SCENESETTER FOR SPECIAL REPRESENTATIVE HOLBROOKE

S E C R E T MUSCAT 000567

SIPDIS
NOFORN
PASS TO S/SRAP AMBASSADOR HOLBROOKE FROM CHARGE' D' AFFAIRES HURTADO

E.O. 12958: DECL: 2019/06/03
TAGS: PREL PK AF MU
SUBJECT: SCENESETTER FOR SPECIAL REPRESENTATIVE HOLBROOKE

CLASSIFIED BY: L. Victor Hurtado, Charge d'Affaires, State, Embassy
Muscat; REASON: 1.4(B),(D)

INTRODUCTION




1. (C) Special Representative Holbrooke: Embassy Muscat and I
warmly welcome you to Oman, one of our oldest friends in the
region. We have requested a meeting with Sultan Qaboos bin Said al
Said. You will find the Sultan is an engaging interlocutor. He is
an intellectual whose interests range widely. You will find him
greatly concerned about the situation in Pakistan, less so about
Afghanistan. As the second-longest serving Arab ruler (39 years),
the Sultan remains an invaluable source of advice and can be
helpful in advancing U.S. interests in the region for the
foreseeable future. In keeping with the traditions of Ibadhi Islam
and of the Al Sa'id sultans, he has no designated successor. The
Sultan often begins discussions with visitors on a matter unrelated
to issues at hand. In his audiences with senior USG officials, he
has been generous with his time.



BILATERAL RELATIONSHIP




2. (C) One of our oldest and most dependable friends in the region,
Oman remains a valued ally. 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. Economic cooperation has grown
even stronger more recently with implementation of the U.S.-Oman
Free Trade Agreement on January 1 of this year. In 2009, we will
begin negotiations on renewal of our bilateral Base Access
Agreement which, when originally signed in 1980, was unprecedented
(and highly criticized) in the region. Despite our strong record
of cooperation with Oman, however, we do not always share the same
views, particularly with regard to Iran where the Omanis see a
manageable threat.



PAKISTAN




3. (C) Oman has a good relationship and strong historical ties with
Pakistan. Over 20 percent of Omanis are of Baluchi origin from
Pakistan's Baluchistan province. Most Baluchi families settled in
Oman over 100 years ago. Gwadar, located on the southwestern coast
of Pakistan, a traditional Baluchi enclave, fell under Omani rule
until it was transferred to Pakistan in 1958. A significant number
of Pakistan laborers reside in Oman, but historically, illegal
immigration from Pakistan has been a source of concern for the
Sultanate. Recent regional media reports revealed that a Muscat
entrepreneur had ties to Lashkar-e-Taiba and the Mumbai terror
attacks.




4. (C) While Oman is growing increasingly concerned over
instability in Pakistan, it is steadfast in noting that Pakistan
must take the bulk of responsibility for its humanitarian crisis.
Nevertheless, according to the Ministry of Foreign Affairs (MFA),
Oman has provided "millions of dollars" for humanitarian assistance
projects in Pakistan, particularly for reconstruction efforts in
Baluchistan following the devastating earthquake there in 2008.
Although Oman's project assistance may be rather modest in GCC
terms (Its oil reserves are limited, and expensive to extract and
refine.),it is quite substantive in terms of Omani capacity. Oman
typically shies away from providing assistance and budget support
to large-scale projects and global funds, citing concerns over
corruption and lack of oversight. Instead it prefers to invest in
smaller projects directly impacting communities, i.e., hospitals,
schools, community centers. In a break from tradition, Oman
recently pledged, $3 million in direct budget support to the
Palestinian Authority, citing Secretary of State Clinton's request
and other assurances about budget integrity.




5. (C) Oman's Minister Responsible for Foreign Affairs Yousuf bin
Alawi bin Abdallah (YBA) told former Ambassador Grappo that victory
by Pakistani forces over factions in tribal areas was patently
"unachievable;" the best the Pakistani government could hope for
was some modus vivendi in which tribal groups were granted a form
of autonomy in exchange for closer security cooperation and a
pledge to keep terrorists and other extremists out. Posing further
challenges, in Oman's view, is the lack of confidence in Pakistani
President Zardari (especially by the military),worries over the
ruling party's ability to stay in control, a looming economic
crisis and consequent fear of another army take-over.




6. (C) Several Omani ministers, including Bin Alawi, expressed
their views on the U.S.-Afghanistan-Pakistan relationship during
Ambassador Grappo's farewell calls. Bin Alawi counseled that in
formulating a strategy, the U.S. must take care to separate Al
Qa'ida from the Taliban. The former doesn't speak for the latter
but essentially seeks to use the Taliban to further its aims
worldwide. The Taliban has no interests outside of Pakistan and
Afghanistan. Another Minister underscored the importance of U.S.
military might in confronting the Taliban but also urged that we
formulate a "social marketing" program to convince Pakistanis in
the tribal areas to abandon the "backward ideology" of the Taliban.
He suggested employing respected moderates and getting them the
necessary "air time" to voice moderate views to Pakistanis and
Afghans. Each of the Ministers referred to "chaos" in the region
in the event of a Taliban incursion into Islamabad, however
short-lived



AFGHANISTAN




7. (C) Bin Alawi has characterized the situation in Afghanistan as
"the real problem" for the region. As expressed to the Ambassador,
bin Alawi believes that a gradual increase in the size of U.S.
forces in Afghanistan would give the Taliban and Al Qaeda elements
"time to adapt" and has accordingly recommended a quick deployment
of all necessary troops. He has also stressed that the U.S. needs
to vigorously address economic and social issues in Afghanistan so
as to win the support of Afghan tribes and convince them to build a
coalition to combat the Taliban and Al Qaeda. Bin Alawi has stated
that he is "losing confidence" in President Karzai for failing to
clamp down on rampant corruption and for not doing enough to unite
factional groups.




8. (C) While concerned about Afghanistan, Oman does not see itself
as having important national interests there and has politely
declined our requests to help fund the expansion of the Afghan
National Army. The MFA asserts that Oman has discretely funded
about a dozen assistance projects in Afghanistan; the Director of
the Ministry' West Asian Affairs Department told the DCM that the
Sultanate has donated $7 million to build schools and provide other
aid.



MIDDLE EAST PEACE




9. (C) Oman has long supported, albeit quietly, efforts to
peacefully resolve the Israeli-Palestinian conflict through the
establishment of an independent Palestinian state. Reflecting its
independent foreign policy, Oman was one of only two Arab states
(the other being Sudan) to refuse to break relations with Egypt
following the 1978 Camp David accords. The two most senior Omani
diplomats, bin Alawi and MFA Secretary General Sayyid Badr
al-Busaidi, periodically talk with officials from both sides,
including face-to-face meetings with former Israeli Foreign
Minister Livni. Israeli diplomats have made discrete visits to
Muscat in recent years. Oman continues to host and chair the
Middle East Desalination Research Center (MEDRC),originally
established as part of the multilateral track of the peace process
in the mid-nineties. Representatives and experts from Israel and
Arab countries, in addition to other donor nations, participate in
MEDRC-sponsored activities and attend the annual MEDRC Board
meeting in Muscat.




10. (C) The Omani government is not optimistic on the prospects
for achieving a comprehensive peace agreement in the near future.
Omani officials blame Israel for continuing settlement expansion
and failing to offer meaningful concessions, but recognize that
Palestinian political disunity is also at fault for the lack of
progress. The U.S. is criticized to a lesser degree for not
applying sufficient pressure on Israel to soften its negotiating
stance. While encouraged by the Obama administration's early and
high-profile attention to the peace process, Oman is worried that
the new Israeli government led by Prime Minister Netanyahu may lead
to backwards movement in peace talks. Local reaction to Israel's
military operations in Gaza in late 2008 was unexpectedly strong;
numerous demonstrations (all non-violent) were held throughout
Oman.



IRAN




11. (C) While Omani officials acknowledge U.S. concerns about
Tehran's opposition to the peace process, support for terrorism,
and nuclear activities, the Sultanate nevertheless enjoys the best
working relations with Iran of any GCC state and is careful not to
antagonize its neighbor to the north. Omani officials conduct
reciprocal visits to Iran and the Omani police and military
maintain open channels of communication with their Iranian
counterparts on matters of joint concern, such as the smuggling of
illegal migrant workers and drugs. While keen to maintain amicable
relations with Tehran, Oman has traditionally maintained a
comfortable distance from its Persian neighbor. Iranian travel to
Oman is carefully scrutinized and controlled. Apart from a few
subjects, meaningful bilateral cooperation has been scant while
economic and commercial ties are limited. There are indications,
however, that both Oman and Iran are trying to strengthen their
bilateral relationship. Iran is pushing to increase tourism, trade
and investment with Oman, as well as the level of mil-mil
cooperation. The Omani government has responded positively, albeit
cautiously, to some of these overtures. One factor in Oman's
evolving approach towards Iran is natural gas. Oman urgently needs
large quantities of gas to fuel its ambitious industrial
development plans but its outreach to Saudi Arabia and Qatar for
new gas supplies has been rebuffed. The Omanis, similar to the
Bahrainis, thus see Iran as the only realistic source and are
accordingly in on-again-off-again protracted talks with Tehran on
potentially investing billions of dollars in a project to develop
Iran's nearby Kish gas field.




12. (C) Foreign Minister bin Alawi has consistently asserted that
sanctions against Iran "will not work" and will only strengthen
hard-line attitudes in Tehran. He has repeatedly advised the U.S.
to initiate direct talks with the Iranian leadership without
preconditions. Bin Alawi has publicly stated to the media on
several occasions that Iran poses no threat to Oman, and he is
adamant that the GCC plus 3 not be used or seen as an anti-Iran
forum. For example, he protested strenuously at the most recent
GCC plus 3 meeting in Egypt against issuing any kind of statement.
Bin Alawi is also quick to dismiss bellicose statements by Iranian
President Ahmadinejad and other leaders in Tehran as mere rhetoric
designed for internal political consumption. In contrast to bin
Alawi, however, the leadership of Oman's military and security
services (including the Sultan's top security official and advisor)
take a much more pragmatic view about the dangers from Iran.
Moreover, Oman's defense posture, including its staging of
equipment (e.g., the basing of fighter aircraft away from the
threat of an Iranian strike) and acquisition of new military
hardware show that it recognizes the risk that Iran poses to
regional stability.




13. (S/NF) Bin Alawi's views on Iran (as opposed to some other
subjects) likely follow those of Sultan Qaboos. The Sultan told
Ambassador Grappo last month that Oman had conveyed to ex-president
Khatami that the U.S. had clearly extended its hand to Tehran, and
it was "now up to Iran to respond." The Sultan asserted that Iran
"had to make itself an asset to the region and the world, not a
destabilizing factor." At the same time, he cautioned patience.
As neither conservatives nor moderates in Iran want relations with
the U.S. to become an issue in the June presidential elections, he
said that we may not hear anything "meaningful" from Iran before
July.



YEMEN


14. (C) Media coverage of the deteriorating political situation
in Oman has been limited, but sources close to the Sultan and
actions of Senior Omani officials indicate the Omanis are greatly
concerned about its southern neighbor and doing what it can to
bolster the prospects of Yemeni leadership. Oman recently withdrew
the citizenship of Yemeni separatist Ali Salim al Baidh, citing
violation of Omani law. The same weekend, bin Alawi mentioned Yemen
in his interview with the Arabic daily 'Al Watan' and confirmed
Oman's support for the unity and leadership of Yemen and
acknowledging that President Salih and the General People's
Congress were doing their "best to continue dialogue." Bin Alawi
remarked that Yemen's problems must be dealt with internally and
Oman will not interfere.




15. (C) Oman invests heavily in Yemen to stabilize its southern
border, not only on security but also in terms of humanitarian and
commercial engagement. Oman would be sorely tested by affects of
severe instability and prolonged tensions are bound to make it more
difficult to attract much needed foreign investment and tourism.



PIRACY




16. (C) Since Oman's most southern port, Salalah, is the first
stop after the Gulf of Aden and a "port of refuge," Oman actively
monitors efforts to combat piracy and participates in anti-piracy
meetings. However, we would like Oman to play a more active role
in coordinating and supporting private security efforts of U.S.
flagged vessels. For example, we would like Oman to permit the
transit of lethally armed security teams as it does security teams
armed with non-lethal equipment.
HURTADO