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08MUSCAT744 2008-10-28 06:37:00 CONFIDENTIAL Embassy Muscat
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DE RUEHMS #0744/01 3020637
P 280637Z OCT 08
					  C O N F I D E N T I A L SECTION 01 OF 05 MUSCAT 000744 


E.O. 12958: DECL: 10/28/2018


Classified By: Ambassador Gary A. Grappo for Reasons 1.4 (b, d)


1. (C) The Deputy Secretary of State and the Ambassador met
on October 19 with Omani Minister Responsible for Foreign
Affairs Yusef bin Alawi to discuss bilateral relations and
regional issues. Bin Alawi welcomed Oman's upgrade from Tier
3 to Tier 2 Watch List in the Trafficking in Persons (TIP)
Report and promised to work with the Ambassador to
demonstrate Oman's commitment to combating trafficking. He
was pessimistic on the chances for progress in resolving the
Israeli-Palestinian conflict as a result of increased Israeli
settlement construction activity and hardened Palestinian
views on borders. Bin Alawi also expressed support for Iraqi
Prime Minister Maliki and contended that Iran was committed
to Gulf security and wanted to work with the international
community to find a face-saving way to resolve the dispute
over its nuclear activities.

2. (C) The following day, October 20, the Deputy Secretary,
accompanied by the Ambassador and Special Assistant Aaron
Jost, met with Sultan Qaboos at the "Husn al-Shumukh" ) a
palace built in the style of a traditional Omani fort in the
Omani interior. The Sultan reaffirmed the importance of the
U.S.-Oman Base Access Agreement in strengthening the
bilateral relationship and expressed his desire to promptly
implement the U.S.-Oman Free Trade Agreement. In contrast to
Oman's experience in overcoming the dominance of tribalism,
he pointed to Yemen's deep-seated tribal system as the major
source of instability there. The Sultan hoped that the
President of Pakistan would follow through on his public
promises, but noted the extreme difficulty in managing
Pakistan's diverse population and in overcoming the
entrenched corruption among the leadership. A solution to
instability in Afghanistan would require a "change in
culture," which would take time. Expressing concern over the
maritime smuggling of people and drugs into Oman, the Sultan
pledged to work with the U.S. to combat Somali piracy. End




3. (C) Welcoming the Deputy Secretary to Oman, Bin Alawi
stated that although he was disappointed with the
cancellation of the Secretary's visit to Muscat, he
understood why the President would want her to be near him
during the financial crisis, which he predicted would be
overcome. He added that he had known many U.S. Secretaries
of State during his long diplomatic career and that his
relationships with them had always been "beneficial and
fruitful," even if they didn't always share the "same
vision." Acknowledging the strong U.S.-Oman relationship,
bin Alawi said that he and other Omani officials were very
"straight" in their discussions with the U.S. as both
countries understood the importance of a frank exchange of
ideas. "We understand the reasons why you may disagree with
us," he commented.

Trafficking in Persons


4. (C) The Deputy Secretary recalled the work in securing
the original U.S.-Oman Base Access Agreement (BAA) which, he
noted, had benefited both countries and was still highly
valued by the U.S. He continued that he was pleased that the
"irritant" that arose this summer in the bilateral
relationship (i.e., Oman's Tier 3 ranking in the Department's
Trafficking in Persons Report) had been resolved and that he
hoped Oman would be open to candid discussions on how to
further address this subject. While stating that Oman had
been "very annoyed" to see an official report from a "friend"
that contained incorrect information about the Sultanate, bin
Alawi declared that the disagreement over TIP was "behind us"
and confirmed that Oman was ready to talk about the subject.
"We'll listen to anything credible," he commented. (Note:
The Omani government has yet to identify specific information
in the TIP report that it believes is not correct. End
Note.) In a sidebar conversation with the Deputy Secretary
and the Ambassador later in the visit, bin Alawi stated that
comprehensive anti-trafficking legislation was in its "final
stages" and would be promulgated by the end of the year.

Israeli-Palestinian Conflict

MUSCAT 00000744 002 OF 005


5. (C) Turning to the Israeli-Palestinian conflict, the
Deputy Secretary emphasized that the President and Secretary
had not given up hope on making significant progress towards
a comprehensive agreement before the end of the year. Bin
Alawi responded that he had high expectations for progress
following the Annapolis Conference in November 2007 and had
no doubt that the U.S. was making "real efforts" to bridge
the gap between the two sides. What Arabs want to see,
however, is the U.S. applying "pressure." The Minister said
that he understood how the nature of Israeli domestic
politics made achieving an agreement with the Palestinians
very difficult ) "I've talked about this with Livni" ) but
worried that Israel would never see another Prime Minister
like Yizhak Rabin who could lead the country to peace. The
fact that Israel was "building more settlements than ever"
was also very concerning and could not be justified on
security grounds.

6. (C) Bin Alawi claimed that Palestinian President Mahmoud
Abbas, who had surrounded himself with the "Palestinian old
guard," had much less room to maneuver than previously due to
intense public pressure. As a result, he had changed his
views. Whereas before Abbas recognized the need for
territorial compromises, the Palestinian leader now asserted
that there could be no agreement without the return of all
Palestinian territory seized by Israel in 1967 -- a demand to
which Israel would never agree. When the Deputy Secretary
pointed out that public demands can change in private
negotiations, bin Alawi replied that "once you throw
something like that out, you can't take it back." The
Minister also said that Abbas had told him "straight" that
the demand for all seized territory was not just a
negotiating tactic. While he wanted to "hope for the best"
and be open-minded about a new Israeli government, bin Alawi
stated that he had to remain "realistic" and look to past
history of changes in Israel's leadership, which was not



7. (C) Bin Alawi noted that Bahrain's foreign minister,
Sheikh Khalid bin Ahmed al-Khalifa, had recently called for,
and seemed determined to push forward, the creation of a
Middle East regional organization that would include Israel
and Turkey in addition to Arab countries. Comparing it to
the OSCE, he opined that such a group could help in resolving
the Israeli-Palestinian conflict, particularly since
bilateral negotiations alone between the sides were not
solving the problem. Asked about the possibility of Iraq
joining the Gulf Cooperation Council (GCC), bin Alawi
acknowledged that al-Khalifa had suggested this as well, but
stated that "the GCC has enough problems of its own without
Iraq." He said that Iraq would remain an "Arab country"
despite sectarian strife and related how he had told Iraqi PM
Maliki during his 2007 trip to Muscat that he needed to use
the media more often to emphasize that he was the leader of
the entire country and represented all Iraqis. "Iraqis want
to see one strong leader they can trust as head of their
government," bin Alawi remarked.

8. (C) Oman believes that Maliki is a leader "that deserves
to be supported," even if "others" in the region think
otherwise. According to bin Alawi, the Shi'a generally are
"liberal minded" and do not normally promote sectarianism.
Although Iraq maintained an embassy in Muscat, Oman has
refrained from re-opening its mission in Baghdad "due to
security," bin Alawi stated. Private sector Omanis, however,
continue to travel to Iraq for business. When conditions
permit, Oman would "of course" re-open its embassy, which it
had carefully maintained physically for this reason. Bin
Alawi added that the U.S. should tell Iraq to look to the
historical experience of South Korea, which benefited greatly
from the continuing presence of U.S. troops, versus the
collapse of South Vietnam after U.S. forces left that



9. (C) Turning to the situation in Darfur, bin Alawi
commented that the Sudanese were "a difficult people."
Ending the violence would require a political solution,
perhaps pressed by an outside actor, like the agreement
granting autonomy to southern Sudan. Bin Alawi asserted that
security could never be achieved through peacekeepers alone
as each faction would continue to provoke the other. The
Sudanese President would play a key role in any agreement to

MUSCAT 00000744 003 OF 005

help stop the suffering in Darfur.



10. (C) On Iran, bin Alawi declared that Oman had the "most
stable" relationship with Tehran of any GCC state due to the
absence of disputed issues. He claimed that Iran was
"careful to maintain stability" in the Gulf as this was
directly in its self-interest. He also asserted that the
Iranians were listening to the international community,
although Tehran remained "very wary" of the U.S. Bin Alawi
stated that Oman spoke "very frankly" to Iran's leadership on
important issues, including Foreign Minister Mottaki, Saeed
Jalili, Ali Larijani, and Ali Akbar Rafsanjani. Contrary to
some opinions, there are "many voices" inside the Iranian

11. (C) Bin Alawi stated that in his personal opinion, Iran
was being "forthcoming" on its nuclear activities. Because
the latest P5 plus 1 package of incentives offered to Iran
was "vague," Iran understandably wanted "an answer on every
item" before it could accept the deal. Underlying Iran's
distrust in negotiations was its sincere belief that the West
still had not "accepted" the Iranian revolution of 1979.
Moreover, bin Alawi continued, Iran's nuclear enrichment
activities had inextricably become entwined with "the pride
of the nation," meaning that Tehran could not surrender its
right to enrichment without something concrete, as opposed to
"guarantees" to nuclear fuel, for example, that could be
taken away. The Minister said that in his estimation, Iran
genuinely wanted to "move forward" and settle the nuclear
issue. A compromise that allowed Iran to enrich a certain
quantity of uranium to a designated level, or to conduct some
separable component of the enrichment process, might be
successfully sold to the Iranian public, he opined. While
indirectly recognizing Iran's destabilizing behavior in the
region and the antagonism it had generated among Arab
leaders, bin Alawi stated that Iran continued to believe that
the Arab people, versus Arab governments, were "with them."

Economic Diplomacy


12. (C) Looking outside the region to the east, bin Alawi
said that Oman enjoyed the strongest economic ties with Japan
and South Korean. India was a "solid friend," but
traditionally not as "aggressive" in its investment
activities in the Sultanate compared to other Asian
countries. However, more Indian companies as of late were
seeking to do business in Oman, perhaps because of the
pending U.S.-Oman Free Trade Agreement (FTA). Bin Alawi
expressed determination to resolve outstanding issues FTA
shortly so as to allow for the agreement's implementation.
He added that a proposed free trade agreement between the GCC
and the European Union was now "very close" after 17 years of

13. (C) After briefly discussing the current global credit
crisis and world energy supplies, bin Alawi claimed that
during the second Clinton administration, Oman had been
forced by its Caspian Pipeline Consortium partners, with U.S.
support, to accept a reduction in its stake in the venture
from 25% to 7% without any compensation. Also, in
contradiction to what a senior Omani official had recently
told the Ambassador (reftel), bin Alawi stated that a deal to
sell Oman's remaining stake in the pipeline to Russia had
fallen through. Although both Russia and Kazakhstan wanted
to buy the Omani share, neither would allow the other to
acquire it.




14. (C) The Sultan welcomed the Deputy Secretary to Oman and
mentioned how Vice-President and Mrs. Cheney had visited the
Sultanate on several different occasions. He commented that
Oman, by being located on ancient trade routes, had been
fortunate in its history to develop relations with different
peoples in contrast to the isolation experienced by those in
the center of the Arabian Peninsula.

Base Access Agreement


15. (C) After the Deputy Secretary recalled the work in
negotiating the 1980 U.S.-Oman Base Access Agreement, the
Sultan stated that some Gulf countries had pressed Oman not

MUSCAT 00000744 004 OF 005

to sign the landmark treaty. Those who opposed it had even
offered to pay Oman more than $500 million to reject the
agreement during a time when the Sultanate was still
developing its hydrocarbon industry. The Sultan said that he
nevertheless went forward as it was important to "have
friends nearby." Moreover, the countries that had been
against the agreement eventually changed their minds after
the outbreak of the Iran-Iraq war when they needed to put
U.S. flags on their ships. "It's good to have friends," the
Sultan remarked. He continued that although Oman and the
U.S. had been friends for a long time, the agreement had made
them "get to know each other" better, which consequently had
made the bilateral relationship even closer.



16. (C) Asked by the Deputy Secretary about his views on
Yemen, the Sultan replied that it was a very difficult
country to control due to its tribal system. It became even
more "complicated" after the unification of North and South
Yemen as there were "quite different mentalities" among the
once separate countries, as well as among the general Yemeni
population. Oman was concerned by what was happening in
Yemen as it was a direct neighbor, and hoped that the Yemeni
government would continue to "manage" the situation and
adhere to a single course of action. "They need to decide on
and stick to a policy," stated the Sultan.

17. (C) The Sultan noted that although the separatist
al-Houthi tribe was from the same Zaidi sect as Yemen's
rulers, they had very different mindsets. Yemen's official
leadership called the al-Houthi "Shi'a" while the al-Houthi
wanted to re-establish an Imam as head of the country.
Yemen, however, had "moved a long way from that," affirmed
the Sultan. What was truly needed was a "break" from the
primacy of the tribal system.

Overcoming Tribalism


18. (C) The Deputy Secretary noted that Oman appeared to
have moved away from the dominance of tribes to successfully
establish a national identity. The Sultan agreed, stating
that Oman had a "good base" from which to evolve beyond
tribalism and described the development of the Omani army
from one centered on tribes to a truly national force. He
maintained that while "people will keep their other
identities," it is essential that they have equal rights if
they are to see themselves foremost as national citizens.
The Sultan said he hated the word "minorities," as this
created a division among citizens, and recalled that he gave
a National Day speech in 1972 in which he declared that all
Omani citizens are equal. Even those opposed to this idea
were afraid to disagree after that, the Sultan remarked.

19. (C) The Sultan stated that he thought it was important
not to "force" individuals and families to change, but to
provide them with opportunities for development. This
approach, he asserted, prevented violent opposition.
Accordingly, when he assumed power, he had not required girls
to attend school, but made this decision a family
responsibility while building schools to accommodate all
potential students. Within two or three years, nearly all
Omani girls were in school and they now make up 50% of
primary school enrollment. The Sultan then described how
Omani women had made major advances in education, the
workplace, government, and military and police service.

Free Trade Agreement


20. (C) The Deputy Secretary expressed the U.S. desire to
promptly complete implementation of the U.S.-Oman FTA and
asked the Sultan to meet with the U.S. Trade Representative
(USTR), Ambassador Susan Schwab, when she visited Oman in a
few days. The Sultan replied that he would "certainly" meet
with the USTR and said he was also very keen to see the FTA
enter into force. (Note: The Sultan met with Ambassador
Schwab on September 25. End Note.) He further noted that he
was working closely with Oman's Minister of Commerce and
Industry towards this end. The Sultan then explained how
economic and social ties between the Sultanate and the U.S.
allowed the bilateral relationship to "filter down" to the
Omani people.



21. (C) Regarding tourism, the Sultan shared that he wanted

MUSCAT 00000744 005 OF 005

to encourage tourists to visit Oman. He only wanted "good"
(i.e., high end) tourism, however, rather than the type of
tourists that used to descend upon Spain. In promoting
tourism, Oman was specifically looking for investments that
would create jobs -- generating employment is "our main
concern all the time," he commented. The Sultan opined that
Oman's population growth rate was at a "good and natural8
level due to the government's educational efforts.



22. (C) Asked about Pakistan, the Sultan replied that he
followed the situation there closely. He had met both Asif
Ali Zardari and his late wife, Benazir Bhutto, when they
visited Oman, but did not know the new Pakistani President
well. He hoped that Zardari, whom he deemed "quite a
character," would have the courage to do what he pledged to
do. Pakistan's complex mixture of people was "in some ways
good" in that it helped ensure that no one group had a
monopoly on power, but "managing" all the different segments
of the population was very difficult. Pakistani leaders, the
Sultan observed, spend most of their time focusing on "how to
make money for themselves," but this was unfortunately common
in the Indian sub-continent. The loyalty of the Pakistani
armed forces would be critical for Zardari, he noted.

23. (C) On Afghanistan, the Sultan described the need of the
people there to "break out" of their isolation. The "buying"
of the tribes with bribes was only a temporary solution to
violence as their allegiance will shift when a better offer
comes along or when grudges arise. The Sultan repeatedly
stressed the importance of gradually changing the "culture"
in Afghanistan and of having responsible and upstanding
leaders to guide the Afghani people. As in Pakistan, the
loyalty of the military to the government, rather than local
leaders, was imperative.

Maritime Security


24. (C) Given that both Afghanistan and Pakistan were
relatively close to Oman, the Sultan stated that Oman "spent
time trying to keep the trouble there from coming here." In
addition, the Sultanate also had to combat smuggling,
including the transport of illegal migrants and drugs like
hashish, that originated in the two countries. The Sultan
had accordingly ordered the Omani navy to increase its size;
57 fast boats have been ordered ) 25 for the navy and the
remainder for the police coast guard. Oman was also in the
process of purchasing larger vessels to operate on the high

25. (C) With respect to piracy along the Somali coast, the
Sultan said the pirates had now acquired a "taste" of the
money they could make by hijacking ships. Moreover, the
pirates could also extort money by creating a protection
racket for ships transiting the area. The Sultan feared that
the piracy was becoming an enduring phenomenon and pledged to
work closely with the U.S. on ways to combat it.

26. (U) The Deputy Secretary's party cleared on this cable.