SCENESETTER FOR APHSCT TOWNSEND VISIT TO SAUDI

S E C R E T SECTION 01 OF 10 RIYADH 000212

SIPDIS

NOFORN
SIPDIS

NSC FOR MALVESTI AND KIFAYAT
TREASURY FOR HEFERNAN AND GLAZER

E.O. 12958: DECL: 01/30/2025
TAGS: PREL EFIN CVIS KTFN PTER GCC SA
SUBJECT: SCENESETTER FOR APHSCT TOWNSEND VISIT TO SAUDI
ARABIA, 5-8 FEBRUARY 2007

Classified By: AMB James C. Oberwetter for reasons 1.5 (b) and (d).


1. (S) Ambassador Oberwetter and the entire US Mission in
Saudi Arabia warmly welcome you back to Riyadh. As you have
witnessed during the course of your many visits to the
Kingdom, our bilateral relationship is developing into
robust, multi-faceted cooperation. One indication of this
was King Abdullah's private, and FM Saud al-Faisal's public,
support for the President's Iraq plan. The Saudi leadership
is deeply distrustful, however, of PM Maliki, and they cite
Maliki's timing of Saddam's execution as willfully
endangering Muslim pilgrims during the Hajj. The King
appreciated Secretary of Defense Gates' visit here in
January, on Secretary Gates' first international trip after
his confirmation. The Saudis are also pleased with Secretary
Rice's intensive engagement with the Palestinians and
Israelis on the peace process. They agree with us on the
Iranian threat, though as a neighbor of Iran's they have
taken a very cautious public line on Iran. Nevertheless, the
Iranian threat provides another strong incentive for the
Saudis to work closely and quietly with us on the full range
of bilateral issues.


2. (S) Counterterrorism cooperation includes the important
new element of intensive engagement on energy infrastructure
protection. The December 2006 MOU signed by Prince Muhammad
bin Nayef and State U/S Joseph provides a framework to
develop, manage, and jointly implement a total-systems
solution to improve security at Saudi Arabian petroleum
facilities. The Joint Working Group will meet in Riyadh on
March 4 to move beyond assessment visits to prepare
recommendations on procurements and site security upgrades.



3. (S) On counterterrorism financing, we see little progress
on the SAG's efforts to establish the National Commission for
Relief and Charitable Work Abroad. The MOI did issue a media
campaign during the Hajj warning the Saudi public not to
donate to unlicensed charities. The SAG Customs has yet to
implement and enforce their cash declaration law.


4. (S) The Saudi leadership acknowledges privately that the
war on terrorism will not be won for many years. The MOI
remains on very high alert; Prince Muhammad bin Nayef speaks
of ongoing serious threats coming from Iraq and concerns of
potential new threats from Iran. Counterterorism is seen in
the MOI and throughout Saudi society as much a campaign of
ideas and education as it is a military intelligence and law
enforcement offensive. The SAG continues an ambitious media
and public education campaign to dissuade Saudis,
particularly the young, against the extremist message.
However, intolerant language remains in Saudi textbooks, and
youth are still exposed to extremist ideologies through
summer camps, in mosques and in the media.

--------------
International Islamic Relief Organization
--------------


5. (S/NF) The IIRO Eastern Province branch office remains
closed pending an ongoing MOI investigation. The MOI
informed U.S. intelligence sources that on approximately July
10, 2006 Al-Mua'jjil's bank accounts were frozen and travel
restrictions were placed on him. According to the MOI, the
SAG does not have enough evidence to arrest or detain him at
this point in time. Other than freezing Al-Mua'jjil's bank
accounts and restricting his travel, the SAG does not plan to
take further action.

--------------
AL HARAMAIN ISLAMIC FOUNDATION
--------------


6. (S/NF) In 2004, the SAG shut down Al Haramain's
operations in the Kingdom. Subsequently, Al Haramain has
reemerged worldwide under multiple names. Single source
reporting indicates Al Haramain was renamed/replaced by Dar
al-Salaam, and has transferred funds to an NGO in Nigeria,
where the funds were diverted to militant groups for the
purchase of weapons and to disrupt oil production in Nigeria.
Dar al-Salaam, according to the same source, sent funds to
Al-Ittihad al-Islami (AIAI) in August 2006. One Dar
al-Salaam senior official was reported to be former Al
Haramain Director, Sheikh Sa'id bin Wahf al-Qahtani. Dar

RIYADH 00000212 002 OF 010


al-Salaam also provided Hassan Dahir Aweys, leader of the
Islamic Courts Union in Somalia and an AIAI Colonel with
multiple ties to Al-Qa'ida, with over USD $200,000 from
February-April 2006. In early January 2007, Mabahtih informed
BMP that it had no information on Dar al-Sallam and could not
locate its office or employees.

--------------
CHARITIES COMMISSION
--------------


7. (S) The SAG proposal to establish a Charities Commission
remains in the Shura Council. Embassy has raised this issue
in December and January meetings at the Ministries of
Interior and Foreign Affairs, urging SAG engagement on this
long overdue measure and noting that its establishment was
announced publicly over two years ago. The Ministry of
Foreign Affairs counterterrorism coordinator explained to us
the difficulty in combining Shar'ia law and Western legal
principles. In a January 25 meeting with the senior
officials of the Saudi Arabian Financial Intelligence Unit
(SAFIU, which is part of the MOI),Embassy was told there is
debate within the Shura Council as to whether the Commission
should be a public or private entity. Ultimately, according
to the SAFIU, it will likely be a combination public/private
commission, with mostly private sector members appointed by
the SAG and with some government oversight.


8. (C) There is one recent encouraging sign of increased SAG
supervision of charities: the public warnings to all Saudis
not to donate to unlicensed charities during the Hajj. The
MOI spokesman issued a public warning which was a headline
in the local newspapers during the Hajj. Embassy Econ
Specialist (who performed the Hajj this year) reported that
Saudi fund raisers in Mecca during the Hajj were displaying
their Ministry of Social Affairs license numbers to show they
were legal. Dr. Saad al-Jabri, MOI Advisor to Muhammad bin
Nayef, told EconCouns that he would prepare a report to give
to APHSCT Townsend on regulation of charities during the
Hajj.

--------------
CASH COURIERS
--------------


9. (C) Saudi financiers of external terrorist/extremist
groups are suspected of personally carrying cash outside of
Saudi Arabia into banking or hawala centers such as Manama
and Dubai. SAG regulations require individuals carrying funds
in excess of $16,000 to declare the funds to Saudi customs
officials upon entering/exiting the Kingdom. SAG Customs has
the legal authority to enforce the cash declaration law but
generally does not. Officials recently reported that Customs
will implement restrictions by this summer, following an
extensive public information campaign (TV and billboard ads)
and additional training.

--------------
FINANCIAL INVESTIGATION UNIT (SAFIU)
-------------- QQ(S) QIU, and SaudQbanks continue to have
QQapping roles and blurred responsibilities. SAFIU -
comprised of Mabahith, GIP, and SAMA offQQis
responsible for investigating bank accounts associated with
subjeQs of Mabahith and GIP terrorism investigations.
However, the redundancy and inefficiency of these financial
organizations often prevent salient information from reaching
the appropriate Mabahith and GIP investigators. In a
terrorism case, fQ example, a MaQhith or GIP ofQcer sends
a suspect,s name Qd/or other piece of identifying
information to his counterpart at SAFIU for investigation.
The SAFIU officer makes an official request to the
appropriate SAMA representative, who sends the request to
sixteen Saudi banks, each of which addressQ the request
differently. Submitting requests through the JTFTF adQ an
additional layer to this process.


11. (C) In December 2006, the FBI, working with the Embassy
ECON section, conducted training for the SAFIU geared towards
basic analytical and investigative techniques for terrorism
finance and money laundering investigations. The SAFIU
investigates investment groups and investment mechanisms for
terrorism finance as well as financial transactions stemming

RIYADH 00000212 003 OF 010


from travel agencies in the Kingdom. The SAFIU appears to be
in the midst of a personnel reorganization and a redefinition
of its operations and goals. SAFIU Director Dr. Saud
Al-Murieshd was recently removed; we do not yet know who will
replace him. The Consultancy Division, an independent unit
under the SAFIU tasked with getting the SAFIU on par with
other functional FIUs, was dismantled.


12. (C) The US Treasury FinCEN informed the SAFIU in early
December that the USG would not able to sponsor the SAFIU for
2007 Egmont membership, due largely to the inability of
FinCEN to gain access to banking sector Qsentatives
without the supervision of SAMA officials. As a result, the
SAFIU is even more focused in obtaining the necessary
training to become a 2008 Egmont candidate, and Embassy
remains engaged with it. FinCENQemains committed to act as
a co-sponsor in helping the SAFIU meet internQ
standards, along with Cyprus and Lebanon.

--------------
JTFTF
--------------


13. (S) The JTFTQt tQ since yoQQ visit in November.
During these meetings, particQts discussed the "BridgeQaQ" case; former Al- Qa,ida operative Muhammad
'Abdallah Abdan al-Ghamdi, who is currently in custody, ran a
scheme with his partner Muhammad Qassim al-Ghambi to raise
millions that were invested in the Spain-registered Bridge
Company. The end use of this money is unknown, but Muhammad
'Abdallah and Muhammad Qassim are suspected of illicit
finance activities. In the past month, Mabahith has arrested
a number of suspicious individuals associated with both
al-Ghamdis but has yet to indicate whether they comprise a
terrorism cell or planned to conduct nefarious activities.
This information is being passed through regular liaison
channels to ensure a thorough investigation on both the U.S.
and Saudi sides. FBI and BPM have not received responses to
several request for bank account data associated with
terrorism finance cases that have been raised though the
JTFTF.

--------------
RADICAL INCITERS AND FACILITATORS
--------------


14. (S/NF) Post fully supports the aim of this Initiative
to deter radical ideological support for terrorists by
ensuring some of its headline exponents (who are also
financing or otherwise facilitating terrorists) are
sanctioned by the UN 1267 Committee. But a USG public
affairs posture that stresses the ideological support, rather
than the evidence of financing or recruiting that is
unquestionably sanctionable under current interpretations,
could play into the hands of the extremists, and lead to a
lessening of SAG support.


15. (S/NF) The SAG has its own ongoing program to deter
radical clerics from their radical preaching and teachings in
the Kingdom, which the SAG sees as successful. This program
has three goals: 1) to monitor radical clerics; 2) co-opt
radical clerics; and 3) remove the clerics deemed to be
un-cooperative. Our initiative should be closely coordinated
with the Saudis, especially when it comes to designating
Saudi individuals. We fully support prioritizing extremist
imams and inciters of terrorism, who also qualify for
designation under the UNSCR 1217, as long as we closely
coordinate through liaison channels with the SAG and
coordinate with post on the public affairs aspects of this
designation.

--------------
COMBATING EXTREMISM
--------------


16. (C) During King Abdullah's national tour in June, he
delivered a speech on tolerance to 70,000 people in the
Qassim region that was widely seen as a rejection of calls by
religious conservatives to slow down the reform process. This
speech appears to have curbed the increasingly aggressive and
open "counter-reformation" movement among certain
conservative media and religious circles. Since June, there
have been no open letters to the government relating to
domestic religious policies.

RIYADH 00000212 004 OF 010




17. (S) One of the SAG's policies to combat extremism is to
ensure that the imams preach messages of tolerance and peace,
not of violence and extremism. To this end, the Ministry of
Islamic Affairs continued with its imam training and
monitoring programs. The media reported in late September
that 2,160 imams had been identified as having delivered
intolerant sermons and sent for refresher training.
Additionally, 2,000 imams were reportedly relieved of their
duties due to their extremist preaching. This training and
the dismissals follow thousands of others during the course
of the year. Despite this progress, there were reports that
extremist lecturers taught youth during the summer camps
hosted by Islamic charities despite strict regulation by the
Ministry of Islamic Affairs and other SAG ministries. In
addition, anti-Shia clerical rhetoric appears to have
escalated over the past six months, largely in reaction to
the Israel-Hizballah war and increasing tension with Iran.
The charities claimed that their lecturers were prescreened
and preapproved by the SAG, but that these types of lectures
can still occur.


18. (U) The SAG also engages in reeducation programs for
Guantanamo returnees, as well as youths returning from Iraq
or caught trying to go to Iraq to pursue extremist actions
there. These government-funded programs attempt to reengage
the individuals in a religiously positive manner. The
programs are for a limited time, after which the individual
is free to seek employment, marriage, etc. as a productive
member of society. Additionally, psychological services are
often provided. When the individuals are youths, their
family members are engaged to assist in the reeducation
process. The reeducation programs became popular quickly,
particularly near border areas, and the media frequently
reports on stories of families calling the SAG to assist them
with their problem children.

--------------
ENERGY INFRASTRUCTURE SECURITY
--------------


19. (S/NF) In response to the February 2006 attack on the
Abqaiq refinery, the SAG has re-energized efforts to improve
its energy infrastructure protection. In December 2006,
Under Secretary of State Joseph signed a Memorandum of
Understanding with Prince Muhammad bin Nayef to create a
Joint Working Group on critical infrastructure protection.
This JWG provide an ongoing framework to jointly develop,
manage, and implement a total systems solution to improve
security at Saudi Arabian petroleum facilities, including
deploying a new MOI security force and mounting up a training
academy.


20. (S/NF) In July 2006, SAG authorized 35,000 new
full-time positions to staff an MOI Facility Security Force
(FSF),of which it plans to hire 12,000 personnel within one
year. In response to SAG requests, the USG coordinated two
Oil Field Survey Consultation visits by Diplomatic Security
physical security and blast experts and critical
infrastructure experts from the Department of Energy, to
Saudi Arabia in July 2006. The team visited and reviewed
existing procedural and physical security at key petroleum
infrastructure sites, including the Abqaiq oil processing
facility, the Qatif pipeline junction, and the Ras Tanura
port facility. They advised on programs/systems to secure
the facilities, structuring security in the face of multiple
attacks, implementing credible emergency response, and
enabling rapid recovery systems in the event of an attack.
The team made a number of specific security recommendations
that the MOI and national oil company ARAMCO are working to
implement. As part of this EIP effort, the MOI, the National
Guard and Saudi Aramco are exploring the purchase of
helicopters for detecting and interdicting attacks on oil
installations.


21. (S/NF) On energy security cooperation with the SAG, a
Department of Energy expert advisor arrived on January 16 for
a 3 to 6 month TDY, to work with the SAG in enhancing
long-term energy security. The MOI authorized site
inspections for early February 2007, which will focus on the
implementation of the July 2006 security recommendations at
Abqaiq, Qatif Junction and Ras Tanura, as well as initial
inspections of the industrial cities of Yanbu and Jubayl. The
SAG agreed to host the next JWG meeting in Riyadh on March 4.

RIYADH 00000212 005 OF 010


In additional, a Saudi delegation comprised of MOI, Ministry
of Petroleum and Saudi Aramco officials will visit the
Security Training and Homeland Security Technology Center at
Sandia National Labs this April. The MOI intends to visit to
US Coast Guard Headquarters, US Coast Guard training sites,
oil installations, and the El Paso Intelligence Center
(EPIC).


22. (U) On February 7, APHSCT Townsend and her delegation
will visit one of the Kingdom's critical energy
installations, the Shaybah oil field, at the recommendation
of King Abdullah. Shaybah currently produces 550,000
barrels per day, with an ambitiouis two-phase expansion plan:
first, to add 200,000 barrels per day; second, to reach a
total production of 1.2 million barrels per day, plus natural
gas production (which will reuire building a gas pipeline
across the Empty Quarter). Shaybah oil is Arabian Super
Light, very valuable because of its low sulphur content. A
primary attraction of Shaybah is its remote physical setting
in Saudi Arabia,s Empty Quarter, close to the Omani and
Emirati borders. This visit will enhance understanding of the
challenges that went into developing this field. The main
camp facilities are surrounded by sand dunes that are 300-500
feet in height, with a distinct orange/red tine due to high
trace deposits of iron in the sand. Embassy is separately
sending APHSCT Townsend a scenario for this site visit.

--------------
TEXTBOOKS
--------------


23. (S/NF) Intolerant language remains in Saudi textbooks
and youth are still exposed to extremist ideologies through
summer camps, in the mosques and in the media. Despite
requests from post, the SAG has not provided post with copies
of current textbooks in order to confirm that they no longer
contain intolerant language. The SAG announced that it is
engaged in a ten year effort to revise textbooks, curricula,
and teaching methods. An April 2006 INR-contracted report,
based on Embassy collection of dozens of 2003 Saudi
textbooks, indicated intolerant language. A May 2006 Freedom
House report based on 2005 textbooks also found that Saudi
textbooks continued to carry intolerant language. We also
continue to press the SAG to be transparent with us about
education reform and encourage them to be forthright with
NGOs, seeking more information about their education reform
efforts.

--------------
FOREIGN FIGHTERS
--------------


24. (S/NF) Saudi Arabia remains a major source of foreign
fighters and ideological support to insurgents in Iraq.
Foreign fighters, including Saudis, typically carry enough
cash on their persons to pay for their travel and
documentation for entry into Iraq. Saudi security services
continue to aggressively pursue the support networks tied to
the movement of fighters to Ira and South Asia.

--------------
BORDER PROTECTION
--------------


25. (S/NF) Border control remains a top priority for the SAG.
Saudi leaders continue to be concerned about the porous
border with Yemen and the potential for insurgents from Iraq
to cross into the Kingdom. There are four initiatives at
different stages of development.

-- The Government announced on September 26 that it would
require five to six years to complete the construction of an
"Iraqi border fence," complete with electronic sensing
technology, that is estimated to cost USD 12 billion.

-- Another measure is the Border Guard Modernization Program,
an MOI initiative to cover all of the Kingdom's borders. It
will also employ a broad range of state-of-the-art
technological tools that will be employed from orbital
(satellite),airborne, seaborne, and ground based platforms.
In addition to the security concerns centered on the border
with Iraq, this system will also address the mounting illegal
immigration and the trafficking of contraband through the
border with Yemen and across the Red Sea.

RIYADH 00000212 006 OF 010



-- The Mega-Ports program, which was well received by the SAG
during a visit here in September, will include the employment
of a system of radiation detection devices to monitor the
export or import of radioactive materials into or out of the
KSA.

-- A fourth initiative is a GCC-shared remote sensing
satellite to provide intelligence, a USD $500 million project
called "Hudhud" and led in Saudi Arabia by a Brigadier
General of the Ground Forces. To date only three of the
GCC's six members (Qatar, the UAE, and the KSA) are
participants.

--------------
REGIONAL ISSUES
--------------


26. (S) While Saudi leaders share U.S. concerns about
regional conflicts, there is marked reluctance to cooperate
openly with the U.S. on some of these issues -- particularly
Iran. However, the SAG is taking an increasingly visible
leadership role in moderating regional issues, calling for a
revamping of the Arab League for greater efficacy,
emphasizing Saudi Arabia,s linchpin role in regional
politics, encouraging peaceful Muslim unity, and visiting
leaders throughout the region. The King has emphasized
during every meeting with U.S. officials, including his
December 16 meeting with Senator Bill Nelson (D-FL),the
alignment of USG and SAG interests.

--Iran


27. (S) Every senior Saudi interlocutor from the King down
has expressed growing concern about Iranian influence in the
region -- especially Iranian attempts to develop nuclear
weapons. The King has identified Iran as the "source of all
problems" in the Middle East and along with other Saudi
interlocutors, has urged the U.S. to take strong steps to
address the Iranian problem. Although the Saudis previously
argued for a nuclear-free Middle East that would include
Israel, the GCC announced after its December 9-10, 2006
summit in Riyadh that it would explore the establishment of a
nuclear program for "peaceful purposes." Saudi leaders in
subsequent meetings have made it clear that the Kingdom would
be vulnerable to a nuclear-armed Iran if the Saudis did not
also possess a nuclear capability.


28. (S/NF) Despite Saudi concerns about growing Iranian
influence and a nuclear-capable Iran, Saudi leadership has
not taken any public steps or made public statements directed
at limiting Tehran. While urging the U.S. to adopt strong
measures, the SAG describes its own relations with Iran as
"normal." The Saudis are clearly reluctant to take a public
stand against Iran and will likely avoid making any public
statements or taking public steps to rein in Iran's drive for
regional superpower status, so long as they feel vulnerable
to Tehran. It is also possible that their reticence is
intended to buy them time to develop an independent Saudi
nuclear deterrent. However, publicly, the Saudi Government
has stated it wants to develop peaceful nuclear technology in
concert with the GCC.


29. (S) On January 8, the Russian Embassy in Saudi Arabia
confirmed that Russian President Putin will visit the Kingdom
in February. This visit builds on a concerted and
well-planned diplomatic and economic strategy devised by King
Abdullah, begun while he was Crown Prince and continued as
King, to reduce the KSA's reliance on the U.S. and broaden
and strengthen Saudi Arabia's international and regional
contacts and influence. The Saudis will likely prod yet
another member of the Quartet to resolve the
Palestinian-Israeli and Lebanese issues, as well as address
developments in Syria. The visit will also support the
Kingdom's efforts to strengthen ties with all five permanent
members of the UN Security Council and almost all of Iran's
neighbors. The timing of this visit is especially noteworthy
given recent developments in Iraq and the continuing impasse
over Iran's nuclear ambitions.

--Iraq


30. (S/NF) Prince Muhammad bin Nayef, during the January 30
visit of Amb Khalilzad to Riyadh, stressed to Khalilzad that

RIYADH 00000212 007 OF 010


PM Maliki was not trusted by the Saudi leadership. Maliki's
decision to execute Saddam at the beginning of the Muslim
eid, and during the hajj, with 3.8 million Muslims including
35,000 Iraqis gathered in a narrow place in Mecca, could have
easily caused riots and led to the many deaths, Prince
Muhammad said. He stressed that executing Saddam was right,
but the timing and manner in which it was carried out showed
that Maliki was a vengeful man. "Maliki didn't respect the
hajj or his neighbors, and we don't respect him." Distrust
of Maliki was also a theme of Khalilzad's January 30 meetings
with King Abdullah and Prince Muqrin. On the other hand, the
Saudi leadership is pleased with the President's speech
announcing the plan for Iraq, and the initial indications of
US action to couinter Iranian support for the Shiite militias
in Iraq, though we have yet to see any new public support for
Iraq from Saudi Arabia. The SAG has agreed to participate
in several multilateral efforts to support Iraq, to include
increased cooperation on border control issues and, in
conjunction with the U.S. and other regional players, the
development of a strategy to rein in the Sunni insurgency.


31. (SBU) On January 28, Saudi Finance Ministry U/S Hamad
Al-Baz,y told EconCouns that the SAG will send a letter of
invitation to Iraqi Central Bank Governor Sinan Shabibi and
Ministry of Finance Advisor Hassan Aziz to visit Riyadh to
reconcile Iraq's USD 39 billion debt to Saudi Arabia once the
USG has contacted Shabibi and Aziz to schedule this meeting
which will probably be held in February. Al-Baz,y stressed
that the final Saudi decision on debt forgiveness is
political and that technical terms must be resolved. Iraq
and Saudi Arabia are still negotiating a mutually acceptable
figure for Iraqi debt. Iraq's adoption of the Compact could
provide a strong justification for Saudi action on both aid
disbursement and debt forgiveness.


32. (S/NF) Despite its organizational weaknesses, the GIP is
at the center of Saudi commitments to various multilateral
initiatives in support of Iraqi stability, which is becoming
an integral part of its CT efforts. These initiatives have
entailed a cooperative effort with the UAE and Jordan to
bolster Iraqi security, as well as a willingness to host a
conference of Iraqi Sunni oppositionists with the aim of
persuading them to support the elected Iraqi government. The
GIP has also offered to facilitate Iraqi access to Saudi
programs aimed at rehabilitating former "jihadis." Despite
these good intentions, the GIP appears to remain mired in
organizational inertia, which does not inspire confidence in
its ability to perform on these commitments.


33. (S) Saudi leaders are increasingly pessimistic of a
peaceful resolution of the Iraq crisis. As noted above, they
see Iraq as part of a broader regional struggle with Iran for
dominance. Although Saudi policy on Iraq is not yet
crystallized, some elements of the government appear
committed to taking sides with Iraq's Sunnis should the
situation deteriorate further. The vulnerabilities of the
border the Kingdom shares with Iraq's al-Anbar Province were
primary catalysts in the Saudi decision to construct a
550-mile fence and security boundary there. They were also
considerations in the proposed Border Enhancement Program and
Saudi support for the proposed Gulf Cooperation Council
Hudhud Remote Sensing System. Although concerned about the
potential for Iraq,s sectarian violence to spill over into
Saudi Arabia, the SAG is publicly maintaining a
"no-interference" policy and remains committed to providing
assistance to the Iraqi people.


34. (S) The SAG has made no progress in disbursing the USD
one billion pledge of aid, trade credits, and concessional
loans it made at the Madrid Donors Conference in October

2003. The SAG,s rationale for this failure has evolved over
the last twelve months from their original concern about the
lack of security on the ground, to the argument that the
Saudi Development Fund cannot release project development
funds and other aid until the Iraqi government has in place
national development priorities that are recognized by all
Iraqi political elements.


35. (S) The SAG is interested in increasing Saudi-Iraqi
cross-border trade over the long-term, but any discussion of
a trade zone along the border now would have to address the
Saudi concern about cross-border terrorist activity and the
safety of Saudi nationals in Iraq. We have not had
discussions with the SAG about such a proposal. Saudi import

RIYADH 00000212 008 OF 010


and customs duties are already quite minimal, so the
attraction to the Iraqis of such a proposal would have to be
easier customs and immigration rules, always sensitive
security issues for the SAG. Currently, all Saudi trade with
Iraq transits through either Jordan or Kuwait.

--Syria


36. (S) Following the Lebanon crisis, a rift developed
between Saudi Arabia and Syria. SAG leaders have made
negative, less-than-subtle statements in the press about
Syria, chastising it for its role in the Lebanon crisis and
ties to Iran. The rift continues to grow, exacerbated by
Syrian President Bashar Al-Assad's August speech in which he
reportedly referred to Arab leaders who failed to support
Hezbollah as "half-men." During a September 12 meeting with
Ambassador Khalilzad, the King indicated that the Syrian
"problem" is secondary to Iran, that where Iran goes, Syria
will follow. However, the King more recently has been clear
that Syria should not be discounted as a serious player in
regional politics, even though it has degraded both
economically and politically and effectively marginalized
itself with its single party system.


37. (S/NF) Prince Muqrin, in an expansive mood during the
January 30 Khalilzad visit, told us the King had turned off a
proposed visit by President Bashar al-Assad to Riyadh.
Muqrin cited the King as saying, "since we are only
half-grown men, maybe we should wait until we are fully
grown." Muqrin added that Bashar was a color-blind eye
doctor who couldn't see red lines.

--Lebanon


38. (S) The SAG faced significant criticism -- both
internally and externally -- resulting from the public's
perception of the SAG,s close ties with extremely unpopular
U.S. policies towards Israel, Lebanon, Hezbollah, and the
Palestinians. The SAG clearly walked back from its early
public position on Lebanon in the face of this criticism,
choosing to focus instead on Muslim unity and its position as
the center of "Arabism." There remains a strong undercurrent
of support among the population for Hezbollah and what is
thought by many here to be a Hezbollah victory. The Saudis
consistently voice concern about the possibility of renewed
violence and continue to urge the U.S. to lead the push for
resolution of the conflict.


39. (SBU) On January 28, Saudi Finance Ministry U/S Hamad
Al-Baz,y told EconCouns that in response to Paris III the
SAG pledged $1 billion as a concessional loan to be channeled
through the Saudi Fund and $100 million as a cash grant for
budget support. Al-Baz,y said that the SAG had delivered its
pledges from summer 2006: USD 500 million as a grant for
reconstruction projects, and USD one billion as a long-term
deposit in the Lebanese Central Bank. Additionally, the Arab
Monetary Fund had pledged USD 250 million, the Islamic
Development Bank had pledged USD 250 million, the Arab Fund
had pledged USD 700 million, and the UAE government had
bilaterally pledged USD 300 million.

--Hamas and Fatah


40. (S) On January 28, King Abdullah invited Hamas and Fatah
leaders to an emergency meeting in Mecca in order to end the
current conflict in Gaza and the West Bank. The King said
that the fighting is shameful, tarnishing the image of and
support for the Palestinians, and only serving the enemies of
the Muslim people. Subsequently, a SAG official said the
meeting will most likely be held in Taif instead of Mecca so
that Palestinian Christian leaders can attend. He said that
the timing of the meeting is to be confirmed but it will be
held before the Arab League summit on March 28. SAG
officials have said that the Israeli/Qestinian conflict
continues to be the linchpin of regional politics. There has
been some renewed discussion by the Saudis of the Arab Peace
Initiative, which was crafted by King Abdullah when he was
Crown PriQe. According to both the King and Foreign Minister
Al-Faisal, Hamas has not acted in the best interests of the
Palestinian people, nor has it convinced them that it can --
or would -- govern in their best interests. However, the
Saudis also point out that Israel's continued "aggression"
gives Hamas the excuse it needs to continue on its current
path.

RIYADH 00000212 009 OF 010



--Somalia


41. (S) Although the Saudis continue to emphasize their
non-interference policy regarding the internal affairs of
sovereign nations, senior officials have indicated support
for Somalia's provisional government and the efforts of
Ethiopian forces to secure Mogadishu. Advisor to King
Abdullah and Saudi Ambassador-designee to the U.S. Adel
Al-Jubair told DCM on December 26 that it is not in the
Kingdom's best interest for Al Qa'eda to establish a "new
Afghanistan" in the Horn of Africa. On January 28, Saudi
Finance Ministry U/S Hamad Al-Baz,y told EconCouns that
Somalia,s security problem needed to be addressed before
seeking new aid donations for it. Al-Baz,y recalled that in
March 2006 the Arab League pledged USD 26 million, of which
Saudi Arabia had contributed its portion, though he was not
sure if this aid had been delivered.

--------------
REFORM
--------------


42. (S) King Abdullah appears committed to the incremental
but steady implementation of a range of reforms. On October
20, he announced changes to the "Basic Law of 1992," which
serves as Saudi Arabia's first written constitution, that
will govern the selection of future kings. Under the new
system, a council, not the king, will chose the next ruler.
Voting will be done by secret ballot, and talent -- not age
-- will be the principal qualification for accession to the
throne. The primary purpose of the Allegiance Commission is
to preserve the rule of the Al Saud; however, is yet another
small -- but significant -- step towards more
institutionalized and participatory government.


43. (S) The judiciary appears to be increasingly aware of the
necessity for reform and is showing some signs of willingness
to do so. There is increased media freedom, as evidenced by
the recent publication in the press of a petition that was
signed by 160 individuals (men, women, Sunni, and Shi'a).
The petitioners were protesting an Internet campaign carried
out by conservative elements against the Minister of Culture
and Information for his reform efforts. There has also been
some notable progress on women's rights. This includes
recent decisions to grant women a more active role in
business organizations, as well as access to employment
sectors such as law and engineering. Women's empowerment is
a central element of the SAG's 2005 five-year plan. While
important changes are underway, there remains a significant
portion of the population -- including some women themselves
-- that is resistant to reforms in this area. Additionally,
the SAG has faced pressure from conservative religious
circles, including the issuance of a May 23 open letter
signed by 61 religious conservatives, which for the first
time, threatened advocates of reform with possible violence.

--------------
RELIGIOUS FREEDOM
--------------


44. (C) On December 29, 2006, forty nine members of an
Ahmadiyya Muslim group consisting of 25 Indians, 23
Pakistanis and 1 Syrian were arrested in Jeddah. The SAG is
in the processing of deporting the 49 plus additional
Ahmadiyyas. Muslim authorities consider the Ahmadiyyas to be
heretics and apostates because they believe that a nineteenth
century Muslim, Hadhrat Mirza Ghulam Ahmad, was the Messiah
and a Prophet. Though the SAG has said that it is illegal
for the Ahmadiyya to publicly practice their faith, this
incident involved the religious police raiding a private
religious gathering and subsequent pressure on the Ahmadiyyas
to implicate and inform on other members who were not
involved in the December 29 meeting. These SAG actions
contravene understandings reached previously with
Ambassador-at-large for International Religious Freedom John
Hanford.


45. (C) On January 25, Sulaimani Ismaili Shi,a prisoner,
Hadi Al-Mutif, tried, for the second time in ten days, to
commit suicide by swallowing a nail. These suicide attempts
follow hunger strikes aimed at getting the attention of the
King in order to receive a pardon and release from jail.
Reportedly, the SAG has not provided adequate psychological

RIYADH 00000212 010 OF 010


counseling to Al-Mutif though it has provided medical
treatment. Al-Mutif was disappointed when the King did not
pardon him along with other Sulaimani Ismaili Shi,a
prisoners during his visit to Najran in November.


46. (S) Shi,a throughout the Kingdom, but especially in
the Eastern Province, have voiced grave concerns about
increasing anti-Shi,a remarks because of increasing
Sunni-Shi,a conflicts in the region, especially in Iraq.
While insisting that the SAG does not favor any particular
sect in Iraq, the SAG has not denounced or punished Sunni
clerics for calling Shi,a heretics or calling on Sunni to
fight Shi,a. On December 7, thirty eight top Sunni Muslim
scholars, notably Shaikh Abdul Rahman Al-Barrak, Abdulaziz
Al-Rajehi, and Nassaer Al-Omar, issued a statement urging
Muslims to support Sunnis in Iraq. More recently, Shaikh
Abdullah bin Jibrin issued a statement condemning Shi,a
atrocities against Sunnis in Iraq.

--------------
VISA ISSUES
--------------


47. (C) In early August, Post discovered several student
visa applicants had presented forged Saudi scholarship
program award letters with their visa applications. As a
result, consular offices added an extra "recall" back to
theMinistry of Higher Education (MOHE) in order to recertify
bona fides or all MOHE cadidates. The new list of student
scholarship recipients was announced in late January 2007.
Representatives of the consular section and DHS Visa Security
Unit will meet with Ministry of Higher Education officials in
early February to set the guidelines and parameters for
student visa applications. While fewer than last year, these
new scholarships are said to be mainly for advanced degrees.


48. (SBU) Consulate General Dhahran began limited
non-immigrant visa processing in September for visa
referrals, as well as business facilitation cases from Saudi
Aramco and the petrochemical sector. Due to resource
considerations, the Embassy is now conducting 30 to 40 visa
interviews in Dhahran every other week, rather the 15 to 20
every week. A visa officer and a DHS officer go out to
Dhahran twice a month to do the interviews and processing.


49. (SBU) Riyadh and Dhahran became the third and fourth
pilot posts to begin collecting ten fingerprints from all
visa applicants at the end of September. We made no public
announcement of this change, and so far have received no
negative feedback from applicants. At the end of October, we
plan to begin checking all 10-print collections against the
FBI,s IAFIS fingerprint database, along with the other two
pilot posts. Early indications are that the ten fingerprints
are identifying problem cases not found through the older
two-fingerprint collections.
OBERWETTER