KING ABDULLAH'S APPEAL LED QATAR TO ACCEPT

C O N F I D E N T I A L DOHA 000344 SIPDIS E.O. 12958: DECL: 05/24/2019 TAGS: ECIN EFIN ECON QA SUBJECT: KING ABDULLAH'S APPEAL LED QATAR TO ACCEPT ESTABLISHMENT OF GCC BANK IN SAUDI ARABIA REF: A. DOHA 60 ¶B. 2008 DOHA 743 Classified By: Ambassador Joseph E. LeBaron, for reasons 1.4 (b, d). -------------- (C) KEY POINS -------------- -- Qatar accepted Saudi Araia's offer to host th new GCC Central Bank largly because of a personal appeal by King Abdullahto the Amir, according to MFA Director for GCC Afairs Yousef Al-Jaber. -- Al-Jaber also told Amassador May 25th that the UAE's decision not to participate in a GCC common currency disappointed Qatar, but Al-Jaber might have been disingenuous. -------------- (C) COMMENTS -------------- -- The UAE's decision will marginally help Qatar in its competition with the UAE to become the region's premier financial center. With the UAE opting out of a common GCC currency and a GCC central bank in Saudi Arabia, it loses the symbiotic GCC financial relationships Qatar will still enjoy. -- Bahrain, of course, will also enjoy those relationships, but Qatar believes Bahrain to be out of the running, even though Bahrain still has an important banking sector. -- And Qatar itself is no shoo-in. Its economy is half of the UAE's, a fifth of Saudi Arabia's. Its stock market is tiny, its amenities for expatriates still under construction, and its free zones and regulatory regimes still fledgling and unproven. End Key Points and Comments. ¶1. (C) On the margins of another meeting May 24, MFA Director for GCC Affairs Yousef Al-Jaber told Ambassador that Qatar, which had been in the running to host the GCC Central Bank, accepted Saudi Arabia's hosting of the Bank once Saudi King Abdullah made a personal appeal for it in a letter to the Amir. ¶2. (C) Al-Jaber said, "We can't turn down a request directly from the Saudi King." Most important for Qatar, said Al-Jaber, is that progress is made toward a common GCC currency. He noted that the Saudis, with the largest economy in the GCC, can make the case that they should host the bank. ¶3. (C) According to Al-Jaber, the UAE did not respond to King Abdullah's letter but informed other GCC states in a recent meeting on establishing the Central Bank that the UAE "did not accept" establishing the bank in Saudi Arabia. Following that declaration, the UAE delegation announced in the meeting that the UAE would pull out of the common currency project. LeBaron