SCENESETTER FOR TREASURY DEPUTY SECRETARY AND UNDERSECRETARY

UNCLAS ABU DHABI 000194

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON PGOV PREL EFIN BEXP MARR AE
SUBJECT: SCENESETTER FOR TREASURY DEPUTY SECRETARY AND UNDERSECRETARY
OF STATE FOR ECONOMIC AFFAIRS

REF: ABU DHABI 55


1. (U) This is a joint message from Embassy Abu Dhabi and Consulate
General Dubai and complements the Mission's classified scenesetter
(reftel).




2. (SBU) Summary: The U.S. Mission to the United Arab Emirates
(UAE) is pleased to welcome the February 14-16 visit of Deputy
Treasury Secretary Neil Wolin and Under Secretary of State for
Economic, Energy and Business Affairs Robert Hormats. Our robust
relations with the UAE focus on mutual strategic interests
throughout the region, as well as our common interest in economic
growth and prosperity here and at home. Abu Dhabi Crown Prince
Mohammed bin Zayed al Nahyan (MbZ) and UAE Foreign Minister
Abdullah bin Zayed al Nahyan (AbZ) are part of a dynamic young
leadership team that makes the UAE an active partner in a broad
range of mutual goals, particularly regarding regional stability
and security. The Emirate of Abu Dhabi, which contains the
eponymous federal capital and controls 93 percent of UAE petroleum
reserves, is the focus of our regional security, defense and energy
cooperation. Dubai, business capital of the Gulf, is a key
commercial center and a vital regional trade and transportation
hub. The UAE is the largest US export market in the Middle East.
Like other countries open to the forces of globalization, the UAE
was hard hit by the economic crisis; but cash-rich Abu Dhabi has
been hurt less than Dubai which was more vulnerable given its high
level of financial leverage. End Summary.



Regional Stability

--------------




3. (SBU) In the past five years, the United Arab Emirates has
emerged as one of the economic powerhouses of the region and
attained a commensurate level of political influence. The UAE has
troops in Afghanistan and Commands the Multilateral Naval Coalition
in the Southern Gulf, is an important political player in and donor
to Pakistan, and its support is sought by leaders throughout the
Middle East, and further afield. Although a tiny country,
geographically and demographically (of its six million residents,
fewer than one million are Emirati citizens),the UAE punches well
above its weight class in international circles. In that context,
U.S. relations are traditionally strong and continue to grow. Key
U.S. strategic interests throughout the region (involving Iran,
Iraq, Pakistan, Afghanistan, Yemen, terrorism, economics, and more)
form the core of our daily dialogue with the UAE.




4. (SBU) Our broad bilateral relations have produced close military
engagement and cooperation for two decades; key US military assets
have access to UAE facilities, and continually plan and exercise
together. Coalition operations in Iraq, Afghanistan, and the Horn
of Africa rely on that cooperation. The UAE hosts more US Navy
ships, principally at Dubai's Jebel Ali port, than any port outside
the United States. Our regional military logistics profile
benefits from our UAE hosts who share various facilities throughout
the country. The UAE was the USG's largest Foreign Military Sales
cash customer in 2009, now totaling 55 programs and $13 billion
with similar amounts in commercial defense sales.




5. (SBU) Concerned about regional proliferation, the UAE has been
responsive on export control issues and we engage on that front
regularly (including an ongoing review of efforts by a dedicated
bilateral Counterproliferation Task Force). As Abu Dhabi moves
forward with a peaceful nuclear power program -- a sign of its
ambitions and a real need for electricity to meet development goals
-- it has taken clear steps to cooperate with the U.S. (including a
Section 123 Agreement which entered into force in December 2009),
and to prevent proliferation, offering an unambiguous regional
counterpoint to Iran's nuclear model.




6. (SBU) The UAE's continuing support for Afghanistan and Iraq is
seen in financial support and debt relief, reciprocal visits,
dispatching ambassadors, and ongoing efforts to use its political
influence to bring about stability in both countries. Similar


focus on shared interests with regard to Israeli-Palestinian peace,
Lebanon, Yemen, Pakistan and elsewhere keep our two nations closely
engaged in daily strategic diplomacy. Regular visits by Special
Envoys Richard Holbrooke and Senator George Mitchell underscore the
importance we place on coordination with the UAE on stability in
Afghanistan/Pakistan and the Middle East peace process.




7. (SBU) Regional leaders look to Abu Dhabi and Dubai for
assistance and political support, while Washington and other
Western capitals increasingly seek the UAE's views. The strength
of relations with the U.S. is evident in the string of high level
USG visitors - including former President Bush in 2008, as well as
multiple cabinet-level visits and senior Congressional delegations.




The Leaders

--------------




8. (SBU) Abu Dhabi Crown Prince Mohammed bin Zayed al Nahyan (MbZ)
is responsible for the formulation of military, security and
economic policy for the federation. Age 48, his only federal title
is Deputy Supreme Commander of the UAE Armed Forces but MbZ plays a
large role in the formulation of national security policy, as
evidenced by his official visits to the White House, most recently
in September 2009 accompanied by his brother, UAE Foreign Minister
Abdullah bin Zayed al Nahyan (AbZ). On the domestic agenda, MbZ is
focused on building a modern state with world-class education and
health care systems. Internationally, the UAE broadly views many
issues of regional stability and security as we do.




9. (SBU) Like his older brother, 37 year old AbZ is a
well-informed, pragmatic leader who often plays a helpful role in
regional diplomatic engagement. In late January 2010, AbZ joined
the Secretary of State and other world leaders in London for
multilateral talks on security and development in Yemen and
Afghanistan.



Economy and the World Crisis

--------------




10. (SBU) The UAE is our largest export market in the Middle East.
Over 700 U.S. companies operate here in a broad array of fields,
with some 550 based in Dubai and its free zones. The individual
emirates retain significant economic autonomy, which Dubai
aggressively asserted over the last several years. Dubai leveraged
its limited oil wealth (only 3-4 percent of its GDP) to build the
infrastructure to grow and diversify its economy -- Dubai is the
regional air transportation hub, and its Jebel Ali sea port is one
of the largest in the world. Encouraging direct foreign investment
through innovative free zones and a range of business-friendly
practices, Dubai focused on real estate development,
infrastructure, trade and transportation, knowledge-based
industries, tourism, and finance to sustain its growth. Dubai has
welcomed and courted U.S. businesses, and hosts many regional
headquarters for non-oil, non-defense sector companies, including
GM, GE, Microsoft, Ford, Caterpillar, Boeing, and Citicorp.




11. (SBU) Despite its resource wealth and exponential growth, the
UAE has been affected by the international economic crisis. Stocks
have been battered and consumer confidence has declined. Dubai was
particularly hard hit by the global economic downturn, leading
ultimately to a near collapse in November 2009. The UAE government
has taken a number of steps to restore confidence, but the 2010
economic outlook is weak.



Components of the U.S. Mission

--------------



12. (SBU) The U.S. Embassy in Abu Dhabi and the Consulate General
in Dubai employ a total of 211 direct hire Americans and 201
locally engaged staff. 28 U.S. government agencies and offices are
represented and 90 DOD personnel are assigned to the mission. A
new consulate facility under construction in Dubai is scheduled for
completion in 2011. The State Department component of the mission
remains understaffed, considering the depth and breadth of our
bilateral relations and strategic regional interests, and the need
to support interagency growth.




13. (SBU) Created in summer 2006, the Iran Regional Presence Office
(IRPO) in Dubai serves as the Department of State's principal
window on Iran and functions to the degree possible as if it were
located in Tehran. IRPO's primary reporting focus is on political
and economic developments inside Iran and the Iranian government's
external policies. IRPO keeps a relatively low profile in the UAE
so as not to disrupt the UAE-U.S. bilateral relationship. IRPO's
recent reporting has focused on Iranian public reaction to the
draft nuclear fuel agreement brokered by the International Atomic
Energy Agency and the aftermath of the June presidential elections,
to include the increasing factionalism within the government, the
scope of discontent among the public and the government's effort to
suppress the opposition. Iranian press frequently accuses the U.S.
of attempting to overthrow the Islamic Republic and often mention
IRPO's presence in Dubai as the center of U.S. anti-regime
activity. It is often referred to as the "regime change office"
amid claims that IRPO public diplomacy programs are a cover for
"velvet revolution." IRPO personnel have been mentioned by name in
some Iranian press reporting as masterminding these efforts, and
IRPO officers and contacts are intelligence targets. The Iranian
government in 2007 expressed its dissatisfaction with the UAE
government that the UAE had allowed IRPO to open on UAE territory.
UAE officials occasionally have queried U.S. officials about IRPO
and its activities. IRPO does not have contact with UAE officials.




14. (SBU) The Dubai Media Hub represents and advocates on behalf of
the U.S. Government on Arab television and radio programs on the
full range of regional and global issues, at a moment's notice and
in fluent Arabic. The State Department's Regional Media Hubs
Initiative was launched in September 2006 to address the need for a
variety of official American faces and voices on media outlets in
real time and on a regular basis. The current Hubs - in Brussels,
Dubai, Tokyo, South Africa and London - engage with regional and
local media to strengthen the U.S. Government's presence and
advocacy capabilities in those key regions. The budget of the
Dubai Hub, including salaries, is approximately $425,000 per year.
Media appearances average approximately 25-30 per month on outlets
including Al Arabiyya, Al Jazeera, BBC Arabic, France 24, and Al
Hurra. The Dubai Hub is staffed by two direct hire Americans - the
Director and Deputy Director - both of whom are fluent Arabic
speakers and who work remotely from home offices, television
studios and on travel throughout the region. The Dubai Hub works
closely with CENTCOM regional advisers to coordinate messaging and
appearances.




15. (SBU) The Mission's consular sections in Dubai and Abu Dhabi
serve the approximately 40,000 American citizens resident in the
UAE, as well as the thousands of Americans who visit each month.
Mission UAE processes over 75,000 applications for visiting visas
and over 5,000 applications for permanent immigration to the United
States each year. Consulate General Dubai is the world's largest
processing post for Iranian non-immigrant visa applicants.
OLSON