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Saudi Cannot Pump Enough Oil To Keep A Lid On Prices

Posted on 10 February 2011 by hashimilion


¶1. (C) SUMMARY: On November 20, 2007, CG and Econoff met with Dr. Sadad al-Husseini, former Executive Vice President for Exploration and Production at Saudi Aramco. Al-Husseini, who maintains close ties to Aramco executives, believes that the Saudi oil company has oversold its ability to increase production and will be unable to reach the stated goal of 12.5 million b/d of sustainable capacity by 2009. While stating that he does not subscribe to the theory of “peak oil,” the former Aramco board member does believe that a global output plateau will be reached in the next 5 to 10 years and will last some 15 years, until world oil production begins to decline. Additionally, al-Husseini expressed the view that the recent surge in oil prices reflects the underlying reality that global demand has met supply, and is not due to artificial market distortions. END SUMMARY.

——————————————— ——-

¶2. (C) Dr. Sadad al-Husseini met with CG and EconOff on November 20 to discuss current trends in the international energy market, as well as his thoughts on the Saudi energy sector. Al-Husseini served as Executive Vice President for Exploration and Production from 1992 until his retirement in 2004. He also served as a member of the Aramco Board of Directors from 1996 to retirement. (COMMENT: Al-Husseini retired in the midst of an executive dispute, supposedly caused when he unsuccessfully attempted to engineer his ascension to the position of CEO. Although he continues to live at Aramco’s main camp and has close interpersonal relationships with key Aramco executives, many of al-Husseini’s views on Aramco are shaped by the perception that the company would be better off if he were running it. END COMMENT). It is al-Husseini’s belief that while Aramco can reach 12 million b/d within the next 10 years, it will be unable to meet the goal of 12.5 million b/d by 2009. The former EVP added that sustaining 12 million b/d output will only be possible for a limited period of time, and even then, only with a massive investment program.

¶3. (C) According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described and the timeline for their production not as unrestrained as Aramco executives and energy optimists would like to portray. In a December 1 presentation at an Aramco Drilling Symposium, Abdallah al-Saif, current Aramco Senior Vice President for Exploration and Production, reported that Aramco has 716 billion barrels (bbls) of total reserves, of which 51 percent are recoverable. He then offered the promising forecast - based on historical trends - that in 20 years, Aramco will have over 900 billion barrels of total reserves, and future technology will allow for 70 percent recovery.

¶4. (C) Al-Husseini disagrees with this analysis, as he believes that Aramco’s reserves are overstated by as much as 300 billion bbls of “speculative resources.” He instead focuses on original proven reserves, oil that has already been produced or which is available for exploitation based on current technology. All parties estimate this amount to be approximately 360 billion bbls. In al-Husseini’s view, once 50 percent depletion of original proven reserves has been reached and the 180 billion bbls threshold crossed, a slow but steady output decline will ensue and no amount of effort will be able to stop it. By al-Husseini’s calculations, approximately 116 billion barrels of oil have been produced by Saudi Arabia, meaning only 64 billion barrels remain before reaching this crucial point of inflection. At 12 million b/d production, this inflection point will arrive in 14 years. Thus, while Aramco will likely be able to surpass 12 million b/d in the next decade, soon after reaching that threshold the company will have to expend maximum effort to simply fend off impending output declines. Al-Husseini believes that what will result is a plateau in total output that will last approximately 15 years, followed by decreasing output.

¶5. (C) Al-Husseini elaborated that oil field depletion rates also play a significant role in determining the Aramco - and

RIYADH 00002441 002 OF 003 12.5 MBD IN 2009

global - production timeline. Increasing output is not simply a function of adding new capacity to already existing operations. Instead, due to depletion rates, new reserves must be brought online to both replace depleted production and satisfy growth in consumption. The International Energy Agency (IEA) has estimated global depletion rates at 4 percent, while a 2006 Aramco statement has estimated Saudi Arabia’s overall depletion rate at 2 percent. Al-Husseini estimates that moving forward, satisfying increases in global demand will require bringing online annually at least 6 million b/d of worldwide output, 2 million to satisfy increased demand and 4 million to compensate for declining production in existing fields.

¶6. (C) The second issue that will limit any proposed Aramco output expansion can be broadly defined as a lack of supporting resources. For example, in al-Husseini’s estimation, it is not the amount of oil available that will prevent Aramco from reaching 12.5 million b/d by 2009, but rather issues such as a lack of available skilled engineers, a shortage of experienced construction companies, insufficient refining capacity, underdeveloped industrial infrastructure, and a need for production management (if too much oil is extracted from a well without proper planning and technique, a well’s potential output will be significantly damaged). As previously reported by post (Reftel), the Eastern Province economy is facing severe industrial expansion limits, and despite Aramco’s willingness to invest up to 50 billion USD to achieve the 2009 goal, availability of labor, materials and housing may end up as determinative factors.


¶7. (C) Considering the rapidly growing global demand for energy - led by China, India and internal growth in oil-exporting countries - and in light of the above mentioned constraints on expanding current capacity, al-Husseini believes that the recent oil price increases are not market distortions but instead reflect the underlying reality that demand has met supply (global energy supply having remained relatively stagnant over the past years at approximately 85 million barrels/day). He estimates that the current floor price of oil, removing all geopolitical instability and financial speculation, is approximately 70 - 75 USD/barrel. Due to the longer-term constraints on expanding global output, al-Husseini judges that demand will continue to outpace supply and that for every million b/d shortfall that exists between demand and supply, the floor price of oil will increase 12 USD. Al-Husseini added that new oil discoveries are insufficient relative to the decline of the super-fields, such as Ghawar, that have long been the lynchpin of the global market.

¶8. (C) COMMENT: While al-Husseini believes that Saudi officials overstate capabilities in the interest of spurring foreign investment, he is also critical of international expectations. He stated that the IEA’s expectation that Saudi Arabia and the Middle East will lead the market in reaching global output levels of over 100 million barrels/day is unrealistic, and it is incumbent upon political leaders to begin understanding and preparing for this “inconvenient truth.” Al-Husseini was clear to add that he does not view himself as part of the “peak oil camp,” and does not agree with analysts such as Matthew Simmons. He considers himself optimistic about the future of energy, but pragmatic with regards to what resources are available and what level of production is possible. While he fundamentally contradicts the Aramco company line, al-Husseini is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered. END COMMENT.


¶9. (U) Dr. Sadad Ibrahim al-Husseini was born in Syria but raised in Saudi Arabia, his father a Saudi government official. He received a BS in Geology from the American University of Beirut in 1968, as well as an MS and Ph.D. in geological sciences from Brown University in 1970 and 1972, respectively. Al-Husseini also attended a Professional Management Program at Harvard Business School in 1982.

RIYADH 00002441 003 OF 003 12.5 MBD IN 2009

Joining Aramco in 1972, al-Husseini quickly advanced, becoming Senior Vice President for Exploration and Production in 1986. He was given the title Executive Vice President in 1992. Al-Husseini served on Aramco’s Management Committee from 1986 until 2004, and sat on the Aramco Board of Directors from 1996 - 2004. He retired on March 1, 2004. XXXXXXXXXXXX


Reference ID: 07RIYADH2441
Created: 2007-12-10 05:05

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Yemeni President Saleh Wants Washington Trip

Posted on 07 February 2011 by hashimilion

S E C R E T SECTION 01 OF 02 SANAA 003023


E.O. 12958: DECL: 12/06/2014

Classified By: Ambassador Thomas C. Krajeski for reasons 1.4 (b) and (d ).

¶1. (C) Summary. President Saleh convoked Ambassador December
6 to request that he convey Saleh’s strong desire to visit Washington to personally congratulate President Bush on his reelection and meet with newly appointed senior officials. Citing important new developments in the region “that can only be discussed face to face,” Saleh said he also plans to raise U.S. - ROYG CT cooperation. Saleh also discussed USG military assistance, SA/LW in Yemen, and the status of pending security detainee releases. End Summary.

Saleh: I Must Meet the President Face to Face

¶2. (C) President Saleh emphasized his desire to be among the first foreign leaders to personally congratulate President Bush on his reelection, and said he needed to meet with Secretary of State designate Dr. Rice and other newly


appointed senior officials to raise new regional developments that can only be discussed “face to face.” Ambassador promised to convey Saleh’s message to the White House, cautioning that a visit could not be arranged before inauguration and all new cabinet posts had been filled and confirmed. Only then would we be able to discuss the possibility of a Saleh visit to D.C.

¶3. (S) True to form, Saleh launched into a list of what he believes the U.S. owes him. “Where is the money for the Army, and what about my spare (F-5) parts?” Saleh demanded. Ambassador promise to follow up on this matter. (Note: OMC reports difficulties in getting MOD to follow through with the necessary paperwork on parts and equipment in order to spend the 17 million USD in Yemen’s FMF account. End Note.)

Controlling SA/LW

¶4. (S) Pointing out that any meetings with senior U.S. officials would quickly turn to the subject of Yemen’s huge grey market in SA/LW, Ambassador told Saleh that Yemen needs to gain control over the huge flow of these weapons in and through the country. Washington is very concerned about this issue and ready to help the ROYG tackle it, added Ambassador. “I will do it!” Saleh exclaimed, insisting that he was
already “cracking down” on the SA/LWs market. The President pointed to the MANPADS buyback program, saying that he had made the hard and “right” decision, over MOD objections, to include in the buyback program all ROYG-recovered MANPADS, including those systems the MOD wanted to retain for its own arsenal.

Ramadan Releases: “We are Waiting for You”

¶5. (S) Saleh raised the 28 security detainees, meant to be released in the Ramadan amnesty, who the ROYG has agreed to continue to hold based on USG objections. Saleh told Ambassador that the 28 were arrested under suspicion of AQ membership, having returned to Yemen from Saudi Arabia or Afghanistan, but that after investigation there was no evidence they were involved in terrorist acts. “We are waiting for information from you,” said Saleh. Ambassador replied that we had already provided all the information currently available. The problem, said Ambassador, is continued ROYG refusal to exchange information. Ambassador reiterated that we have asked repeatedly for the evidence
that led the ROYG to conclude these 28 should be released. Surely there must be case files, transcripts of interviews, investigation notes, pressed Ambassador, yet the ROYG maintains it has no information on these suspects.

Hadi Dulqum: “The Saudis are Crazy for him”

¶6. (S) Saleh stuck to his line that Hadi Dulqum is just a “simple arms dealer.” The Saudis want Dulqum, said the President, “they are crazy for him. What do you expect?” he asked, “if we arrest every arms dealer in the country, we will have hundreds of them in prison.” The USG agrees with the Saudis, said Ambassador, adding that Dulqum’s connections with AQ are too extensive for him to be simply another Yemeni arms dealer. Saleh offered to conduct joint interrogations
of Dulqum with the USG and said he would instruct the PSO to share its files on Dulqum. (Note: This is the third time Saleh has made such a promise. The PSO continues to insist it has no information on Dulqum. End Note.)

¶7. (S) Comment: Saleh gave no indication that the 28 would be released soon, but he is clearly under considerable pressure
to do so. His acute awareness of the Saudi position on Dulqum, (which previously senior ROYG officials have dismissed as not credible) indicates the Saudis have approached him, directly or indirectly, on the matter.

¶8. (C) Comment Continued. Saleh wants to visit Washington and meet with President Bush and senior USG officials annually. To the extent we can offer bilateral meetings with senior officials here in Sanaa, elsewhere in the region, or even D.C., we should consider it, but an official visit to Washington so soon after Sea Island should wait until we have resolved to our satisfaction the prisoner release issue, and have renewed Yemeni commitment on counter-terrorism. End Comment.

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Good News Fro Yemen’s Investment Climate

Posted on 07 February 2011 by hashimilion

C O N F I D E N T I A L SANAA 001589


E.O. 12958: DECL: 06/11/2015

REF: A. SANAA 1338
¶B. SANAA 106

Classified By: DCM Nabeel Khoury for reasons 1.5 b and d.

¶1. (C) Summary and Comment. On June 8 the ROYG announced
Dubai Ports International (DPI) the winner of a 35-year concession to operate and develop the Aden Port and Aden Container Terminal (ACT). DPI is the world’s fifth largest port operator, managing 18 international ports and terminals worldwide. The ROYG’s choice quelled the fears of international organizations and observers that corruption and mismanagement by the High Tender Committee would result in a port operator without the ability and experience to do the
job. Although the tender process itself lacked transparency and failed to meet international standards, the fact that DPI won the contract may indicate that, at the highest levels, the ROYG is beginning to see the danger of allowing parochial interests to tank Yemen’s economicprospects. End Summary and Comment.

¶2. (U) The Aden Port and Container Terminal contract deal is worth 500 to 600 million USD, with at least a one billion USD investment by the management company. The proposals offered the following financial terms: an upfront 100 million USD payment to ROYG; and, a shared revenue stream accrued to both the winning company and the ROYG over the next 20 to 30 years. DPI will likely invest at least one billion USD in port infrastructure improvements over the coming years to
revitalize Aden Port.

A less Than Perfect Process

¶3. (C) John Speakman, World Bank economist and advisor to the
ROYG on this tender, reported that the ROYG ignored his advice on how to conduct a transparent tender process. The committee shared the financial terms of all the original bids with the bidders during the second round, encouraging each to resubmit their bids in light of their competitors proposals. In the final round, the choice was between DPI and Kuwait Gulf League (KGL). The parameters for assessing each tender were disclosed but their weights were not, leading some local
observers to charge that the committee purposefully obscured the decision-making matrix so that it could potentially award the contract to whichever firm offered the biggest payoffs.

¶4. (C) Both deals offered approximately the same financial terms. KGL quoted higher projected revenue to the ROYG and smaller guaranteed revenue, while DPI offered higher guaranteed revenue with lower projected revenue. While the tender process was flawed throughout, falling far short of international transparency standards, Spearman rated it as “slightly improved over previous years.”

¶5. (C) In the many months leading up to the decision, international organizations and interested observers feared corruption would ultimately determine the final outcome. The choice of an inexperienced firm would spell a major lost opportunity to improve Yemen’s failing economy, attract foreign investment, and help wean Yemen from oil dependency.

Saleh: I Picked DPI Myself

¶6. (C) Ambassador praised the ROYG’s decision to President Saleh on June 9, calling it a strong symbol that Yemen is serious about opening its economy to foreign investment. DPI, said Ambassador, is an excellent and experienced company with an international reputation. It is the right choice to develop the huge potential of Aden Port and the Aden Free Zone. Saleh responded that he personally had made the
decision to pick DPI.

¶7. (C) Comment: Three days prior to the announcement ceremony, Kuwait sent a royal delegation to petition President Saleh directly on behalf of KGL. Saleh reportedly told the Kuwait officials, “My hands are off this project. I,m going to let the tender committee decide on technical merits.” By his own admission, Saleh did not keep his hands
off, however, his direct intervention was, in fact, to ensure the ROYG’s choice was based on merit. A hopeful sign that Saleh is beginning to understand that the choice of Aden’s port operator should not be influenced by corruption. That the tender committee did not adopt transparency or international standards as advised by the WB, however, is yet another indicator that Yemen’s institutions remain weak and implementing important political and economic reforms is
still ultimately decided according to the President’s whims.
End Comment.

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Washington Visit: Saleh Needs To Be Part Of The Solution

Posted on 06 February 2011 by hashimilion

S E C R E T SECTION 01 OF 02 SANAA 001790


E.O. 12958: DECL: 06/22/2015


Classified By: CDA Nabeel Khoury for reasons 1.5 b and d.

¶1. (S) Summary: Significant progress has been made in our
relationship with Yemen in the past four years. The ROYG has arrested and tried perpetrators of the USS Cole and VM Limburg attacks, shared GWOT-related information, collaborated in the capture of AQ suspects and helped uncover plots against U.S. and other western interests in Yemen. On the economic and political reform front, Yemen has conducted reasonably free and fair Parliamentary and local council elections, taken an active role in regional and international
democratic reform efforts, including BMENA and the Community of Democracies; backed IMF/WB sponsored economic reforms, and
committed to seeking MCC membership. Despite this progress, dealing with the ROYG can be frustrating and difficult. This is all the more true with regard to the crucial issues of fighting corruption and stopping the dangerous trade small arms and light weapons (SA/LW). Solidifying our relationship with Yemen requires progress on both fronts through firm demands and tangible inducements.

SA/LW: Live Up To Your Commitments

¶2. (S/NF) On March 12 President Saleh committed to discontinue issuing end-user certificates (EUCs) to Yemeni arms dealers and declared all old EUCs back to 1990 null and void. Interior Minister Alimi and Military Chief of Staff Qassemi confirmed receipt of written orders from the Presidency canceling old EUCs and directing MOD and MOI that all arms purchases henceforth were to be through ROYG
procurement officials only. We have some indications that Saleh is moving to reign in top Yemeni arms brokers. Other reports, however, reveal attempts by Yemeni dealers to conduct business as usual with supplier nations. We got Saleh’s attention when we stopped a Serbian arms shipment procured by a notorious arms dealer via an MOD issued EUC. We need to continue in this vein. (ref A).

¶3. (S/NF) Saleh has indicated to top advisors in the past that he believes he can pull the wool over the eyes of the USG. In the time leading up to his November trip, we must convince him that this is not the case by making clear that we are monitoring Yemeni SA/LW orders and shipments closely, and that a breach of the President’s promise will affect the tone of the visit and, ultimately, the nature of bilateral relations. Specific steps we can take on SA/LW in the months
leading up to the visit include: Stopping any illicit sales and shipments; continuing pressure on supplier nations not to sell SA/LW to Yemen; linking future USG military assistance to inventory controls and end-user monitoring; calling on Saleh to enforce UN restrictions on weapons trade to Somalia and Sudan; and, conducting joint Maritime Interdiction Operations (MIOs) with the Yemen Coast Guard (YCG).

——————————————— ——-
Deliverables: Expanding Yemen Coast Guard and CSF-CTU
——————————————— ——-

¶4. (S) In return for Saleh’s compliance, we should promise expanded military aid and cooperation. Our most successful CT programs to date, the training and equipping of the Yemen Coast Guard (YCG) and the Central Security Forces Counter Terrorism Unit (CSF-CTU), have been conducted in cooperation with the MOI. Among our deliverables should be continued and enhanced USG assistance to YCG and CSF-CTU via a long-term, sustainable training program funded though FMF. NAVCENT and CJTF HOA are prepared to conduct joint exercises and/or smuggling interdiction operations with the YCG. A joint ops center to monitor movements in the Arabia Sea and the Bab
al-Mandab should be part of that process.

¶5. (S) We have made clear to MOI USG intentions to link further equipment assistance for CSF-CTU with an inventory system designed to prevent the leakage of SA/LW to the gray market. A modern inventory system for all MOD stocks should be both a condition for and a promise of further cooperation and assistance.

——————————————— —-
Enhanced GWOT Intelligence Sharing and Cooperation
——————————————— —-

¶6. (S) President Saleh has logged some major CT gains and significantly improved security in Yemen since the post-9/11 forging of the U.S-Yemen GWOT partnership. Recent successes include: the round-up of an emerging al-Qa’ida cell with plans to target the U.S. Ambassador, prosecution and conviction of the USS Cole and M/V Limburg terrorists, and participating in the largest MANPADs destruction program in the region. However, there continue to be frequent and troubling lapses in the ROYG’s CT performance, including the release of extremists and failure to share information.

¶7. (S) Former regime elements tied to the insurgency in Iraq have operational freedom in Yemen. The ROYG must honor legal Iraqi arrest warrants and deny sanctuary to all Iraqi fugitives. For Yemen to be a reliable GWOT partner, it must: provide USG access to detained known or suspected terrorists; participating in the deportation of fugitives; and, enforcing anti-terrorist facilitation to close off the Jihadist
pipeline. The U.S. has programs active in Yemen that can assist the ROYG to improve its abilities to monitor its borders and track known or suspected terrorists. In addition to enhancements to the EXBS and PISCES programs, we are looking at providing fingerprinting and national identity card equipment and training to the MOI, and anti-terrorist financing training to the Yemen Central Bank.

Yemen: Leader in Regional Reform?

¶8. (C) The Yemen’s economy is flailing and serious reforms are needed to attract foreign investment. With dwindling oil reserves, a rapidly depleting water supply, and 3.5 percent anual population growth, Yemen is well behind the curve on crucial economic reforms. The USG is ready to help with MCC, MEPI and USAID assistance but Saleh has to show the political will necessary to move forward. Saleh has asked repeatedly for U.S. aid to compensate his losses in Saada. An anticipated /hoped for increase in ESP can be director to reconstruction efforts in the north.

——————————————— —
Government By the Government, For the Government
——————————————— —

¶9. (C) Rampant official corruption impedes foreign investment, economic growth, and comprehensive development. Corruption and greed are also closely related to Yemen,s dangerous SA/LW proliferation. MCC provides the opportunity to commit the ROYG to a serious plan to combat endemic corruption. Saleh’s feet must be held to the fire on what has thus far been mere lip service. MCC membership serves as both a carrot and stick in this regard.

Democratic Elections

¶10. (C) Saleh touts Yemen as a leader in regional reform and has committed to democratization. Domestically, however, he has run-out of reforms he can implement at no political cost to himself. Increasingly anxious about upcoming Presidential elections, and already preoccupied with succession, it is unlikely Saleh will allow a viable opposition candidate to challenge him in 2006. The visit is an opportunity to pressure Saleh not to amend the constitution so he may run again in 2013 by praising him for bringingt Yemen to the point where he can rely on the system in place to produce a legitimate successor. The inducement here might be a public show of support via a greater role in public fora such as the G-8.

¶11. (C) Comment: Progress on SA/LW, information and intelligence sharing, fighting corruption, and democratic reform is essential, even crucial, for U.S. and Yemeni interests. Saleh must be reassured of the tangible benefits from his partnership with the U.S., but must not be allowed to leave Washington thinking that he can maintain U.S. friendship with a business as usual approach to the above issues. End Comment.

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Sana’a EAC Recommends Reopening Of Embassy

Posted on 06 February 2011 by hashimilion

S E C R E T SANAA 000005



E.O. 12958: DECL: 01/01/2020

REF: A. SANAA 00002
¶B. 3/CD/2-10
¶C. TDX-315/000043-10

Classified By: Ambassador Stephen Seche, reasons 1.4 (c, d and g)

¶1. (S/NF) On January 4, 2010 the Ambassador convened Post’s Emergency Action Committee (EAC). Attendees included DCM, MO,

¶2. (S/NF) GRPO Chief briefed the EAC on the background of the threat that prompted suspension of Embassy operations January 3, and measures taken earlier in the day by ROYG security forces to mitigate that threat. He noted that the Counter Terrorism Unit (CTU) had interdicted a vehicle shortly after it had departed from the compound of Mohamed Hanak, the AQ “emir” of Arhab, and the individual believed to be facilitating the movement of suicide bombers into Sana’a from that location north of the capital. The four passengers in the vehicle attempted to flee on foot, and in an exchange of gunfire that followed, CTU soldiers managed to wound several of them. Neither the nature of their injuries nor their identities are known at this time because individuals associated with local tribes arrived immediately on the scene and carried the bodies away.

¶3. (S/NF) The Ambassador, GRPO Chief and RSO all agreed that the operation, while imperfect, would likely disrupt substantially the specific threat posed by the AQ cell in Arhab that had prompted the suspension of operations and permit the Embassy to reopen under the same conditions and threat level that generally prevail in Yemen.

¶4. (SBU) The Ambassador recommended, and the EAC agreed, that town-hall meetings be held on January 5 for both LE Staff and USDH staff to brief them appropriately on events of recent days. Post will submit a draft press statement for Departmental approval, and the Ambassador is contacting relevant Department officials to obtain formal concurrence with this plan.

¶5. (U) POC for this reporting is RSO John C. Taylor at 967-1-755-2218 (Open) or 967-1-130-3178 (STE).


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Scenesetter For Special Representative Ambassador Holbrooke’s February 15-16 Visit To Riyadh

Posted on 06 February 2011 by hashimilion




E.O. 12958: DECL: 02/10/2020

Ref: KABUL 500

RIYADH 00000182 001.2 of 003

Classified By: Ambassador James B. Smith for reasons 1.4 (B) and (D)

¶1. (C) Ambassador Holbrooke, Embassy Riyadh warmly welcomes
you to Saudi Arabia, which, by virtue of its historical and
cultural ties to Central Asia; personal relationships between
Saudi, Afghani and Pakistani leaders; financial power; and
leadership of the Muslim world, can play a central role in
implementing the President’s strategy for Afghanistan and
Pakistan. Your visit comes at a time of great potential but
great uncertainty: the Saudi-Afghan relationship appears to
be warming up, while the traditionally close Saudi-Pakistani
relationship has grown increasingly strained. The Saudis are
broadly supportive of our approach to Afghanistan and
Pakistan, but occasionally express skepticism about our
timing or our approach. Your visit provides an opportunity
to mine the Saudis’ wealth of experience in dealing with
Afghanistan, Pakistan, and extremism, and further explore
ways to translate our shared goals into action in the unique
Saudi context. We have requested meetings with xxxxxxxxxxxx.

February 2-3 visit to the Kingdom, although richer in
symbolism than substance, was a sign that lukewarm
Saudi-Afghan relations may finally be warming up. In his
official statement at the London Conference, FM Saud
announced a $150 million pledge of additional financial
support for Afghan reconstruction. He expressed broad Saudi
support for reconciliation, adding that they would be willing
to assist at the request of President Karzai- on the
condition that the Taliban sever its relationship with
Al-Qaeda and cease providing refuge to its leaders. While
not as forward leaning as we may have liked, FM Saud’s
statement put the Saudis on the record and created an
opportunity to put reconciliation talks back in
motion-eventually. Saudi participation at the Turkish-led
regional conference on Afghanistan on January 26 was further
evidence of the Saudi commitment to engagement. Karzai’s
visit showed that the King was ready to deal with Karzai as a
legitimate, Muslim head of state. However, the Saudis
continue to have concerns about Afghan corruption and believe
greater political incorporation of the Pashtun community is
essential. Their apparent wish to downplay Karzai’s
visit-as compared to the Afghans (reftel)-may also indicate
the King’s desire to keep some distance and maintain his
credibility as a potential reconciliation mediator.

¶3. (s/nf) but mediation not ready for prime time:
Privately, the Saudis tell us it’s still “too soon” to be
publicly discussing technical and financial aspects of
reintegration efforts. xxxxxxxxxxxx has made
clear that his marching orders are to work through
intelligence channels only until progress becomes
sustainable, at which point foreign ministries will be
brought in. In a recent meeting with the Ambassador, xxxxxxxxxxxx
hinted at but did not provide details about what
appears to be significant movement on the Saudi mediation
effort, with visits by high-level Taliban and Afghan
officials, since the Hajj. We surmise that xxxxxxxxxxxx is
reluctant to share information because the talks remain
delicate and he fears U.S. involvement could derail progress.
He has also voiced concern about how to address UNSCR 1267
prohibitions on dealing with various Taliban members.

generally agree that there is a need to deny terrorists
safehavens in Pakistan, but question whether the methods we
have outlined will be effective. Despite tense relations
with the Zardari government, close military and intelligence
cooperation continues between Saudi Arabia and Pakistan. The
Saudis believe opposition leader Nawaz Sharif can play a
“great role” in working with tribal chiefs and that “money is
better than bullets” in the fight against the Taliban. They
have started to fulfill their pledge from the Tokyo donor,s
conference (over half of the $700 million pledged has been
disbursed) and have expressed a willingness to continue with
financial support for a stable Pakistan. Saudi interlocutors
stress the importance of remembering that Pakistan remains

Riyadh 00000182 002.2 of 003

pre-occupied with issues on its Indian border, coloring its
ability to deal with the Taliban.

¶5. (C) IN THE ARMY WE TRUST: The tumultuous democratic
process in Pakistan makes the Saudis nervous, and they appear
to be looking for “another Musharraf”: a strong, forceful
leader they know they can trust. In his January meeting with
General Jones, the King cited President Zardari as an
impediment to denying terrorist safehavens, calling him an
“obstacle” and “a rotten head” that was infecting the whole
body. He maintained that the Pakistani Army was capable of
being a strong partner for the U.S., and opined that U.S.
development assistance would rebuild trust. He asserted that
that the Army was staying out of Pakistani politics in
deference to U.S. wishes, rather than doing what it “should.”
FM Saud told General Jones that we must reach out to tribal
leaders and separate “those we could work with” from “those
we must fight.” He believed that using the military to fight
extremists posed certain dangers, and that the credibility of
the army must be maintained. The Saudis were pushing
Pakistan’s civilian leaders to work together, but “compromise
seemed alien to Pakistani politicians.”

¶6. (C) TURKI’S TAKE: During a recent meeting with
Ambassador, former GIP Director Prince Turki Al-Faisal called
Afghanistan a “puzzle,” where establishing trust with Afghan
leaders, and recognizing the links between Pakistan and the
Taliban, were keys to success. All financial aid to the
Afghan government should be conditional: benchmarks must be
set for the leadership, and aid must be withheld until these
are met. Recent Saudi efforts to assist in Taliban mediation
had failed, he said, when “both sides fell short.” He
described the Taliban leadership as “fractured,” and
suggested the U.S. and NATO needed to target criminal
elements more vociferously and re-focus our attention on
capturing Osama Bin Laden and Ayman Al-Zawahiri. He
suggested Saudi Arabia, the U.S., China, Russia, Afghanistan
and Pakistan could join forces and share assets in order to
capture or kill bin Laden and Al-Zawahiri. This would break
the terrorists’ “aura of invincibility” and allow the U.S. to
“declare victory” and move on.

¶7. (S/NF) TERRORISM FINANCE: Terrorist funding emanating
from Saudi Arabia remains a serious concern. Over the last
year, however, Saudi Arabia has made important progress in
combating al-Qaida financing emanating from the country.
Sensitive reporting indicates that al-Qaida’s ability to
raise funds has deteriorated substantially, and that it is
now in its weakest state since 9/11. The Kingdom is also
cooperating more actively than at any previous point to
respond to terrorist financing concerns raised by the United
States, and to investigate and detain financial facilitators
of concern. Nonetheless, sustained engagement is required to
maintain the current momentum, particularly in providing the
Saudis with specific details and actionable information.
Your visit provides another opportunity to welcome the
progress Saudi Arabia has made, and reiterate the importance
that President Obama and the USG place on curtailing
fundraising activity by global terrorist groups in Saudi
Arabia, particularly those that undermine the stability of
Afghanistan and Pakistan.

¶8. (S/NF) TERRORISM FINANCE, CONTINUED: While in the past
the KSA stood reluctant to pursue Saudi donors who backed
groups that did not directly threaten the Kingdom, the Saudi
Ministry of Interior (MOI) has now demonstrated willingness
to take action, and has begun to detain individuals involved
in funding networks for groups such as Lashkar e-Tayyiba
(LeT), the Taliban, and in some cases even Hamas. Our TF
cooperation with the MOI is of utmost strategic importance to
U.S. national security as donors in Saudi Arabia continue to
constitute a source of funding to Sunni extremist groups
worldwide. Available intelligence reflects that the Kingdom
remains an important fundraising locale-especially during the
Hajj and Ramadan-for the Taliban, LeT, and other terrorist
groups based in Afghanistan and Pakistan. The MOI remains
almost completely dependent on the CIA to provide analytic
support and direction for its counterterrorism operations. As
such, our success against terrorist financing in the Kingdom
remains directly tied to our ability to provide actionable
intelligence to our Saudi counterparts. In order to enhance
the USG’s ability to influence and direct Saudi efforts to

Riyadh 00000182 003.2 of 003

disrupt terrorist financing, in 2008 we stood up a Treasury
attach office in Embassy Riyadh. This office actively
contributes to the daily intelligence sharing process that
is led by CIA.

taken increasingly aggressive efforts to disrupt al-Qaida’s
access to funding from Saudi sources. An example of recent
progress by the KSA is the conviction of over 300 people for
involvement in terrorism, including some for providing
financial support. News reports suggest that appeals may be
opened to the media in order to enhance the deterrent effects
of such prosecutions. In addition, Assistant Interior
xxxxxxxxxxxx stated that
the Ministry of the Interior (MOI) deliberately timed its
August 19, 2009 press release regarding the arrest of 44
terrorist supporters to deter potential donors from giving
money to suspected terrorist groups during Ramadan. Although
a great deal of work remains to be done,xxxxxxxxxxxx
has given his commitment to work with the United States on
Taliban finance, and has said that the MOI will arrest
individuals involved in Saudi-based Taliban fundraising
activities - even if involved in the reconciliation process -
when provided with actionable intelligence.

expressed broad support for the President’s strategy on
Afghanistan and Pakistan, but often balk when asked to
designate an SRAP to coordinate policy with the USG and
others. In part, this reflects the centralized Saudi
decision-making process and the reality that issues related
to Afghanistan and Pakistan policy are not delegated, but
rather dealt with directly by the King and members of the
intelligence community. While the Saudis are hesitant to
delegate authority and tend to make only broad-based
commitments to high-profile, multilateral initiatives, they
appear ready, willing and eager to share their experiences
with us and identify greater opportunities for cooperation on
a bilateral basis. Your visit provides an opportunity to
further explore how we can best translate our shared goals
into action in the unique Saudi context.

Reference ID: 10RIYADH182
Created: 2010-02-12 12:12

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In Aden, Newspaper Headquarters Still Blackened

Posted on 05 February 2011 by hashimilion

C O N F I D E N T I A L SANAA 000222



E.O. 12958: DECL: 02/01/2020


Classified By: Ambassador Stephen Seche for reasons 1.4(b) and (d).

¶1. (C) SUMMARY. On January 31, EmbOffs visited Aden-based independent newspaper al-Ayyam to assess what happened on January 4, when an exchange of gunfire killed a government
soldier and an al-Ayyam guard, and led to the arrest of al-Ayyam Editor-in-Chief Hisham Bashraheel (reftel). This incident marked the nadir of months of government harassment of al-Ayyam, a polarizing symbol of regional identity in Yemen’s south. XXXXXXXXXXXXXX expressed concern that Hisham would be killed in custody. Although questions remain about the Bashraheels’ account, the damage to the al-Ayyam
compound, including impact from four RPGs, suggests a disproportionate response by the ROYG risking potential loss
of civilian life and ignoring journalists’ safety and freedom. END SUMMARY.

¶2. (C) On January 31, EmbOffs visited the al-Ayyam compound in the crowded Crater neighborhood of Aden. The compound, which includes the headquarters of independent newspaper al-Ayyam and the home of the Bashraheel family who own and manage al-Ayyam, was the scene of an exchange of gunfire on January 4 that resulted in the death of a government soldier and an al-Ayyam guard and the arrest of al-Ayyam
Editor-in-Chief Hisham Bashraheel and his relatives Hani and Mohammed (reftel).


¶3. (C) The al-Ayyam compound showed damage from heavy gunfire. The front gate, front rooms, and rear walls were riddled with bullet holes which appeared to be from 7.62mm rounds. The compound also sustained at least four RPG hits. The secondary detonation of the RPG shells after their entry in the house started a fire, and several rooms were still blackened from smoke. Six children and fourteen women were in the Bashraheel home during the attack, but none were injured.


¶4. (C) XXXXXXXXXXXXX (strictly protect), XXXXXXXXXXXX
said that although his guards were armed with .45 pistols and
AK47s, they never fired a shot in response to the bombardment
of the compound. He said that the casualties on the government side were the result of friendly fire between CSF and Crater police forces. XXXXXXXXXXXXX said that there were 20 firearms inside the compound, and showed EmbOff the licenses for them. (Note: Reports from official and some independent media sources at the time contradicted XXXXXXXXXXXX account and suggested that al-Ayyam guards engaged in a firefight with CSF, and that a large cache of illegal weapons, including sniper rifles, were confiscated from the compound (reftel). End Note.) A government mediation committee was moving in
and out of the compound during those twelve hours to negotiate the terms of Hisham’s arrest. Hisham had initially refused to walk out of the compound unless the Governor and Police Commissioner of Aden accompanied him out to guarantee his safety.

¶5. (C) Hisham, Hani, and Mohammed Bashraheel are all still in custody. XXXXXXXXXXXXX told PolOffs, “XXXXXXXXXXXXX are being tortured to confess. (The government is) cooking something.
I believe that one of the members of my family is going to be
killed in prison.”


¶6. (C) “(President Saleh) has a personal vendetta against (Hisham),” XXXXXXXXXXXXX said. “They evacuated the neighborhood two
days in advance. It was carefully planned.” Attempting to explain the twelve-hour standoff between the initial outbreak of gunfire and government security forces entering the compound to arrest Hisham, XXXXXXXXXXXXXX said that President Saleh choreographed the operation from Sana’a by telephone and couldn’t decide how he wanted it to end.


¶7. (C) Al-Ayyam has become a key refrain in the chants of southern dissidents and a symbol of the Sana’a government’s mistreatment of the south and its institutions. Representatives of the Adeni NGO community expressed to PolOff on January 30 their outrage at the shelling of al-Ayyam. Aden Deputy Chief of the Yemeni Socialist Party
(YSP) Qassim Dawood told PolOffs on January 30 that the Adeni
opposition was disappointed at the silence of the international community on al-Ayyam. Opposition Islah Party MP Insaf Mayo told PolOffs on January 30, “If the government used the kind of firepower against the house of (rebel leader) Abdulmalik al-Houthi that it used against al-Ayyam, the (Houthi rebel group) would be finished.”

¶8. (C) ROYG officials have responded by painting al-Ayyam’s front page as the banner of the separatist Southern Movement. “For the last several years, al-Ayyam has given up journalism and moved into politics,” Aden Deputy Governor Abdulkareem Shaif told PolOffs on January 30. “They would print five pictures from secessionist rallies on page one. Who prints five pictures on page one?” XXXXXXXXXXXXXXX, told PolOff on January 29 that the Bashraheels were involved in funneling money from overseas to Southern Movement leaders, a widely circulated (though unsubstantiated) claim among ROYG officials and government-affiliated journalists.


¶9. (C) Some aspects of the Bashraheels’ account are questionable, but it is clear that government security forces fired RPGs at a house with civilian occupants, located in a crowded urban area. The government’s assault on the compound evinces a disregard for potential loss of civilian life, southern political unrest, and journalists’ safety and freedom. END COMMENT.

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Oman’s Sultan Qaboos And A/S Feltman Discuss Yemen

Posted on 05 February 2011 by hashimilion

S E C R E T MUSCAT 000103


E.O. 12958: DECL: 2020/02/23

CLASSIFIED BY: Richard J. Schmierer, Ambassador, State, EXEC; REASON: 1.4(B), (D)

¶1. (S) SUMMARY: In a February 17 meeting with NEA Assistant Secretary Feltman, Sultan Qaboos

— Supported President Saleh and a united Yemen;

— Concurred wholeheartedly with the U.S. analysis and approach to
Yemen, especially on the need to maintain pressure on President

— Agreed the fight against al-Qaida should be the highest priority in Yemen and the region;

— Explained that he had placed Omani security forces on alert to counter al-Qaida;

— Saw Yemen’s 2013 presidential elections as a potential watershed; between now and then Saleh would need to prove himself
“worthy” to his fellow Yemenis.


¶2. (C) NEA Assistant Secretary Jeffrey Feltman called on Oman’s
Sultan Qaboos bin Said Al Said February 17. In a meeting lasting
almost two-hours, the two focused discussions on Iran and Yemen.
This cable reports the Yemen discussion; Iran is reported septel. Also present on the Omani side was MFA Secretary General (D-equivalent) and fellow royal Sayyid Badr bin Hamad bin Humud Al Busaidi. Ambassador Richard Schmierer and DCM (notetaker) filled out the U.S. side.

¶3. (S) SHRINKING CIRCLE. A/S Feltman reviewed the U.S. assessment of the situation in Yemen and President Ali Abdallah Saleh. Saleh appears to be muddling through a challenging situation, but there is concern that he is relying on a shrinking leadership circle
consisting of family, the military, and some tribal elements. At the same time, Saleh appears focused on non-existential distractions such as the Houthis when the focus should be on the potentially existential threat Al-Qaida in the Arabian Peninsula (AQAP) poses. The question that arises is whether Saleh see these “distractions” as useful to him in managing the situation. The United States sees no real alternative to supporting Saleh. The U.S. is nevertheless determined to send a very clear message on its future expectations while assistance will be conditionally based. The Sultan cautioned that Saleh might use competition among donors to degrade conditionality.

¶4. (S) BALANCING ACT. The Sultan agreed on the need to support
Saleh. Yemen was at a “crucial” point in time. The Yemeni president continues to conduct a “balancing act.” Recent information the Sultan has received corroborates the U.S. analysis that Saleh is increasingly inward looking, relying on a small circle of trust and not sharing the responsibilities of governing as he had done before. Further, Saleh is losing support of the Hashed tribe that led him to power. The Houthi struggle was a domestic issue. The Sultan believed it would be coming to an end soon because Saudi Arabia, on which Saleh is dependent, realized it needed to stop.

¶5. (S) FOCUSING ON PRESIDENTIAL ELECTION. The Sultan reviewed some history of Yemen. He had been personally involved in efforts to avert the 1994 civil war. The south entered the union because it calculated it would dominate the government, a calculation that proved wrong. The situation has been exacerbated because the north has neglected the south, especially after the north’s victory in
the war. Consequently, in the south today there are two schools
developing. One is seeking greater autonomy within a united Yemen, and the other seeks independence. Oman supports a united Yemen.
The 2012 [sic] presidential election will be a key to gauging the future. Developments in Yemen will be difficult to predict, but Oman will work to preclude the development of any political “vacuum.” If Saleh is to be re-elected, he must use the intervening years to convince Yemenis that he is worthy.

¶6. (S) NO MORE GAMES. For the present, the Sultan believed that
dealing with AQAP was the highest priority for all concerned. Oman’s policy is to root out AQAP. The Sultan had recently placed Oman’s security forces at maximum alert against AQAP. Al-Qaida moved to Yemen because it saw opportunities there. It could prey on territorial, tribal, and religious differences. Saleh must be kept under pressure to do more, not just against AQAP directly, but also more to deny AQAP the tools it uses to create dissension. Thus, Saleh must do more for his people in terms of good governance. His message to Saleh is that there must be “no more games.”

¶7. (U) A/S Feltman cleared this message.

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