DUBAI'S PORT RASHID CLOSING TO MAKE WAY FOR DEVELOPMENT

UNCLAS SECTION 01 OF 02 DUBAI 000108

SIPDIS

SIPDIS

DEPARTMENT: NEA/ARPI BAGWELL AND MASILKO

E.O. 12958
TAGS: ECON EINV SENV PGOV AE
SUBJECT: DUBAI'S PORT RASHID CLOSING TO MAKE WAY FOR DEVELOPMENT

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1. (SBU) Summary. In a move aimed at maximizing financial
returns on prime central Dubai real estate, Dubai
government-controlled port operator DPWorld announced that
Dubai's historic Port Rashid will be closed to cargo, commercial
and military sea traffic in stages over the next few months,
with most operations moving to the flagship Jebel Ali port
(approximately 20 KM south of Port Rashid). US and Coalition
naval vessels will be able to use the port until August. The
closure has placed some Coalition forces in a difficult position
vis-a-vis berth space, with DPWorld sending out feelers on
having Coalition forces share some of the dedicated USN berth
space at Jebel Ali. Replacing Port Rashid will be yet another
major land reclamation effort: Maritime City, which will also
include a large cruise terminal. End Summary

Port Rashid closing to commercial and military traffic

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2. (SBU) During a late February meeting with US Navy Commander
Task Force 53 Port Liaison Element (CTF53 PLE) and Fleet
Industrial Supply Center (FISC) Dubai Site, Tariq bin Khalifa
(DP World Commercial Director, UAE Region) noted that Dubai's
historic Port Rashid - the UAE's first fully modern port - would
close to all commercial ships on 1 March 2008. Captain Nasser
al Sabt (Jebel Ali Harbor Master) also noted that the Port would
close to all shipping effective 1 August 2008. Some Coalition
countries, including Britain, Japan and Canada, whose warships
have periodically used Port Rashid, are now being forced to look
for alternative locations. Smaller US vessels have also
regularly berthed at Port Rashid. On behalf of the displaced
British Coalition forces, Khalifa approached CTF53 with
possibility of sharing USG leased Jebel Ali pier space. The
Canadian and Australian Navy Contingent have also directly
expressed to CTF53 their desire to berth in USG leased berth
spaces at Jebel Ali. (Note. US Navy Regional Command currently
pays DPWorld USD 1.3 million annually for priority pier space at
Jebel Ali's Shed 66 and an additional 1.3 million for land lease
and pier space at Quay Nine. End note). We understand Naval
Central Command is considering the possibility.

What stays at Port Rashid?

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3. (U) While most operations now in Port Rashid will be moved to
Jebel Ali, according to recent press, the current cruise
terminal will be expanded to cater to growing numbers of cruise
ship tourists (thus building on Dubai's efforts to become a
vacation destination). Also heavily-used DPWorld dry dock
operations will remain at Port Rashid, particularly as they
would be prohibitively expensive to move. In addition, the
business offices of Dubai Customs will remain in the downtown
port.

What's next for Port Rashid?

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4. (U) Port Rashid lies at the entrance to the Dubai Creek,
between Deira, the older commercial hub, and the still to be
completed Deira Palm Island. Nakheel's redevelopment plans for
"Maritime City" involve land reclamation for residential
buildings, office towers, retail facility and a recreational
marina. Reclamation estimates place the total site at 73
million square feet, more than three times the existing land
mass.

Comment

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5. (SBU) The closing of Port Rashid to commercial and military
sea traffic is one part of an evolving series of events
impacting U.S. Navy port operations in Dubai. Currently, the
U.S. Navy moors U.S. (Warships) and U.S.N.S. (Support Ships) at
Port Rashid and Jebel Ali's Shed 66 and Quay Nine. In addition,
DPWorld is constructing on a "build to lease" basis a new
logistics transshipment point at Quay Nine for the exclusive use
of the U.S Navy. Once completed, the U.S. Navy will eventually
move from its present location at Shed 66 to Quay Nine; losing
access to Shed 66, and more importantly, to its adjacent pier

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space (resulting in a net estimated loss of 170 meters of pier
space). The effect of this evolving situation is that as Port
Rashid closes to all traffic, both commercial and military sea
traffic will be pushed to Jebel Ali where there is already
significant ship traffic and increasingly limited berth spaces.
The U.S. Navy's ability to support Coalition and other forces by
sharing pier space will be impacted by the net loss of space
available at Jebel Ali.


6. (SBU) Dubai has made a major industry of land reclamation.
With a coast line of a mere 70 kilometers, Dubai has projects
both under construction and planning phases that would increase
the coast line more than ten fold (to roughly 1,000 kilometers).
All of these efforts accentuate Dubai's determination to build
and expand on its already well-established tourism and real
estate development sectors.
SUTPHIN