SCENESETTER FOR ASSISTANT SECRETARY OF DEFENSE

S E C R E T SECTION 01 OF 04 MUSCAT 000776

NOFORN
SIPDIS

DOHA PLEASE PASS TO ASSISTANT SECRETARY LONG

E.O. 12958: DECL: 11/12/2018
TAGS: PARM PREL PTER MASS MNUC MOPS KNNP MU
SUBJECT: SCENESETTER FOR ASSISTANT SECRETARY OF DEFENSE
MARY BETH LONG'S VISIT TO OMAN (NOVEMBER 14)

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


1. (C) As one of our oldest friends in the region (the
Omanis refer to their relationship with us as "strategic"),
the Sultanate remains a trusted U.S. partner. This year marks
the 175th anniversary of the U.S.-Oman "Treaty of Amity and
Commerce," second oldest in the Middle East and North Africa.
Yet, while we enjoy close relations with Oman, we do not see
eye-to-eye on all matters, most notably Iran. We hope that
your brief visit here will help maintain our already strong
relationship while increasing opportunities for further
cooperation on bilateral and regional issues.

Oman-Iran Overview
--------------


2. (C) Devoid of outstanding territorial claims or other
divisive issues, Oman probably enjoys the best relations with
Iran of any GCC state. The government in Muscat has long
placed a premium on preserving amicable ties with its
northern neighbor and is especially careful not to antagonize
the regime in Tehran. Omani Minister Responsible for Foreign
Affairs Yusef bin Alawi visits Iran on a semi-regular basis;
a senior Omani delegation led by the Deputy Prime Minister
traveled to Tehran in April 2008 to reciprocate the visit of
Iranian President Ahmadinejad to Muscat in May 2007. The
Omani police and military maintain open channels of
communication with their Iranian counterparts on matters such
as the smuggling of illegal migrant workers to Oman through
Iranian waters, and Iranians and Omanis invite one another to
observe each other's military exercises.


3. (C) Despite the value Oman places on keeping good
relations with Tehran, it has at the same time been careful
to keep a comfortable distance from its Persian neighbor.
Apart from a few subjects, the Oman-Iran relationship has
largely been non-substantive with little in the way of
meaningful cooperation. Bilateral economic ties and trade
remain limited and Oman's security establishment continues to
vet Iranian visa applicants with a watchful eye. Oman's
strategic relationship still clearly lies with the United
States (and the U.K.),and it regularly shares its insights
and observations concerning Iran with us. Omani officials
also advocate in Tehran for a more conciliatory approach
towards the West. Oman's small Shi'a population (less than
5%) has little affiliation with Iran.


4. (C) There are indications, however, that both Oman and
Iran are proactively trying to strengthen their bilateral
relationship. Iran as of late is pushing to bolster ties with
Oman through increased tourism, trade and investment and has
even attempted to raise the level of mil-mil cooperation.
For its part, the Omani government has given the green light
for a growing number of official Iranian visits and has
reciprocated with high-level visits to Iran of its own.
Fearful of a regional conflict with Iran into which it might
be drawn and also perceiving a regime in Tehran emboldened by
recent events, Oman may be acting to establish a separate
identity from that of the rest of the GCC and to demonstrate,
therefore, that Iran has nothing to fear from Oman.

Oman's Quest for Iranian Gas
--------------


5. (C) A more certain factor in Oman's current approach
towards Iran is natural gas. With a major share of its
domestic gas production committed to long-term liquefied
natural gas (LNG) export contracts, Oman urgently needs large
quantities of gas to fuel its ambitious industrial
development plans. The government accordingly considers the
acquisition of new gas supplies to be a vital national
security issue and, after extensive review of alternatives,
sees Iran as the only realistic supplier.


6. (C) Oman signed a Memorandum of Understanding (MOU) in
April 2008 on the joint development of Iran's off-shore Kish
gas field and continues difficult and protracted negotiations
with Tehran on the terms of a final deal. Oman reportedly is
prepared to invest at least seven billion dollars to develop
the field and build an undersea pipeline, but is frustrated
with unreasonable Iranian demands on gas pricing and other
issues. In sharing our concerns over the proposed deal, the
Embassy has reminded the Omanis of the unreliability of Iran
as an energy supplier, as it could shut off a gas pipeline at
any time and for any (or no) reason. We have also emphasized
that a major gas deal with Iran could undermine attempts by

MUSCAT 00000776 002 OF 004


the P5 plus 1 to reach an agreement with the Tehran regime on
the Iranian nuclear program. Finally, we have reminded the
Omanis of our own concerns under Iran sanctions legislation
were a deal to be reached.

Differing Views on Iran
--------------


7. (C) Oman's leadership recognizes and shares U.S. concerns
about Iran's nuclear activities and the significantly
increased instability a nuclear-capable Iran would mean for
the region. Omanis are also anxious about Tehran's meddling
and trouble-making in other states and its opposition to
efforts to end the Israeli-Palestinian conflict. Moreover,
the January 2008 incident between Iranian Revolutionary Guard
Corps (IRGC) and U.S. naval vessels in the Strait of Hormuz
highlighted to Omani officials the vulnerability of this
strategic chokepoint to unpredictable Iranian behavior.


8. (C) Despite these shared concerns, Oman's views on how to
respond to Iranian actions continue to diverge from our own.
Senior Omani government officials repeat their advice that
sanctions against Iran are counter-productive and only
strengthen hard-line attitudes in Tehran. They instead urge
us to initiate direct talks with Tehran without preconditions
as the best way to mitigate Iranian threats. Leaders in
Oman's military and security services, however, including the
Sultan's top security official and advisor, take a more
pragmatic and hard-line view about the dangers posed by Iran
than their civilian counterparts, who are more apt to
downplay Iran's destabilizing activities and to dismiss
threatening statements from Iranian officials as just
political rhetoric intended for domestic consumption.

Iraq
--------------


9. (C) The Omani leadership remains concerned with Iraq's
future and the possibility that extremist and sectarian
violence in Iraq could spill over into other states in the
region. Though encouraged by the improvement in security in
Iraq brought on in part by the U.S. troop surge, Omani
government officials continue to harbor doubts about the
reliability of Iraq's leadership and whether it can
effectively control the country. Senior Omanis also have
concerns about Iraqi Prime Minister Maliki's interest in and
capability for pursuing reconciliation with Sunni leaders,
which they see as critical to ending the violence in Iraq.
The Sultan and his senior military officers back a continued
U.S. military presence in Iraq until security is established
and Iraqi forces and police are able to preserve stability.


10. (S) Sultan Qaboos told the Ambassador this spring that he
recognizes that Oman and other Arab states should "do more"
to support the Iraqi government, although he declined to
re-open Oman's embassy in Baghdad due to security concerns.
(Note: Senior MFA officials continue to rebuff our requests
to establish a diplomatic presence in Baghdad or name an
ambassador to Iraq, although they insist this is due solely
to security, versus political, reasons. Iraq maintains an
embassy and resident ambassador in Muscat. End Note.) In
accordance with the Sultan's stance, a senior Omani economic
delegation staged a three-day visit to Baghdad from June
29-July 1.

Middle East Peace
--------------


11. (C) The Omani government remains a quiet supporter of
efforts to peacefully resolve the Israeli-Palestinian
conflict based on the President's two-state vision. Oman
endorsed and participated at the ministerial level in the
November 2007 Annapolis Conference to promote Middle East
peace; both Minister Responsible for Foreign Affairs Yusef
bin Alawi and MFA Secretary General Sayyid Badr al-Busaidi
remain in periodic contact with Israeli officials. Bin Alawi
most recently met publicly with Israeli Foreign Minister
Livni in April 2008 in Doha. However, Omani officials, and
bin Alawi in particular, are currently very pessimistic about
the possibility of the two sides striking a deal by the end
of the year. They fault the U.S. for not applying sufficient
pressure on Israel, but most especially fault Israel for
failing to take meaningful action on settlements and offer
genuine concessions to the Palestinians. However, they also
recognize that Palestinian political disunity is also to
blame for the lack of progress.

MUSCAT 00000776 003 OF 004



Bilateral Security Relationship
--------------


12. (C) U.S. security and military cooperation with Oman
remains strong. The U.S.-Oman Base Access Agreement, first
signed in 1980 and still a cornerstone of our bilateral
security relationship, is up for renewal in 2010. The U.S.
will ask to expand its scope to include the growing Port of
Sohar in northern Oman, as well as the new al-Musanah airbase
(close to Sohar) to help compensate for the phased closure of
military facilities at Muscat International Airport (MIA).
U.S. AFCENT hopes to build a new War Reserve Materiel (WRM)
site at al-Musanah to house equipment currently at MIA.


13. (S/NF) Oman has supported virtually all access, basing
and over-flight requests we have made. NAVCENT is increasing
the number of port calls to the Sultanate, including liberty
visits and logistical re-supply visits. However, Oman has
curtailed U.S. naval vessels into Muscat for economic-related
reasons, and does not currently allow nuclear-powered
warships to call at its ports. Earlier this year, the
Ambassador informally approached Minister bin Alawi to
request an exception to this policy in order to allow a
nuclear-powered submarine to make a port call, which was
denied.

Omani FMF and Defense Needs
--------------


14. (S/NF) Omani leaders remain persuaded that Iran would not
attack GCC countries with missiles in response to a military
strike staged in the Gulf. They see asymmetrical, terrorist
operations conducted by Iran against Gulf states, including
U.S. targets in these countries, as a greater danger.
Consequently, the Omanis have little appetite for high
price-tag Patriot missiles, but are very interested in Shared
Early Warning (SEW) and seek to modernize their capability -
both defensive and deterrent - to help counter what they view
as more likely threats. To this end, Oman has made
ATACMS/HIMARS a top priority due to its strong deterrent
capability.


15. (C) From a high of USD 24.85 million in FY 04, the FY 08
Foreign Military Financing (FMF) budget request for Oman was
reduced to USD 4.7 million. Declining U.S. FMF poses a
challenge for the modernization of Oman's military, as well
as for the future of U.S. weapons sales to Oman. Despite our
assurances to the contrary, the Omanis question whether the
reduction for FY 08 was intended as a political message. The
USD 12 million FY 09 target for FMF for Oman is a significant
step in the right direction, but more assistance is needed to
help achieve U.S. security goals here.

Counter-Terrorism/Internal Security
--------------


16. (C) Oman's long coastline and relatively open borders in
some inland areas remain vulnerable to smugglers, drug
traffickers, and terrorists. Border control accordingly
continues to be one of Oman's top priorities and a major area
of bilateral cooperation with the U.S. The Royal Oman Police
Coast Guard regularly detains smugglers and illegal migrant
workers, usually along Oman's northern coast between Muscat
and Sohar. Most of the migrant workers cross overland from
South Asia to Iran where they then board ships for the
Sultanate. More Somalis are allegedly attempting to enter
Oman via Yemen.

Counter-Proliferation
--------------


17. (SBU) The Embassy works closely with Oman to prevent the
proliferation of nuclear and other weapons of mass
destruction (WMD) or their components. The Port of Salalah -
one of the busiest transshipment ports in the world - is
participating in the Department of Energy's Megaports program
and is a pilot port in the Secure Freight Initiative (SFI).
Through ongoing technical and financial assistance from the
U.S. Departments of Energy and Homeland Security, ROP Customs
is able to scan targeted containers through an Integrated
Container Inspection System (ICIS) lane utilizing both x-ray
and radiation detection equipment. Oman also has received
equipment and technical assistance to strengthen its export
control regimes under the U.S. Department of State's Export
Control and Related Border Security (EXBS) program.

MUSCAT 00000776 004 OF 004


GRAPPO