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IdentifierCreatedClassificationOrigin
07MUSCAT441 2007-05-06 13:30:00 CONFIDENTIAL Embassy Muscat
Cable title:  

IRANIAN FOREIGN MINISTER VISITS MUSCAT

Tags:   PREL ECON ETRD IR MU 
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1. (C) Iranian Foreign Minister Manouchehr Mottaki visited
Muscat from May 1-2 to attend the Oman-Iran Joint Economic
Committee. While in Oman, he met briefly with Minister
Responsible for Foreign Affairs Yusef bin Alawi (reftel) and
was received by Sultan Qaboos, who reportedly extended an
invitation for the Iranian President to visit Oman. Despite
pronouncements extolling economic relations between Oman and
Iran, trade between the two countries remains lackluster.
Contacts cite numerous frustrations in conducting business
with Iranian entities, which will limit any push by Iran to
strengthen commercial ties with Oman. End Summary.

LOTS OF TALK, BUT NO DEALS


--------------------------





2. (U) Iranian FM Mottaki arrived in Muscat on May 1 to lead
Iran's delegation of 34 government officials and business
representatives to the 11th session of the Oman-Iran Joint
Economic Committee (JEC). Omani Minister of Commerce and
Industry Maqbool bin Ali Sultan chaired the Omani side of the
two-day meeting. According to local media, the JEC discussed
establishing joint projects in the areas of petrochemicals,
oil and gas, as well as the possibility of forming a
bilateral trade and investment company to facilitate commerce
between Oman's Musandam governorate and the Hormozgan
district of Iran. Discussions reportedly also covered
cooperation in the mining industry, the role of the private
sector in efforts to increase trade, and the need for direct
flights between Tehran and Muscat. The JEC meeting concluded
with the signing of an agreement "on the exchange of official
diplomatic visas." As with most of the previous JEC
meetings, no firm business deals or substantive trade
agreements were announced.

IRAN WANTS MORE TRADE, EASIER VISAS


--------------------------





3. (U) Talking to journalists at the Iranian Embassy in
Muscat, Mottaki hailed Oman-Iran relations and described them
as "deep-rooted, cordial and strong." He noted, however,
that economic ties between the two countries were "not at
par" with the "excellent" political relationship, and stated
that work was needed to "ease the issuing of Omani visas for
Iranian businessmen and tourists." Mottaki also voiced
Iran's support for stability in Iraq and the aspirations of
GCC states to develop peaceful nuclear power programs. In
addition to meeting with Minister Responsible for Foreign
Affairs Yusef bin Alawi (reftel), Mottaki was received by
Sultan Qaboos on May 2 before departing Oman (septel).
Mottaki told reporters following the meeting that the Sultan
had handed him an invitation for the Iranian President to
visit Oman.

COMMENT


--------------------------





4. (C) Economic and commercial relations between Oman and
Iran are similar to other aspects of their bilateral
relationship -- heavy on show and nice words, but short on
substance. Despite their close proximity, trade between Oman
and Iran is far from robust and remains centered on the
exchange of Iranian livestock, and some agricultural
products, for consumer goods mostly re-exported from Oman
(and often trucked in from the UAE). While the Omani
government does not publish figures on total trade between
Iran and Oman, in November 2006 the Chairman of the Oman
Chamber of Commerce and Industry (OCCI) claimed that total
exports from Oman to Iran in 2005 were valued at 92.8 million
Omani rials (USD 241.3 million), while total imports from
Iran amounted to 21.7 million Omani rials (USD 56.2 million).
(Note: The value of total imports to Oman from neighboring
UAE in 2005 was approximately USD 2.34 billion. End note.)
Both figures, he pointed out, had declined from the previous
year. While in Muscat, Mottaki estimated that the volume of
trade between Iran and Oman amounted to about USD 200 million
-- a figure, he said, that "has to be raised, given existing
capacities."



5. (C) In line with these relatively weak trade estimates,
post contacts report that Iran has a "poor reputation" in
Oman for doing business and that negotiating deals with
Iranian entities can be "very difficult." These contacts
complain that many Iranian commercial interlocutors speak
little Arabic or English, are relatively unsophisticated in
the ways of international business, are slow to respond to
requests for specific information, and frequently fail to

MUSCAT 00000441 002 OF 002


follow through on their promises. An Oman Oil Company
employee charged with identifying foreign business and
investment opportunities told Pol-Econ Chief that his firm
had been trying to finalize an agreement with Iran for the
last five years on a proposed oil and gas development
project, but that the Iranians seemed "schizophrenic" about
the deal. "One moment they are very eager to conclude
negotiations, and then we don't hear anything of substance
from them for months!" he griped. Such negative perceptions
will limit any Iranian campaign to strengthen trade and
commercial ties with Oman. End Comment.
GRAPPO