UNCLAS SECTION 01 OF 02 DUBAI 000445

NEA/ARP FOR BMASILKO; ISN FOR PMCNERNEY; DOE FOR WTOBEY; SIPDIS

E.O. 12958: N/A
TAGS: PREL IR ENRG ETTC ECON KNNP KCEM KOMC AE
SUBJECT: AA/S MCNERNEY'S MEETINGS WITH THE AMERICAN BUSINESS COUNCIL
AND THE DUBAI CHAMBER

DUBAI 00000445 001.2 OF 002



1. (SBU) Summary: Acting Assistant Secretary for International
Security and Nonproliferation Patricia McNerney visited Dubai on
October 16 to discuss counter proliferation cooperation and
export control issues related to Iran (see septel for meeting
with MG Mohammed Al Qemzi). McNerney discussed a range of trade
and trade control related issues in events hosted by the
American Business Council (official U.S. Chamber of Commerce
affiliate) and the Dubai Chamber of Commerce and Industry
(DCCI), representing Dubai's private sector. In roundtable
discussions with senior members, McNerney also touched upon the
impact of Iran on security and economic growth in Dubai. End
Summary.

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American Business Council

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2. (SBU) The American Business Council (ABC) hosted AA/S
McNerney, accompanied by Deputy Administrator for National
Nuclear Security Administration's Office of Defense Nuclear
Nonproliferation Will Tobey and Consul General, for a roundtable
discussion with senior members McNerney talked broadly about the
U.S.' policy towards Iran and the success we have had pressuring
Iran through United Nations Security Council sanctions and
targeted financial measures. She described the U.S.'s concerns
about Iran's nuclear program, as well as the deep implications
for the region should it acquire nuclear weapons. McNerney
pointed out how Dubai's relationship with Iran affects its
security and economic prosperity.


3. (SBU) On export controls, McNerney discussed implementation
of the UAE's new export controls law and how export controls are
helping to build a more secure business environment in the UAE.
McNerney noted that Hong Kong and Singapore are models of
implementing export controls without disrupting legitimate
business. McNerney underscored the important role the American
business community can play in preventing the diversion of
controlled materials to Iran, especially as the UAE wo

rks toward
better implementation of its export control law. Tobey
described for the group a number of Department of Energy
programs to detect, secure, and dispose nuclear material as well
as prevent nuclear terrorism and proliferation.


4. (SBU) McNerney also highlighted the positive impact in the
region of the Section 123 Nuclear Cooperation Agreement under
negotiation with the UAE as an example of transparent
cooperation in pursuit of a civilian nuclear power program. The
Agreement will allow the UAE to produce nuclear energy without
enrichment and reprocessing capabilities. Countries adopting
this program will rely on external fuel banks created by the
IAEA. Although the Section 123 Agreement is still under
negotiation in the UAE, McNerney noted that the UAE and the
United States were very close to reaching agreement on the text.


5. (SBU) In a question and answer session, McNerney was asked a
series of questions on regional stability and transparency on
Israel. One member of the American business community commented
that businesses are establishing offices in countries such as
Tunisia and bypassing Dubai to transport goods to Iran. While
specific companies were not named, the argument suggested that
Dubai is transitioning away from being the economic pipeline to
Iran. McNerney said that, if true, this would be a good news
story because it indicates that the new export control laws are
forcing nefarious companies to make extra stops in the shipment
of goods to Iran Extra stops, she noted, provide more
opportunities for interdictions of sensitive materials en route
to Iran and make it more difficult and costly for Iran to get
these items. She noted that while Dubai is a significant point
for diversion to Iran, Dubai is not the only problem.


6. (SBU) A businessman from Federal Express noted their
particular problem in applying U.S. sanctions law in Dubai and
their frustration that their competitor DHL is a significant
player in the Iranian market yet is also receiving lucrative
U.S. government contracts in Iraq. McNerney agreed to look into
addressing this issue. A representative from Hewlett- Packard
complained that due to strict citizenship laws in the UAE,
Iranians residing in the UAE for decades remain Iranian
nationals, and thus U.S. laws prohibit the technology transfer
necessary to adequately train them as employees. One businessman
repeated the oft-heard complaint about the difficulty of getting
U.S. visas, especially for third country nationals requiring
special processing. The Consul General said the USG will
continue to work to improve procedures and process visa
applications for legitimate businessmen as expeditiously and
fairly as possible under U.S. regulations.


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Dubai Chamber of Commerce

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7. (SBU) The Dubai Chamber of Commerce and Industry (DCCI), the
premier organization representing all sectors of Dubai's dynamic
private sector also hosted a roundtable discussion for select
senior members, including Vice Chairman Hisham Shirawi and
Director General Hamad Buamim. McNerney kicked off her remarks
by acknowledging the challenges faced in Dubai vis-a-vis Iran,
particularly given Iran's use of front companies to disguise
illegitimate trade. She noted the important role the private
sector can and should play, especially given its enormous size
(the DCCI has over 100,000 members at present). She reminded
participants that the key international framework with regard to
Iran are UN Security Council Resolutions (UNSCRs) 1737 and1747.
Tobey again described DOE's programs with regard to detecting,
securing, and disposing nuclear material.


8. (SBU) Shirawi stressed the importance of Dubai maintaining
its status in the region by offering a certain standard of
living and openness to all nationalities. He said he understood
the USG's concern regarding the transshipment through the UAE of
illicit goods, but he conveyed his personal doubts that this was
actually happening to the extent claimed. If Iran wanted
sensitive materials, he argued, it would look to transport
through other channels so as not to jeopardize the livelihood of
Iranian citizens living here.


9. (SBU) Buamin explained that the DCCI, Dubai Customs, and
Dubai's General Department of State Security require a
certificate for transactions of goods costing more than
$200,000. Buamim noted that trade with Iran decreased by more
than 35 percent after UNSCRs 1737, 1747, and 1803, which had had
a negative impact on the Dubai business community. However, he
stressed Dubai is working hard on this issue. He described
DCCI's efforts to continue to raise awareness among the Dubai
business community through various means such as training.
Despite this, though, Buamim clearly expressed his belief that
tighter trade controls would result in a larger gray/black
market.


10. (SBU) Al Shirawi said that the DCCI will promote the
implementation of the UAE's export control laws to maintain
stability and security. He stated that monitoring dual-use
items is especially challenging because it could involve
everything, including goods not on a control list. McNerney
emphasized the importance of end-user checks for this very
reason. In order for the DCCI to implement any law, Al Shirawi
requested that we provide clear lists with detailed
descriptions, bar codes, and restrictions. He stated that
without harmonized systems between the USG and the UAE, it will
be difficult to implement the laws. Al Shirawi suggested a
secure website where the DCCI could access updated lists of
companies or individuals.
SUTPHIN