Omanis recently took part in massive demonstrations in the northern city of Sohar and were knocking on the doors of Abu Dhabi. Both Saudi Arabia and the UAE, the last dictatorial powers in the region cannot ignore democracy. The people of the Gulf are fed up with the Gulf ruling elites and have awakened from their 40 year old slumber. It’s true that they’re not as poor as the Egyptians or Tunisians, but they are become increasingly more aware that a country’s wealth belong to the state and the state alone.

Some wikileaks documents suggest that peak oil production levels in the Gulf have already been met and that current supplies will only be sufficient for a couple more decades. These backward political regimes have lead to poor planning and corruption. The future for the youth is not so great.

Bahrain has given us a glimpse of what lies ahead in the future. Its oil reserves have diminished and its unable to change its fiscal policy or  turn itself into a modern state. For decades bahrainis have contributed towards the state but were denied any meaningful political representation by the ruling family. They were left with few options and hence took matters into their own hands. The Al Khalifa regime responded by using live ammunition and immediately unleashed their Pakistani mercenaries on the demonstrators. The regime had showed its true colours.

The regimes of both Saudi Arabia and UAE gave the Al Khalifa family unlimited moral support in crushing the protests by all means necessary. Both regimes tried to bribe their populations with financial incentives in order to stop the protests from spreading. The Saudi King Abdullah announced a 36 billion dollar spending program, which was promptly rejected by the protestors who felt insulted.

Saudi protestors chose the 11th of March as their day of rage, and openly called for overthrowing Al Saud’s regime. Had live ammunition been used on the protestors it would have catalysed protests in the Emirates. Thousands of UAE nationals are ignored by the oil rich states of Abu Dhabi and Dubai and live in modest conditions in the poor Northern Emirates. The majority are angry at the huge economic gap in wealth between the different federations  and at being excluded from participating in major policy decisions. Some are curious why large coastal lands were sold to foreign investors.

Also, a large number of stateless people live in both the Emirates and Saudi Arabia. They were born and brought up in the country of their grandfathers, yet find it perplexing that the regime’s friends nationalises Indians and westerners.

As U.S. President Barack Obama seeks to reinvigorate his administration’s policy in the Middle East, he will have to contend with several issues where U.S. influence is less than overwhelming.

Chief among them, according to Middle East analysts, is the growing assertiveness of Saudi Arabia as it confronts Iranian influence in the region and tilts away from its historic bargain with the U.S.: oil for security.

In recent months, the Saudis have essentially taken the gloves off — sending troops into Bahrain to prop up the island’s Sunni monarchy against a rebellious Shiite majority; consolidating their relationship with Pakistan as a regional counterweight to Iran; and expanding the Gulf Cooperation Council (GCC) to reinforce the club of Sunni monarchies.

Through the GCC Saudi Arabia has also moved to resolve the crisis in Yemen, its neighbor to the south, where al Qaeda is establishing a foothold and where the Saudis suspect Iranian meddling.

Their core mission, says Ian Bremmer, president of the Eurasia Group, “is to ensure stability in their neighborhood.” Bremmer believes “the single most important long-term implication of the Arab Spring may be a consolidated GCC that is tacking away from the West.”

At the same time, the Saudi kingdom’s relations with the United States have deteriorated — in part over the Obama administration’s support for pro-democracy movements in the Arab world. On two occasions in recent months, according to well-placed sources in the Gulf, King Abdullah of Saudi Arabia even refused to meet senior U.S. officials.

Earlier this week, Saudi grievances were laid out in a Washington Post op-ed by Nawaf Obaid, a consummate insider and a senior fellow at the King Faisal Center for Research and Islamic Studies. Describing a “tectonic shift” in the Saudi-U.S. relationship, he complained of an “ill-conceived response to the Arab protest movements and an unconscionable refusal to hold Israel accountable” for its settlement-building in Palestinian territories. On the latter issue, he said the U.S. “had lost all credibility.”

Obaid also echoed some of the criticisms made last year by Prince Turki al Faisal, a former ambassador to the United States who said that “negligence, ignorance and arrogance” had cost America the “moral high ground” it held after 9/11.

Saudi alienation from Washington predates the Obama administration. Riyadh saw the invasion of Iraq as a disaster because it unleashed Shiite influence in a country traditionally dominated by its Sunni minority. Several Saudi officials have described Iraqi Prime Minister Nuri al Maliki — who leads a Shia-dominated government — as an “Iranian agent.”

The Saudis also complained that the Bush administration had “dropped the ball” on the Israel-Palestinian peace process by not endorsing King Abdullah’s plan for a two-state solution, with east Jerusalem as the Palestinian capital. That, they argued, had only strengthened more radical forces in the region, such as Hamas and Hezbollah.

Above all, the Saudi establishment has long been anxious that the threat it perceives from Iran is not adequately acknowledged in Washington.

U.S. diplomatic cables obtained by WikiLeaks and published last year showed growing Saudi impatience with U.S. caution toward Iran’s nuclear program, with King Abdullah quoted as urging Gen. David Petraeus to “cut off the head of the snake” during a meeting in April 2008. A year later, the King is quoted as telling President Obama’s counterterrorism adviser, John Brennan, that he hoped the U.S. would review its Iran policy and “come to the right conclusion.”

So now, Obaid writes, “Riyadh intends to pursue a much more assertive foreign policy, at times conflicting with American interests.”

One long-time observer of Saudi policy says the kingdom is preparing to use its wealth and economic growth (forecast at nearly 6% this year, thanks to the rising price of crude oil) to lead an expanded bloc as old certainties wither away.

The Saudis plan to spend $100 billion to modernize their armed forces, buy a new generation of combat aircraft and add 60,000 Interior Ministry troops. Like other Gulf states, Saudi Arabia also plans to expand its special forces.

Beyond its borders the kingdom wants to expand the six-member Gulf Cooperation Council, until now a club of wealthy monarchies, by inviting Jordan and Morocco to join. They might not have much money, but they, too, are ruled by Sunni monarchs and have — by regional standards — cohesive and well-trained armies.

In return, Gulf largesse would help support their weak economies. Amid recriminations and confusion in the Arab League — whose planned Baghdad summit has just been postponed for a whole year — the Saudis see the GCC as the institutional antidote to the upheavals of the Arab Spring.

Saudi Arabia has already created a $20 billion fund to assist Bahrain and Oman. And the dispatch of some 1,000 troops to Bahrain in March served notice to Tehran that Saudi Arabia would not tolerate a Shiite-dominated state a few miles off its coast.

“Sending a force to Bahrain was a necessary evil for the GCC in order to protect the monarchy in Bahrain,” says Theodore Karasik of the Institute of Near East and Gulf Military Analysis. “If a monarchy falls in the region, this might create a domino effect.”

It was also a slap in the face to U.S. policy in the region, which was focused on coaxing dialogue in Bahrain. Just days before the Saudi intervention, U.S. Defense Secretary Robert Gates was in Bahrain urging King Hamad to take more than “baby steps” towards reform.

That followed alarm in Riyadh over the Obama administration’s desertion of long-time ally Hosni Mubarak, who had cultivated close ties with the Gulf states and who was regarded by the Saudis as another Arab bulwark against “Iranian expansionism.” The U.S. eventually told Mubarak it was time to go, but the Saudi royal family supported him to the end, even offering to make up for any cut in U.S. aid.

Bremmer of the Eurasia Group says the United States does hold important cards — through multi-billion-dollar arms contracts and long-established relationships in the oil industry. And regional analysts say that ultimately Saudi Arabia would likely appeal for and get U.S. help in any showdown with Iran.

Bremmer says that much in the Gulf revolves around personal relationships and loyalties, and he says the Obama administration needs to invest more in that, starting at the top. By contrast, senior executives in U.S. oil companies — by and large no fans of the president’s energy policy — do talk with the Saudis.

In the longer-term, a Saudi tilt to the East may simply reflect new economic realities. Some 55% of Saudi oil now flows to Asia, compared with about 10% that flows to the United States. The Saudi state oil firm has built refineries in China, and trade between the two countries was worth $40 billion in 2010.

As relations with the West fray, Bremmer concludes that “a far-reaching Saudi-China strategic partnership could well result alongside expanded Chinese contracts to buy long-term access to Saudi oil and Chinese investment in developing Saudi infrastructure.”

Motorcycle-riding assassins have gunned down a Saudi diplomat in the Pakistani city of Karachi, four days after a grenade attack on the Saudi consulate there.

The unusual spate of attacks raised questions about whether they were in reprisal for the death of Saudi-born Osama bin Laden or the consequence of regional Sunni-Shia tensions triggered by upheaval in Bahrain.

A senior police officer said the diplomat, named as Hassan al-Khatani and described as a security officer, was shot dead in his car on Monday morning by two men riding a motorbike who fired four shots from a 9mm pistol.

Television pictures showed a luxury sedan with gunshots through its windows. Police said a backup team of assailants rode alongside the killers, indicating a degree of professionalism in the hit.

On Thursday unidentified assailants threw two grenades at the front gate of the consulate, damaging the entrance but injuring nobody.

Attacks on diplomats from Saudi Arabia are rare in Pakistan, thanks to the country’s close relationship with the army and the widespread reverence towards the country as the home of Islam.

“We’ve always had sectarian tensions but rarely an attack on a Saudi diplomat like this,” said defence analyst Ayesha Siddiqa.

But decades-old Shia-Sunni tensions in Karachi have been reignited by turmoil across the Arabian sea in Bahrain, where Saudi Arabia deployed troops last March to help quell an uprising by mostly Shia demonstrators.

Pakistani Shias became angry when it emerged that a private security firm was urgently recruiting hundreds of former soldiers to work for the Bahrain security forces and help with the crackdown.

Newspaper advertisements sought Pakistanis with experience in “security” and “riot control”.

A senior police officer in Karachi told the Guardian the Bahrain connection was considered the most likely motive for the two most recent attacks. But they were investigating whether they may have been in reprisal for the US special force raid that killed Bin Laden on 2 May.

Riyadh stripped Bin Laden of his citizenship in 1994 and has since co-operated closely with American efforts to crack down on al-Qaida, even though private Saudi citizens have been accused of sponsoring his network.

US intelligence is currently examining a trove of computer drives snatched from Bin Laden’s hideout, reportedly containing 2.7 terabytes of data, for further information about al-Qaida’s money pipeline.

A third possibility was that the attacks were linked to local criminal groups, the officer said. In recent years, he said, “some low-level officials at the consulate had been found to be involved in minor criminal activities with local mafias”.

The difficulty of investigating the killing is underscored by the general insecurity in the sprawling port city of 16 million people, where ethnic, political and Islamist militant groups hold sway in pockets of the city that are virtually out-of-bounds to the security services.

The Iranian meddling in Bahrain was temporarily to be put to a hold. However, the prey, albeit small in acreage, is too lucrative to be let go, and Iranian clandestine intervention continues. Bahrain, a small island kingdom in the Gulf, is coveted by Iran, its neighbor across the bay, as it has a lot to covet. Strategically located near the Hormuz straits, through which 20% of the world’s oil passes, with its own production of 40,000 oil barrels a day, and with huge gas reserves, Bahrain is definitely in the sights of the Iranian regime. What makes the Iranian move to indirectly swallow Bahrain a real risk is the fact that 70% of the Bahraini population is Shiite, such as 80% of Iran’s population, and the Bahraini Shiites look up to Iran for guidance, or even instructions.

The Saudi King and other Gulf States rulers read the map correctly and sent troops to protect Bahrain. The demise of the 200-year Bahrain rule of the Sunni dynasty currently headed by King Sheikh Hamad bin Isa Al-Khalifa’s and its replacement by a Shiite puppet of Iran could be ominous to their own regimes. Saudi Arabia is particularly vulnerable because its rich oilfields border with Bahrain and the local population in this region is mostly Shiite. A successful Shiite takeover of Bahrain could whet the appetite of the Saudi Shiites and their Iranian comrades to follow suit. Therefore, with the invitation of the Bahraini king, 3,500 Saudi soldiers crossed the bridge linking Saudi Arabia with Bahrain to help preserve the Bahraini regime.

The Iranians are far from liking this development, which all of a sudden shuffled their cards. Now, it is no longer tiny Bahrain defending itself from Iranian sponsored subversion — it is Iran versus Saudi Arabia and the United Arab Emirates. The bar has risen. Saudi Arabia, with a cash chest that would make King Midas envious and with the backing of the U.S, is a formidable rival to Iran.

The Iranian response to the Saudi move was quick. Local media in the northeastern city of Mashhad reported that 700 people gathered outside the Saudi consulate and stoned it to protest the killing of Shiites in Bahrain. If the Saudi government fails to take the hint, additional protests are likely to follow in other Iranian cities, including Tehran.

Saudi Arabia has increased its pressure on the U.S to intervene and prevent the operation of the Iranian nuclear plant in Bushehr. They quoted Dmitry Rogozin the Russian ambassador to NATO who repeated a previous warning sent by Russia that “The virus attack on a Russian-built nuclear reactor in Iran could have triggered a nuclear disaster on the scale of Chernobyl.” Now the concern is increased following the disaster in the Japanese reactors in Fukoshima. Although Fereydoun Abbasi the head of the Atomic Energy Organization, acknowledged that “Even before the earthquake and nuclear contamination crisis in Japan, Iran had accepted Russian experts’ proposal to revise its plans to load fuel into the core of the Bushehr power plant’s reactor,” Saudi Arabia continues with its pressure against Iran, as part of its effort to limit Iranian clandestine involvement in Bahrain.

The rivalry between Iran and Saudi Arabia is not new. The fervent Shiite Iran and the Sunni Saudi Arabia have long been struggling over the reign of world Muslims. Thus far, with its control of the two holy cities of Mecca and Medina, Saudi Arabia has the upper hand.

The saber rattling continues. Bahrain ousted the Iranian Consul in Manama, and the Iranians retorted in kind. Iran recruited once more Hezbollah, its subcontractor for dirty jobs. During a rally in Beirut, Hezbollah leader Nasrallah criticized Bahrain’s monarchy for bringing in troops from neighboring Saudi Arabia and other Gulf States to quash Shiite protests. Nasrallah said the blood of the people will eventually force their regimes to grant them greater rights.

The Bahraini Foreign Ministry condemned Hezbollah’s criticism of its government, describing it as an intervention in Bahrain’s internal affairs. A statement released by the Bahrain foreign ministry said Nasrallah’s verbal “assault against Bahrain and its people” was aimed at serving foreign interests, a reference to Iran, Hezbollah’s boss. The foreign ministry described Nasrallah as the “representative of a terrorist organization with a known history in destabilizing security in the region.” Apparently, Iran and its allies do not like others to play in what Iran considers its own playground.

Thus far the Iranians are wary not to directly confront the Saudis, and for a reason: For Iran, Saudi Arabia is the last major local power they need to win over; however, it is not a simple task. The Saudis’ big brother is watching — the U.S. The U.S has failed to intervene in Egypt because Egypt is dependent on U.S aid and therefore, it anticipated that the Egyptian response to the U.S lack of active support would be limited to verbal condemnation, if any. However, the terms of reference between the U.S and Saudi Arabia are diametrically different. It is Saudi Arabia that supports the U.S with money, oil and military bases. Therefore, Saudi interests and voices are more likely to be listened to attentively in Washington, D.C.

Nonetheless, the Sunnis in Bahrain have a lot to worry about. The Shiites in Bahrain demand a democratic republic instead of monarchy, and that simple message is certain to find many attentive ears in the U.S and elsewhere. However, democracy in Bahrain with a 70% Shiite majority, means Sunnis out, Shiites in, the U.S and its 5th Fleet harbor out, Iran in, including a control of the oil reserves and a direct threat to Saudi Arabia, the world’s largest producer of oil in fields located next door populated by Shiites.

As absurd as it may sound, it is likely that supporters of full Western style democracy in Bahrain may at the end of the day be supporting theocratic Iran.

A dilemma, Greek for “two premises,” has been likened to the horns at the front end of an angry and charging bull. Both premises are bad options.

If there were ever a decision tantamount to sitting on the horns of the dilemma, the choices the West needs to make are fitting. What would the West choose? Support democracy for approximately 350,000 Shiites in Bahrain, or risk an increased Iranian control of the spigots of the huge oil reserves, with the resulting immediate effect on the world’s economy?

By Haggai Carmon

Malaysian premier Najib Razak says his country is willing to send peacekeepers to help “de-escalate tension” in Bahrain while backing Saudi Arabia’s role in resolving regional unrest.

Bahraini authorities in the kingdom ruled by a Sunni dynasty have attempted to curb violent protests in recent months inspired by uprisings that toppled Egypt’s and Tunisia’s presidents.

“Malaysia stands ready to contribute peacekeepers to the Kingdoam of Bahrain, if invited to do so by the Bahraini leadership,” Najib said in a statement late Friday following a meeting with Saudi Arabian monarch King Abdullah in Riyadh.

“Malaysia will consider it a great honour to offer assistance in this noble effort.”

He said Malaysia, a Sunni Muslim-majority nation, supported the national dialogue process launched by Crown Prince Salman bin Hamad Al-Khalifa in a bid to “de-escalate tension in the country.”

On March 16, security forces drove mostly Shiite protesters out of central Manama’s Pearl Square and demolished their camp after King Hamad declared a state of emergency.

The King also called in Saudi-led Gulf troops to boost his security force.

Bahrain authorities said 24 people, including four policemen, were killed in the unrest with the kingdom coming under strong criticism from international human rights organisations for its heavy-handed crackdown.

A tectonic shift has occurred in the U.S.-Saudi relationship. Despite significant pressure from the Obama administration to remain on the sidelines, Saudi leaders sent troops into Manama in March to defend Bahrain’s monarchy and quell the unrest that has shaken that country since February. For more than 60 years, Saudi Arabia has been bound by an unwritten bargain: oil for security. Riyadh has often protested but ultimately acquiesced to what it saw as misguided U.S. policies. But American missteps in the region since Sept. 11, an ill-conceived response to the Arab protest movements and an unconscionable refusal to hold Israel accountable for its illegal settlement building have brought this arrangement to an end. As the Saudis recalibrate the partnership, Riyadh intends to pursue a much more assertive foreign policy, at times conflicting with American interests.

The backdrop for this change are the rise of Iranian meddling in the region and the counterproductive policies that the United States has pursued here since Sept. 11. The most significant blunder may have been the invasion of Iraq, which resulted in enormous loss of life and provided Iran an opening to expand its sphere of influence. For years, Iran’s leadership has aimed to foment discord while furthering its geopolitical ambitions. Tehran has long funded Hamas and Hezbollah; recently, its scope of attempted interference has broadened to include the affairs of Arab states from Yemen to Morocco. This month the chief of staff of Iran’s armed forces, Gen. Hasan Firouzabadi, harshly criticized Riyadh over its intervention in Bahrain, claiming this act would spark massive domestic uprisings.

Such remarks are based more on wishful thinking than fact, but Iran’s efforts to destabilize its neighbors are tireless. As Riyadh fights a cold war with Tehran, Washington has shown itself in recent months to be an unwilling and unreliable partner against this threat. The emerging political reality is a Saudi-led Arab world facing off against the aggression of Iran and its non-state proxies.

Saudi Arabia will not allow the political unrest in the region to destabilize the Arab monarchies — the Gulf states, Jordan and Morocco. In Yemen, the Saudis are insisting on an orderly transition of power and a dignified exit for President Ali Abdullah Saleh (a courtesy that was not extended to Hosni Mubarak, despite the former Egyptian president’s many years as a strong U.S. ally). To facilitate this handover, Riyadh is leading a diplomatic effort under the auspices of the six-country Gulf Cooperation Council. In Iraq, the Saudi government will continue to pursue a hard-line stance against the Maliki government, which it regards as little more than an Iranian puppet. In Lebanon, Saudi Arabia will act to check the growth of Hezbollah and to ensure that this Iranian proxy does not dominate the country’s political life. Regarding the widespread upheaval in Syria, the Saudis will work to ensure that any potential transition to a post-Assad era is as peaceful and as free of Iranian meddling as possible.

Regarding Israel, Riyadh is adamant that a just settlement, based on King Abdullah’s proposed peace plan, be implemented. This includes a Palestinian state with its capital in East Jerusalem. The United States has lost all credibility on this issue; after casting the sole vote in the U.N. Security Council against censuring Israel for its illegal settlement building, it can no longer act as an objective mediator. This act was a watershed in U.S.-Saudi relations, guaranteeing that Saudi leaders will not push for further compromise from the Palestinians, despite American pressure.

Saudi Arabia remains strong and stable, lending muscle to its invigorated foreign policy. Spiritually, the kingdom plays a unique role for the world’s 1.2 billion Muslims — more than 1 billion of whom are Sunni — as the birthplace of Islam and home of the two holiest cities. Politically, its leaders enjoy broad domestic support, and a growing nationalism has knitted the historically tribal country more closely together. This is largely why widespread protests, much anticipated by Western media in March, never materialized. As the world’s sole energy superpower and the de facto central banker of the global energy markets, Riyadh is the economic powerhouse of the Middle East, representing 25 percent of the combined gross domestic product of the Arab world. The kingdom has amassed more than $550 billion in foreign reserves and is spending more than $150 billion to improve infrastructure, public education, social services and health care.

To counter the threats posed by Iran and transnational terrorist networks, the Saudi leadership is authorizing more than $100 billion of additional military spending to modernize ground forces, upgrade naval capabilities and more. The kingdom is doubling its number of high-quality combat aircraft and adding 60,000 security personnel to the Interior Ministry forces. Plans are underway to create a “Special Forces Command,” based on the U.S. model, to unify the kingdom’s various special forces if needed for rapid deployment abroad.

Saudi Arabia has the will and the means to meet its expanded global responsibilities. In some issues, such as counterterrorism and efforts to fight money laundering, the Saudis will continue to be a strong U.S. partner. In areas in which Saudi national security or strategic interests are at stake, the kingdom will pursue its own agenda. With Iran working tirelessly to dominate the region, the Muslim Brotherhood rising in Egypt and unrest on nearly every border, there is simply too much at stake for the kingdom to rely on a security policy written in Washington, which has backfired more often than not and spread instability. The special relationship may never be the same, but from this transformation a more stable and secure Middle East can be born.

C O N F I D E N T I A L RIYADH 000935

SIPDIS

STATE FOR NEA/ARP (HARRIS)
DEPT PASS USTR FOR JASON BUNTIN

E.O. 12958: DECL: 07/12/2010
TAGS: ETRD ECIN PREL GCC SA AS NZ JA
SUBJECT: GCC TRADE NEGOTIATIONS DOWN UNDER: STICKING POINTS
AND FRUSTRATION WITH THE GCC

Classified By: DCM David Rundell reasons 1.4 (b) and (d).

SUMMARY
——-

¶1. (C) At a diplomatic roundtable on free trade agreement
(FTA) negotiations with the Gulf Cooperation Council (GCC),
the Australian and New Zealand DCMs expressed fatigue and
frustration with their respective experiences. The New
Zealand DCM said his government is prepared to pull out after
the next round if the two sides cannot make significant
progress. Both said their governments are frustrated with
the GCC as a negotiating partner, and both agreed the GCC
consultations between negotiating sessions has proved to be a
major barrier to progress. End summary.

STICKING POINTS AND FRUSTRATION WITH THE GCC
——————————————-

¶2. (C) According to Australian DCM Roy Clogstoun, his
country’s trade agreement negotiations with the GCC are hung
up on the issue of the GCC’s current five percent tariff on
automobile imports (which Australia would like to eliminate)
and unresolved issues with the services and investment
sections of the agreement. While the current tariff is
relatively low, Australians fear another country (i.e. Japan)
could gain an advantage by negotiating a lower tariff
subsequently. New Zealand’s negotiations are stuck on the
issue of dairy products, though New Zealand DCM Peter Noble
also noted the services and investment portions of their
agreement were sub-optimal (Note: Reportedly, dairy and
sheep products account for 80 percent of New Zealand’s
exports to the GCC.). He described the dispute mechanism and
arbitration sections of the agreement as “acceptable,” but he
said his country was preparing to abandon the process after
the next round in October if negotiators did not make
substantial progress towards reaching an agreement by then.

¶3. (C) Both DCMs expressed frustration with the GCC, going so
far as to question the GCC’s motivation for negotiating the
agreements. Noble implied the Saudis may be using the
negotiations as a training exercise for future agreements
with larger trading partners, noting the Chinese had openly
done so with his country in bilateral trade negotiations.
Both emphasized repeatedly that the GCC’s lack of interim
consultations between member states seriously hampered
progress that otherwise might be easy to achieve. “They
don’t talk to each other between rounds of meetings,” one
said, “they just return to their capitals until the next
round.” The two DCMs asserted that Saudi Arabia controls the
GCC in negotiations and has used smaller GCC members as pawns
in the process — convincing other individual members to
pretend to be the lone holdout opposing a proposal, when in
fact all six member governments actually were in opposition.
Our contacts have said the members tend to act in concert to
distract attention from controversial issues like the human
rights records of individual GCC countries.

¶4. (C) Japanese DCM Fumio Iwai told Econoff in a separate
meeting that the GCC postponed the July round of its free
trade negotiations with Japan. “We are in the same boat as
the Australians,” he said, in that the sticking point in
their negotiations is the five percent auto tariff. Iwai
said the Saudis had the strongest opposition to lowering the
tariff, and he noted that the issue had been raised at the
highest bilateral levels.

COMMENT
——-

¶5. (C) Given GCC officials previously have told us they also
are in FTA negotiations with China, Japan, and Turkey, it
seems likely the New Zealand DCM’s fears that the GCC is
using its separate negotiations with Australia and New
Zealand as a training round may be well-founded.
Nevertheless, that does not mean the GCC wants them to fail.
The failure of EU - GCC negotiations in late 2008
demonstrated an inflexibility which also seems underway here.
One bright spot: both DCMs noted the successful conclusion
of U.S. FTAs with Bahrain and Oman had positively influenced
the negotiating atmosphere.
ERDMAN

The Gulf Co-operation Council could be turning itself into the club of Arab monarchies as it considers bringing Jordan and Morocco into its fold, a move that would strengthen the political and economic capacity of the two countries’ leaders to fend off any popular challenge.

In a surprise announcement late on Tuesday, the GCC, which joins six oil-producing Gulf Arab states, said it was considering a request by Morocco and Jordan to join the bloc, even though the two poorer countries have little in common with existing members.

Following a GCC summit in Riyadh, Abdullatif al-Zayani, the secretary-general, said foreign ministers would be holding talks with the two non-Gulf countries to complete the procedures required for membership. It is not yet clear if membership will be granted or in what form.

The GCC was formed in 1981 in the wake of the Iranian revolution as an alliance of oil-producing monarchies, including Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, Kuwait and Oman.

Efforts at economic integration have been only partly successful, undermined by rivalries and political divisions.

As republics dominated by family rule have proved most vulnerable to popular revolts this year, however, the GCC has been asserting itself, closing ranks to protect its members from the changes sweeping the region. GCC troops were sent to Bahrain to support the ruling Sunni family, helping it crush a Shia uprising. Meanwhile, the organisation pledged $20bn in financial aid to Bahrain and Oman, another Gulf monarchy that was hit by protests.

Saudi Arabia, the heavyweight in the GCC, has also been dismayed by the willingness of the US to abandon long-time allies such as Egypt’s Hosni Mubarak, who was ousted this year, and to criticise a Bahraini intervention, which Riyadh insists was needed to counter Iranian meddling.

Diplomats say GCC states have been sending the message that no Gulf ruling family will be allowed to fall – nor will Iran, which is seen as the biggest regional threat, be permitted to take advantage of the unrest in the region.

Khalid al-Khalifa, Bahrain’s foreign minister, said on Twitter that Jordan and Morocco were “clear examples of good, wise governance and real political development”. The GCC, he added, had “a vital interest in joining together with them”.

Mustafa Hamarneh, a Jordanian political analyst, said the GCC move was a sign that Jordan belonged to the “conservative monarchy club”. What all the countries had in common, he said, was that “they see eye to eye on all the main issue: on Iran, on Bahrain and on the question of political reforms”.

Membership in the GCC would be a boost for the Jordanian monarchy, if it went ahead, but would prove a setback for groups seeking reform, he added.

Hassan al-Mostafa, a Saudi writer, said the possible integration of the two countries into the GCC was an attempt to “reshape the region” by creating new alliances at a time when a democratically elected Egyptian government was likely to follow a more independent foreign policy, possibly becoming friendlier with Tehran.

“The GCC will also help Jordan and Morocco to avoid pressure or collapse of these regimes,” he said. “But Moroccans and Jordanians are more politically active and won’t accept the GCC dictating foreign policy.”

Dris Ben Ali, a Moroccan economist who has been advocating political reforms, said he was concerned about the political rationale behind a potential membership in the GCC, which might be aimed at halting Morocco’s move towards a “democratic, parliamentary monarchy” that could become a model for others in the region.