SCENESETTER FOR NEA A/S WELCH VISIT TO MUSCAT (AUG

S E C R E T SECTION 01 OF 04 MUSCAT 000786 SIPDIS NOFORN SIPDIS DEPT FOR NEA/FO, NEA/ARP E.O. 12958: DECL: 08/14/2017 TAGS: PARM PREL KNNP ECON PDEM MU SUBJECT: SCENESETTER FOR NEA A/S WELCH VISIT TO MUSCAT (AUG 23-25) REF: A. MUSCAT 780 ¶B. MUSCAT 709 ¶C. MUSCAT 705 ¶D. MUSCAT 700 ¶E. 06 MUSCAT 1670 Classified By: Ambassador Gary A. Grappo, reasons 1.4 b and d Summary -------------- ¶1. (C) Embassy Muscat and I warmly welcome your return to Oman. Omani officials look forward to meeting with you to receive updates on issues concerning the Israeli-Palestinian conflict, Iraq, and Iran. While Oman remains a strong friend and ally and cooperates with us on a wide range of subjects, our designation of Oman in June as a Tier 3 country for trafficking-in-persons (TIP) generated a surprising reaction from both the government and the media. Regional concerns, however, remain uppermost in the minds of the Omani leadership. On the domestic front, your visit will present a good opportunity to urge the Omanis to continue their nascent efforts to combat TIP. The U.S.-Oman Free Trade Agreement, once implemented, should boost Oman's ambitious economic diversification efforts. Oman's economy continues to grow on the account of high oil prices, albeit at a slower pace than ¶2006. The government's massive recovery effort from Cyclone Gonu will likely cost an estimated USD 3-4 billion; on the positive side, much of this is going back into the domestic economy, further boosting growth for this year and into 2008. The government is actively promoting the October Majlis al-Shura elections, though turnout is expected to be low. End Summary. Regional Security Issues -------------- ¶2. (C) Regional stability continues to be of primary importance to the Omani government. Of utmost concern to them is re-establishing dialogue toward finding a resolution to the Israeli-Palestinian conflict. Oman's leadership is generally supportive of the President's proposed Middle East peace conference, but wants to see inclusive participation. Characterizing it as an "opportunity that can't be missed," the Omani government stands firmly behind the concept of having broad participation, including Syria, Lebanon, and other Arab and Muslim countries; to have otherwise would not fulfill the goal of having a "true" international peace conference. ¶3. (C) The Omanis caution that for the conference to be a success, Israel must be prepared to take risks to support Palestinian Prime Minister Abu Mazen and show the Palestinians that they are serious about addressing Palestinian concerns. In order to achieve tangible progress, the government advises that participants focus on a "medium-term package," rather than final status issues. The Omani government believes that any overarching peace plan developed would have to address three critical issues: the right of return, permanent borders and the status of Jerusalem. Oman most likely would support a plan that includes the resolution of these three issues, so long as they are settled through direct negotiation between Israel and the Palestinians. Oman is "skeptical" of Israeli intentions, given "contradictory" statements offered by the Israelis. For example, Minister Responsible for Foreign Affairs Yusuf bin Alawi recently pointed out that Israeli Prime Minister Ehud Olmert had expressed notional "acceptance" of the Arab League Peace Initiative, but then had publicly rejected the return of Palestinian refugees to present-day Israel. Iraq -------------- ¶4. (C) Omani officials, who cast a wary eye toward events occurring in Iraq, will want to hear your views on the situation there, especially on where we may be headed over the next 3-6 months. Though not a major financial donor (Oman pledged USD 3 million at the Madrid conference),Oman has supported our efforts to promote security and political stability in Iraq. Iraqi Prime Minister Nuri al-Maliki led a 10-member delegation to Muscat in April 2007; the Omani government has completely forgiven Iraqi debt. ¶5. (C) The Omani government remains very concerned that Maliki does not have the stature to lead the country MUSCAT 00000786 002.2 OF 004 effectively over the long-term. Bin Alawi has been critical of Maliki's ability to reach outside of his power base and questions whether the Prime Minister has effective control of Iraqi security forces. In dismissing rumors of former Prime Minister Iyad Allawi replacing Maliki, bin Alawi acknowledged that the situation in Iraq "will not change overnight regardless of who is Prime Minister." Iran -------------- ¶6. (S/NF) Oman does not view Iran as an enemy or direct threat to its national security, as explained more fully in reftel A. Accordingly, it prefers dialogue and cooperation on mutual maritime security and other shared interests, rather than isolating Iran or interfering in its internal politics. Barring a significant increase in Iran's provocative rhetoric, acts of belligerency in the region, or a defiant withdrawal from the non-proliferation treaty, Oman will likely continue its policy of engagement with Iran and oppose sanctions against the regime in Tehran. Nevertheless, the relationship is skin-deep, as Omanis and Iranians, in general, do not share cultural or religious affinities and have little in common. ¶7. (S/NF) Questions persist within the Omani leadership as to what extent Iran poses a threat. Oman's military and security services generally have a more pragmatic view of Iran's threat potential than does the Ministry of Foreign Affairs (MFA). Mirroring U.S. concerns, leaders in these institutions worry about growing instability in the region resulting from Iranian policies, perceived as expansionist. The MFA, on the other hand, appears more ready to downplay Iran's destabilizing activities and to dismiss threatening statements as just political rhetoric intended for domestic consumption. Eager to ease Iranian suspicions of Muscat's close security ties with the U.S., MFA officials, including bin Alawi, emphasize Oman's long-standing good relations with Iran in public statements and joint press conferences. MFA officials have also called for the U.S. to integrate Iran into a regional security framework. ¶8. (C) Concerning Iran's nuclear program, Oman's leadership believes that Iran has improved its working relationship with EU High Representative Javier Solana and with the International Atomic Energy Agency (IAEA). Bin Alawi advised that Iran appears to be "more forthcoming" on issues related to its nuclear activities and "very concerned" about another UN Security Council sanctions resolution. The Omani government is skeptical of additional punitive sanctions meted out by the UN Security Council, which "will only make hard-liners in Tehran stronger." Trafficking in Persons -------------- ¶9. (C) The Omani government reacted strongly to its Tier 3 designation, with some officials questioning our motives for such harsh criticism of a long-time friend. Nevertheless, the designation has gotten their attention. Since the designation, the Omani government has drafted, with the assistance of a prominent U.S.-based expert, an anti-TIP law that both criminalizes TIP and establishes a national committee to coordinate anti-TIP initiatives. The government plans to hold its first internal anti-TIP workshop in September. The draft law and formation of a national committee represent significant steps by the government in meeting the targets set out in the 60-day action plan. The government will soon send officials from the Royal Oman Police and the Ministry of Manpower on a Voluntary Visitors Program to learn from and observe U.S. colleagues in their handling of TIP crimes. Nevertheless, considerable work remains, and you can help reinforce post's engagement on this subject by stressing that the government's continued proactive efforts will be needed in order to meet the requirements listed in the 60-day action plan. FTA Pending -------------- ¶10. (C) The implementation of the U.S.-Oman Free Trade Agreement remains pending. We have made considerable progress in working through the issues related to intellectual property, customs, telecommunications, transparency, and labor, among others. Nevertheless, before setting an implementation date, we await the government's MUSCAT 00000786 003 OF 004 promulgation of draft tender, copyright, and industrial property laws, in addition to its adoption of telecommunications licensing and customs administration procedures. The Sultan has a personal interest in the FTA and has instructed his ministers to work actively for its success. ¶11. (U) Oman's pursuit of an FTA is part of its overall plan to reduce dependence on dwindling petroleum reserves. Oman continues to follow its ambitious industrialization and economic diversification program. Several billion dollars of U.S. investment have poured into Oman in the past few years, including from Dow Chemical (petrochemical complex),Bechtel (aluminum smelter) and Occidental Petroleum. Oman actively seeks private foreign investors, especially in the industrial, information technology, tourism and higher education fields. Gonu Windfall -------------- ¶12. (C) Under the quiet leadership of the Sultan, the Omani government is moving quickly to recover from the devastating impact of Tropical Cyclone Gonu. The official storm tally of fatalities was 49; but many, including officials, privately estimate the number of dead and missing at 500-1,000. Estimates peg the damage caused by the cyclone at USD 3-4 billion. Under the direction of the state-run Oman Charitable Organization, the government has offered to replace houses, cars, and household effects of those Omani nationals whose uninsured property was destroyed by Gonu. The organization, which has received 59,000 petitions from affected families so far, estimates cumulative losses to be USD 300 million. On the positive side, the domestic economy should receive an added boost from the spending associated with Gonu. On the downside, the government has claimed most of the credit in media outlets for its activities, overshadowing extensive volunteer relief efforts. (Note: A media contact confided in receiving a directive not to publish volunteer actions, nor the amount of aid received by the Sultanate from neighboring GCC countries. End note.) While undoubtedly beneficial to affected recipients, the generosity of the government further embeds the image of the Sultanate as a paternalistic welfare state in the Omani psyche. Upcoming Elections -------------- ¶13. (C) The Omani government has been promoting the upcoming October 27 elections for the Majlis al-Shura, its lower consultative chamber. Established in 1991, the Majlis al-Shura has slowly been given expanded powers, including the right to review and propose changes to (but not veto) legislation, question ministers, and examine government financial plans. The government has sent "awareness teams" to address Omani employees at government offices and major private companies to encourage them to register to vote and run for office. A total of 717 candidates, including 20 women, have been registered. Regulations on official campaign activities limit outreach to voters, but candidates often campaign informally at social events and many rely heavily on tribal connections to win their electoral races. While press editorials generally have backed the government's voter registration drive, some articles have surprisingly questioned the utility of casting a ballot for a body often seen as failing to seriously benefit citizens. On-line commentaries and polls indicate that voter apathy continues to plague the government's efforts to increase participation in the elections. Collaboration with Iraqi SU*1-!dHF;;f ¶14. (S) The Omani government has agreed "in principle" to our request to accept Iraqi WMD/missile scientists for one-year fellowships at USG expense, and is strongly considering participation in the program. Oman would require "comprehensive background information" on relocation candidates and emphasized that these individuals should have "strong professional qualifications" so that they could be properly placed at a university or other appropriate institution. Of particular interest to the MFA is placing qualified individuals at the Middle East Desalination Research Center (MEDRC),established in 1996 through the Middle East Peace Process (MEPP) multilateral working group MUSCAT 00000786 004 OF 004 on water resources. As the only active MEPP Track II institution in the Gulf, the Omani government attaches great significance to MEDRC. Bin Alawi may ask you for help in encouraging other countries, as well as private donors/foundations, to support MEDRC. GRAPPO