Identifier
Created
Classification
Origin
07DUBAI491
2007-08-19 14:25:00
CONFIDENTIAL
Consulate Dubai
Cable title:  

CODEL GRAHAM MEETS WITH DUBAI EXECUTIVE OFFICE HEAD NABIL AL

Tags:  PGOV PREL ECON OREP IN AE 
pdf how-to read a cable
VZCZCXRO4064
RR RUEHDIR
DE RUEHDE #0491/01 2311425
ZNY CCCCC
R 191425Z AUG 07
FM AMCONSUL DUBAI
TO RUEHC/SECSTATE WASHDC
INFO RUEHZM/GCC C COLLECTIVE
RUEHDE/AMCONSUL DUBAI
C O N F I D E N T I A L SECTION 01 OF 02 DUBAI 000491 

SIPDIS

SIPDIS

DEPT FOR NEA/ARP REUTER AND BAGWELL;
SENATE SECURITY RIMKUNAS;
SENATE FOR GRAHAM; HOUSE FOR INGLIS AND BROWN

TAGS: PGOV PREL ECON OREP IN AE
SUBJECT: CODEL GRAHAM MEETS WITH DUBAI EXECUTIVE OFFICE HEAD NABIL AL
YOUSUF

DUBAI 00000491 001.2 OF 002


C O N F I D E N T I A L SECTION 01 OF 02 DUBAI 000491

SIPDIS

SIPDIS

DEPT FOR NEA/ARP REUTER AND BAGWELL;
SENATE SECURITY RIMKUNAS;
SENATE FOR GRAHAM; HOUSE FOR INGLIS AND BROWN

TAGS: PGOV PREL ECON OREP IN AE
SUBJECT: CODEL GRAHAM MEETS WITH DUBAI EXECUTIVE OFFICE HEAD NABIL AL
YOUSUF

DUBAI 00000491 001.2 OF 002



1. (C) Summary: In an August 12 meeting with a CODEL led by
Senator Lindsey Graham (R-SC),Nabil al Yousuf (Director of UAE
Vice President, Prime Minister and Dubai Ruler Mohammed bin
Rashid al Maktoum's (MbR) Executive Office) outlined elements of
Dubai's strategic plan and highlighted recent growth trends,
focusing on Dubai's investment in knowledge-based industries as
a source of future income and jobs. He noted UAE concerns
regarding regional stability and demographic issues, stressing
that "the Dubai Model" should be promoted as a means toward
economic growth and empowerment. As such, it offered the Arab
world's large youth population a viable alternative to
extremism. While accepting US border security procedures as an
understandable reaction to 9/11, he argued implementation should
be improved lest the US send the wrong message to its friends.
On engaging Israel economically and politically, he implied that
while the UAE is a moderate country, it cannot publicly move
faster than the larger Arab world. End Summary.


2. (U) On August 12 a CODEL led by Senator Lindsey Graham met
with the Director of MbR's Executive Office Nabil al Yousuf at
its Emirates Towers offices. Senator Graham was accompanied by
South Carolina Governor Mark Sanford (R),Congressman Robert
Inglis (R-SC),Congressman Henry Brown (R-SC),Graham staffer
Matt Rimkunas, the Consul General and ConGen notetaker. The
Executive Office - directly modeled on the Executive Office of
the President and often supported by outside consulting firms,
most notably Mckinsey and Co -- functions as MbR's back office,
largely supplanting the duties of the Ruler's Court (Diwan),
which was the locus of administrative power for all preceding
Dubai rulers. Al Yousuf, among other duties, is in charge of
Dubai's Strategic Plan.


Dubai to emphasize services and knowledge-based enterprises
-------------- --------------

3. (SBU) CODEL members opened the meeting by expressing USG
gratitude for UAE assistance in Afghanistan and then moved on to

the topic of Dubai's future plans and economic sustainability.
To provide perspective, al Yousuf noted the Emirate's trading
history and remarkable growth. He attributed the Emirate's
success and current cosmopolitan environment (he admitted
Emiratis make up 15 percent or less of the Dubai population,
while the overall "official" UAE statistic on the percentage of
Emirati nationals is 20 percent) to these commercial roots and
forward-thinking leadership. He commented that Dubai has been
uniquely successful in using its limited oil wealth to prepare
the ground, through the construction of infrastructure (such as
the Jebel Ali port),to grow and diversify the economy.


4. (U) In 1995, then-Dubai Crown Prince MbR started a push for
Dubai to pursue tourism as an alternate source of national
income. Today, tourism generates 13 to 14% to the Emirate's GDP
(compared to petroleum's 3-4% GDP contribution),and in 2006
more than 7 million tourists visited Dubai. (Note: MbR has set
15 million tourists as a goal by 2010, a number that even given
the massive hotel, airport and other tourism infrastructure
construction will be very hard to achieve. End Note.) Al Yousuf
outlined Dubai's pioneering development of free zones, including
Jebel Ali and the Internet and Media City free zones, a concept
now being copied throughout the region. He noted Dubai will
continue to innovate and push forward with new free zone-based
projects, including the ongoing Dubai International Financial
Center and Heathcare City projects. Predicated on Michael
Porter's knowledge cluster concepts, these knowledge centers
provide tax free havens (no corporate/income tax and no tax or
limit on profit and capital repatriation),foreign ownership of
land and full foreign ownership (UAE law requires 51% national
ownership of almost all types of businesses outside of the free
zones).


5. (U) When queried as to why international companies would be
attracted to Dubai, al Yousuf pointed to the city's strengths as
a regional logistical hub (the region's largest and most modern
air and sea ports),its quality of life (as good or better for
expatriates than anywhere else in the region) and particularly
its foreign investment- friendly posture and governance rules.
Elaborating on the tax free status of the UAE, Al Yousuf noted
that the only significant taxes in the UAE are: a 5% duty tax on
most imports and a 14% tax on total hotel bills. Instead, the
Dubai government generates revenues through service fees and,
especially, Dubai's (huge and successful) state owned businesses
(such as Emirates Airlines, EMAAR properties, and Dubai World).


6. (SBU) Governor Sanford questioned Dubai's knowledge centers'
competitiveness given similar technology clusters in nearby
India. Al Yousuf reiterated that establishing and conducting
business in Dubai is substantially easier and more transparent
than in India (with its many foreign investment restrictions,
regulations, and systemic corruption). Furthermore, he stated

DUBAI 00000491 002.2 OF 002


that knowledge centers in Dubai and India are complimentary, as
India is ill-suited to target the Arabic speaking world. Al
Yousuf pointed out that Dubai and Kerala have signed an MOU to
establish an internet free zone in that Southern Indian state.

Regional Stability and Demographics remain serious concerns
-------------- --------------

7. (C) Al Yousuf identified regional stability and local
demographics as major issues of concern now and in the future
for the Dubai government. He anticipates within ten years
nationals will constitute less than 7% of the total Dubai
population. Right now, more than 40% of Dubai's population is
under the age of 20. Al Yousuf emphasized that the younger
generation needs to be assured a place in the expanding economy
so that they are not tempted by extremist ideology. (Comment:
MbR has relentlessly sought and promoted young talent for Dubai,
Inc. To be a young, smart and determined Dubaian is to have a
world of opportunities at your feet. Dubai's state enterprises
are full of 30-45 year old CEOs and top executives; al Yousuf
himself falls in that age range. End Comment.)


8. (U) According to al Yousuf, within 5 years the changing
economy will result in a slow down in the current building boom
(and an easing in skyrocketing property prices),leading to
eventual repatriation of a large portion of the construction
workforce to their home countries. In contrast, as the Emirate
continues focusing its economy on knowledge intensive
industries, it is actively recruiting worldwide for highly
educated personnel for knowledge-intensive projects such as the
Healthcare city. He pointed out that these initiatives are
intertwined, since high caliber expatriate workers are typically
not just financially motivated; quality of life issues (health
care, leisure, security, education) are also key components in
the decision to uproot families and relocate to Dubai.

The "Dubai Model" as an alternative to extremism
-------------- ---

9. (U) When queried as to the lessons he would pass onto USG
policy makers, Al Yousuf quickly pointed out that the region is
not just about political conflict. He noted the economic boom
and the high levels of financial liquidity (not just from
current oil prices, but also from investments being pulled out
of the US due to post 9/11 procedures and restrictions) have
helped fuel the regions rapid growth and the widespread
investment that has taken place in recent years. He referenced
Tom Friedman's call for promoting a "Dubai Model" in the Middle
East, emphasizing prosperity and economic opportunity as an
alternative to extremism. Al Yousuf stated that the region's
huge and growing youth population is at a turning point, and
"could go either way"; he believes youth need to be educated to
"choose prosperity" and given an "opportunity to live."

Fingerprint me, but do it nicely
--------------

10. (U) Asked about perceptions of the US among Arabs,
particularly Arab travelers, al Yousuf elaborated on his and
others' experiences entering the US post 9/11. He noted that he
travels to the US frequently (in fact, he had just returned from
a trip there for a family wedding) and is married to an
American. He noted he is often diverted to "secondary
inspection" on entry to the US, delaying his entry by up to two
hours. He said he understood the need for thorough checking and
caution. He underscored that his concern was not the procedures
themselves, but the discourteous and abrupt way the procedures
were carried out by border agents, who have surprisingly little
knowledge of this region or its countries. He said, half
jokingly, "I don't mind if you fingerprint and photograph me,
but just treat me nicely, like a human being".

Israel, still a difficult topic
--------------

11. (C) Asked about Israel/Palestine, al Yousuf confirmed that
even in Dubai the conflict is seen as a central issue by many.
He noted that while the UAE is a moderate country (pointing out
the recent Israeli delegation to recent UAE-hosted International
Monetary Fund meetings) it is "a part of the larger Arab world"
and only one country within the Arab League. (Comment: Al
Yousuf's clear implication was that it could not publicly get
ahead of the rest of the GCC or larger Arab world regarding
political or high-profile economic engagement with Israel,
despite likely mutual economic advantage and some current, quiet
trade linkages. End comment.)

12.(U) CODEL Graham has not cleared this cable.
SUTPHIN