets).

Potential UAE Embassy in Iraq
--------------


5. (C) Pressed on the need for a stronger Arab presence in

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Iraq, al-Otaiba said the UAE had in fact sent a delegation to
Baghdad two days prior to "scout out locations" for an
Embassy. He cited the "positive" Saudi announcement of a
mission to Iraq for similar purposes, yet noted that the UAE
did not have much confidence in the current Iraqi government.
He cautioned against the "full scale civil war" that could
break out if U.S. troops withdrew precipitously, which might
easily spill over into Syria, Jordan, and elsewhere, and
would severely harm various U.S. interests. Decrying
negative coverage on al-Jazeera (the "extreme voice of the
region"),al-Otaiba nonetheless asserted that security
conditions in Iraq were so poor that no Arab country was
likely to consider sending troops without a vastly different
security environment.

Countering the Iran Threat with Missile Defenses
-------------- ---


6. (C) Commenting on long-standing bilateral (U.S.-UAE)
discussions on weapons sales packages which have received
increased attention of late, al-Otaiba said that while the
lists of systems were not finalized, they were clearly
designed to bolster UAE defenses against the missile threat
from Iran. Iran has been the UAE's primary military threat
"as far back as I can recall," he added, citing UAE caution
about the Iranian nuclear threat as predating similar
concerns in the West. Iran occupies three UAE islands and is
only 50 miles away, he commented.


7. (C) In spite of robust rhetoric on the Iranian threat,
al-Otaiba reiterated the frequent UAE refrain that it needs
to be "discreet" about public statements offensive to Iran;
"I don't think you will find a more reliable ally (than the
UAE),but we must be discreet." Protecting the UAE's "17
billion dollars" in annual trade with Iran requires a quiet
public posture, he asserted. Al-Otaiba said the complex Iran
threat was a key reason why the UAE preferred to keep Gulf
Security Dialogue discussions bilateral in nature, as each
GCC state had a nuanced view of that threat; he said the UAE
was most concerned, followed in turn by Saudi Arabia (with a
large Shia population in the eastern provinces),Bahrain
(many Shia and limited resources),Qatar, Kuwait, and Oman
(least concerned about Iran). He said President Ahmedinejad
is "leading the charge" as spokesman for Iranian belligerence
but is not "calling the shots" in Tehran. He stated that UAE
perceptions of Ahmedinejad's subordinate role (vis-a-vis the
religious authorities) was reinforced during the President's
May visit to the UAE. Iran's ruling clerics find
Ahmedinejad's vocal presence a useful distraction to mask
their larger goals (such as ongoing nuclear development).


8. (C) Iran has transferred some funds overseas for fear of
sanctions, al-Otaiba continued, asserting that eight years of
"waiting for reform" from former "reform" President Khatami
had been wasted. He said Iran speaks as if it expects to be
attacked by the U.S.; the UAE's concern is focused on Iran's
likely response -- hitting out at proximate countries like
the UAE regardless of who provoked it. (Comment: Senator
Graham pressed al-Otaiba to be prepared for the inevitable
naming of Iran as the primary threat for which any weapons
package would be designed to counter, in spite of the
latter's well rehearsed appeal that the U.S. acknowledge the
UAE's need to be soft in its public rhetoric vis-a-vis Iran.
End comment.)


9. (U) CODEL Graham did not have an opportunity to review
this message prior to departure from the UAE.
QUINN