SAUD AL FAISAL ON PAKISTAN, IRAQ, LEBANON,

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 001668 SIPDIS DEPT FOR NEA AND EEB E.O. 12958: DECL: 11/05/2018 TAGS: EFIN ECON EINV PREL EPET KPAL SA SUBJECT: SAUD AL FAISAL ON PAKISTAN, IRAQ, LEBANON, PALESTINIAN UNITY, AND IRAN Classified By: Charge d'Affaires David Rundell, reasons 1.4 (b) and (d) . ¶1. (C) Summary: On October 26, Treasury Deputy Secretary Robert Kimmitt and Ambassador Fraker met Saudi Foreign Minister Saud Al Faisal. Kimmitt and Saud Discussed Pakistan's approaching balance of payment crisis, Saudi relations with Iraq, the need for continued support for the Palestinian Authority, Lebanon's upcoming election, and Iran's pursuit of nuclear capabilities. End summary. Pakistan's approaching economic crisis -------------- ¶2. (C) Kimmitt raised USG concerns that Pakistan is facing a balance of payments crisis with less than two months import coverage in foreign reserves. He urged Saud to encourage Pakistan to agree to a reform program with the IMF, which would open the door to additional aid from friends of Pakistan, including the U.S., Europe, China, and Saudi Arabia. ¶3. (C) Saud agreed that Pakistan needs "an intrusive Operation;" however, the Pakistani leadership is unwilling to face up to the reality of the political and economic situation. Addressing calls for Saudi oil grants, Saud stated that such aid without fundamental reform would only increase Pakistan's problems. He stressed that Pakistan must accept an IMF program of real reform, and not seek "sedatives." ¶4. (C) Saud agreed that perception is an important issue for Pakistan's political leadership, noting that appearance is often the primary driver of policy decisions, rather than impact. He stated that an economic collapse coupled with the political situation in Pakistan would have negative implications for regional security. Saud questioned whether Zardari has the experience in government to "see his way clear," adding that he hoped Zardari is getting good advice. Relations with Iraq -------------- ¶5. (C) Saud stated that Riyadh's decision to return an Ambassador to Iraq would depend on steps taken by the Maliki government. He expressed concern that Maliki was adopting some of Iran's foreign policy positions. Saud relayed a message he received from the Bahraini foreign minister, who explained that Maliki rejected the Arab League proposal for settling the Israeli - Palestinian conflict as "unacceptable to the Iraqi people for religious and cultural reasons." Saud described Maliki's adoption of Iranian president Ahmedinejad's foreign policy positions as "surreal," and pointed out that these views were not shared by Iraq's deputy prime minister or foreign minister. ¶6. (C) Responding to the USG's interest in Saudi Arabia placing an ambassador in Baghdad, Saud pointed to the lack of security in Iraq and questioned whether a Saudi ambassador could be effective without freedom to move securely in the capital. He said that Riyadh wants to send an ambassador to Iraq if the security situation can be guaranteed without burdening the U.S. military. Returning to Iran, he added that while we cannot leave a free hand to the Iranians in Iraq, Saudi Arabia cannot match Iranian actions that include backing militias and other intervention. Saud commented that the next Iraq election is important and that Saudi Arabia is encouraging the formation of alliances Between Iraqi parties that are committed to the "equal treatment of all Iraqis." Support for Palestinian Authority -------------- ¶7. (C) Kimmitt encouraged Saudi support for the Palestinians and assured Saud of USG measures to help the economy in the territories, including talking to Israel About easing restrictions on movement. Saud confirmed that Riyadh was helping Palestinians with budget requirements and infrastructure, which he hoped would be safeguarded from Israel. He complained that "massive retaliation for actions of a few are illegal and must stop." He advised that improving the conditions for the Palestinians is a better long-term policy for Israel than "collective punishment." ¶8. (C) Saud raised the upcoming Egyptian meeting to discuss the Palestinian situation. He advocated the need for a Palestinian national unity government to establish one legal armed force and to disband all factions not under Government control. He pointed to a proposal to commit the Palestinians RIYADH 00001668 002 OF 002 to an Arab League strategy for peace, and explained that if the Palestinians refused to accept the proposal, Saudi cooperation would end. Saud hoped that some key member of Hamas would accept the proposal, and if so, the Arab League would only deal with those elements of Hamas and isolate the parts that reject. He hoped that Hamas would seriously consider the proposal and not blindly rely on the rhetoric of Iran. Saud stressed the need for public support from Syria, rather than disruption. He added that "if we do this, then we have done everything that can be done on the Arab side to make peace, and then we will see if Israel wants peace." he conveyed his skepticism on Israel's commitment to a two-state Annapolis solution, and doubted that peace was attainable without a change in this mindset. Lebanon at a crossroads -------------- ¶9. (C) Saud pointed to two key upcoming events in Lebanon that would set the immediate future course of the nation: the Hariri trial and the election. He hoped the trial would occur without disruption and that elections would lead to an independent government committed to stability, equality and the disbanding of militias. If force and intimidation were employed to reach settlement, "then we are back to square one." Saud identified Syria as the key, and warned that Syria's actions will dictate Arab relations with the Al Assad government. Iran's nuclear ambition -------------- ¶10. (C) Saud pointed out Iran's economic troubles and assessed that the UN, EU, and U.S. measures have had an impact and were the only efforts that were working and pushing in the right direction. However, Saud noted Iran's political and military ambitions in the region and explained that Iran would pursue nuclear capabilities to match the "other country in the region" with a nuclear capability. He clarified that pursuing nuclear capability is a cornerstone national policy, not just an interest of Iranian president Ahmedinejad. He continued, "Whatever they say, Iran will seek a nuclear capability because it sees this as essential to their rightful position in the region." ¶11. (U) Deputy Secretary Kimmitt's delegation cleared this cable. FRAKER