SEN. KERRY IN SAUDI - IRAN, IRAQ AND OIL

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 001034

SIPDIS

E.O. 12958: DECL: 07/02/2013
TAGS: CIA ECON IR IS IZ MASS MCAP MOPS PGOV PINR
PREL, SA
SUBJECT: SEN. KERRY IN SAUDI - IRAN, IRAQ AND OIL

Classified By: Ambassador Ford Fraker for reasons 1.4 (b) and (d)


1. (C) SUMMARY: Senator John Kerry (D-MA) traveled to the
Kingdom on June 28-30 where he met with Saudi King Abdullah
bin Abdulaziz Al Saud, Chief of General Intelligence Prince
Muqrin Bin Abdulaziz Al Saud, Minister of Finance Dr. Ibrahim
Al-Asaf, and Assistant Interior Minister for Security Affairs
Prince Mohammed Bin Naif (MBN). The Ambassador and DCM
accompanied to all these meetings. Discussions included
Saudi views on the Iranian threat, their distrust of Iraqi
Prime Minister Nuri Al-Maliki, progress against Al Qaeda, oil
production and the Saudi riyal-dollar peg. The King
elaborated on furthering global religious tolerance and
combating extremism through the Inter-Faith Dialogue he
launched, where the next step will be a multi-faith
conference, including Christian, Jewish and Muslim
representatives, scheduled for July 16 in Madrid (Septel).
END SUMMARY.

IRAN
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3. (C) The Saudis were unanimous in their view that Iran was
a growing threat with a goal of not just achieving greater
influence but expansion of their sphere of control, citing
"Syrian duplicity" in supporting Hezbollah and opposing the
Lebanese government, and support to Yemeni insurgents leading
to fighting along the Saudi-Yemen border. MBN expounded on
the possibility of Iran gaining control of Mecca and Medina,
Islam's two holy cities, that could occur if the Saudi
government were toppled. They all acknowledged Iran's
expansionist operations trying to convert Sunni Muslims to
the Shi'ite sect, and subversive involvement in non-Arab
Muslim areas such as Indonesia, Malaysia and sub-Saharan
Africa. The King especially was vociferous in his
condemnation of Syrian President Bashar Assad in aligning
with Iran.

IRAQ
--------------


4. (C) Regarding Iraq, the Saudis acknowledged violence has
been significantly reduced. As a sign of progress, Muqrin
informed us of the humanitarian assistance program he is
devising with Iraqi National Security Advisor Mowafaq Rubaie
(Septel). Al-Asaf was heartened the Iraqis were taking a
more Arab nationalist view and putting sectarian differences
aside, implying this meant Iran would lose influence in Iraq.
However, in all of the Iraq discussions, distrust and
displeasure with the current Iraqi government was strongly
expressed. MBN bemoaned the GOI's decision to execute Saddam
Hussein at the height of the Hajj (Dec 30, 2006) when there
were 4 million pilgrims in Mecca. He opined the potential of
even small riots during this event could have led to a
massive loss of life and tremendous damage during this highly
publicized event on Saudi soil. Muqrin noted the King
considered Maliki as untrustworthy because Maliki had
reportedly promised the King to rein in the Shia militias in
2006, but had not done so (NOTE: the GOI, beginning with the
Basra and Sadr City Iraqi Army led operations in March 2008,
have now beaten down these militias). King Abdullah was most
vehement in his distrust of Maliki, calling him "an Iranian
100%" and that the GOI has allowed "half of Iraq to become
Iranian."


5. (C) The topic of the 500 mile long border security fence
being built along Saudi Arabia's northern border with Iraq,
which still has contracts pending, was raised. MBN
highlighted the importance of this security initiative. Sen.
Kerry requested that Raytheon, who is bidding on this
contract, be given consideration on its bid. To which MBN
responded that if Raytheon "gets its bid right," they would
win the contract.

RIYADH 00001034 002 OF 002



COUNTERING AL QAEDA IN SAUDI
--------------


6. (C) The Saudis highlighted how in the past four years
they have significantly degraded Al Qaeda's ability to
conduct operations in Saudi Arabia. MBN characterized our
bilateral relationship as "we are at war together against Al
Qaeda," adding that political partisanship should not
interfere in the mutually beneficial security operations we
jointly conduct. Both Muqrin and MBN emphasized the close,
effective working relationship and intelligence sharing they
have with Riyadh GRPO and the FBI. MBN explained in detail
how the SAG's de-radicalization program works, where it
includes not attributing blame to the individual, rather
describing them as being "misled" by Al Qaeda. Also that MOI
works with the families and local tribes to rehabilitate the
individual. At the same time, they are working hard to
present a global image of the SAG as a force against, not
for, terrorism. He cautioned that the biggest threat in
Saudi Arabia is the annual Hajj, where millions of Muslims
come to make the pilgrimage, and there is always the chance
that some would overstay to commit terrorist acts.

OIL PRICES AND DOLLAR PEG
--------------


7. (C) Sen. Kerry raised the issue of oil prices and
associated economics with Al-Asaf. Al-Asaf commented on
issues relating to oil production, supply constraints and the
impact of monetary policy on oil pricing. He explained Saudi
Arabian leadership was reacting vigorously to the current
high oil price climate, including expansion of oil production
to eventually 12.5 million barrels per day and investments in
refining capacity. Sen. Kerry queried Al-Asaf if the Saudi
Riyal would remain pegged to the dollar (3.75 SAR = 1 USD).
Al-Asaf assured us that there were would be no change.
Despite pressure to peg the riyal to the Euro or to a basket
of currencies, Al-Asaf stated the Saudi-U.S. relationship is
best served by maintaining the status quo in monetary policy.
Al-Asaf expressed concern of a deep recession in the U.S.
this year with its subsequent global impact. Regarding our
bilateral relationship, he advised that "Congress should be
more flexible in U.S. arms sales to the Kingdom." Hinting
that he was pleased with the Administration, but resented
Congress putting up barriers to agreed upon weapons
purchases. He added that many of our bilateral issues could
be smoothed over if the Israeli-Palestinian issue were
resolved.

COMMENT
--------------


8. (C) Atmospherics during Sen. Kerry's visit were extremely
positive. MBN's characterization that we are war together
summed up the message from the Saudis emphasizing the
strength of our relationship and the vast number of issues we
do agree on.
FRAKER