U.S. officials are expected to meet delegates from the Afghan Islamist insurgency in the Qatari capital Doha on Thursday to try to advance peace efforts in Afghanistan, where the United States has battled the insurgents for 12 years.

While Qatar itself is not a central player in the Afghan peace process, it is seen as a plausibly neutral party which can serve as a convenient host for sensitive discussions and has the trust at least of parts of the Taliban.

Neil Partrick, a Gulf security expert who contributes to the Gulf Studies Programme at the London School of Economics, said Qatar’s involvement in Afghanistan was motivated by a need for security, leverage and prestige.

“Insecurity in central and south Asia is not in the interest of any of the Gulf states. And playing in the big boys’ club, politically, economically, or in sporting terms, is also liked by Doha,” he said.

Other political crises and wars Qatar has tackled include Yemen, Somalia, Lebanon, Darfur and the Palestinian territories, often hosting peace talks on its own soil to try to prove it can punch above its weight in international diplomacy.

Among its assets has been its ability to stay on friendly terms with a wide range of countries, including the United States and Iran, and to cultivate alliances with customers in the Americas, Europe and Asia hungry for its gas exports.

PACE TO SLOW?

But a planned leadership change reported by Arab and Western diplomats that could see the U.S.-allied Emir eventually ceding power to his son has stirred speculation its foreign activism could take a breather under a new leader.

The diplomats say the transition, motivated by desire for a smooth handover to a younger generation, is expected to start with Prime Minister Sheikh Hamad bin Jassim al-Thani, who also serves as foreign minister, leaving his cabinet posts.

He has been a leading force, together with the Emir, Sheikh Hamad bin Khalifa al-Thani, in making the country not only a global investment powerhouse but also a bankroller of Arab Spring revolts in alliance with the Muslim Brotherhood.

Under their leadership the country has sent arms and funds to Syrian rebels fighting a two-year-old war to try to topple President Bashar al-Assad.

Whether Crown Prince Tamim, 33, due to replace his father as emir under the reported transition, will apply quite so much energy to foreign powerbroking is for some an open question.

The Taliban talks, if they continue for any significant period, will likely claim Tamim’s attention.

Shadi Hamid, director of research at the Brookings Doha Center, said he did not expect a wholesale shift in Qatar’s foreign priorities under Tamim “because Qatari policy in the last few years has been very successful.”

“You can say Qatar has overreached, but at the end of the day this is arguably one of the most influential Middle Eastern countries on the international stage. You cannot deny that.”

“You might see some tinkering around the margins going forward but these types of initiatives (like the Taliban) are the sort of things that Qatar has no reason to stop doing.”

(Reporting by William Maclean and Yara Bayoumy; editing by Janet McBride)

Syria’s civil war and Iran’s nuclear program have led to tensions, with Gulf Arab states willing a more assertive U.S. response to bring Iran to heel and force Syrian President Bashar al-Assad from power. Growing U.S. energy independence has further complicated a relationship founded on oil and defense.

Some Gulf Arab oil states had even begun to wonder if the alliance was anything more than the “practical marriage of convenience for a finite period of time” that Henry Kissinger, in a 2007 interview, saw in Washington’s ties to Saudi Arabia.

Washington is moving to dismiss such doubts, indicating its military partnership with the ruling dynasties who sit on a third of the world’s conventional oil reserves will remain deep-rooted, even if trimmed by budget cuts at home.

“The United States isn’t going anywhere. The United States is firmly committed to the security of all our regional partners,” said a senior official accompanying U.S. Defense Secretary Chuck Hagel in the Middle East last week. “We understand in a clear-eyed way what the threats are in the region.”

Hagel began his week-long trip days after the Pentagon said it was finalizing a $10 billion arms deal that would strengthen the militaries of Saudi Arabia and the United Arab Emirates, as well as that of Israel.

The agreement, more than a year in the making, would result in the sale of 25 F-16 Desert Falcon jets worth nearly $5 billion to the UAE. The UAE and Saudi Arabia also would be allowed to purchase weapons with so-called “stand-off” capabilities that enable them to engage the enemy with precision at a distance.

A few days before the trip, President Barack Obama welcomed to the White House Crown Prince Mohammed bin Zayed of the UAE, the largest U.S. export market in the Middle East.

In a joint statement they reaffirmed a shared commitment to “close defense and security cooperation, including joint training exercises, counterterrorism cooperation and the deployment of interoperable U.S. defense systems”.

The deal, and Sheikh Mohammed’s warm U.S. welcome, are the latest in a series of signals Washington is sending to the region of its undimmed resolve to support the ruling families, partners in Washington’s confrontation with Iran.

OIL AND THE WORLD ECONOMY

The West’s energy watchdog, the International Energy Agency, says it expects a continued fall in U.S. oil imports, with North America becoming a net oil exporter by around 2030 and the United States becoming almost self-sufficient in energy by 2035.

Some Gulf Arabs worry that a United States self reliant in oil might show less commitment to safeguarding the Strait of Hormuz, the world’s main energy artery through which 40 percent of the world’s sea-borne oil exports pass.

Ensuring global energy security is likely to remain an important part of U.S. strategy, said a U.S. official based in the Middle East. While U.S. purchases of Gulf Arab oil may be declining, global dependence is increasing. This fact engages American support, he said.

“Since the health of the U.S. economy is closely tied to the world’s, there’s every reason for Washington to help protect its allies here,” said Les Janka, a former White House and Pentagon official who now heads a business consultancy in Riyadh.

When General Martin Dempsey, chairman of the U.S. Joint Chiefs, told the Center for Strategic and International Studies think tank on March 18 that he hoped America would achieve energy independence, he added: “But I can assure you that at least from a military perspective . . . you will find that the future will be a period of greater commitment.”

Pressed to elaborate by UAE envoy Yousef Al Otaiba, Dempsey replied that that commitment should not be measured in terms of carrier battle groups but in terms of improved collaboration.

“We just have to figure out how to help you do more, so that we can do less, but that doesn’t mean less well.”

Energy is far from the only concern. A U.S. pivot to Asia, perceptions of U.S. economic decline and U.S. military withdrawals, first from Iraq and now from Afghanistan, have blurred Gulf Arabs’ security landscape.

Fear of Arab Spring contagion, too, means that Gulf Arab authorities see future threats coming as much from internal sources as from the external ones that were the original premise for Western military support.

Shashank Joshi of Britain’s Royal United Services Institution said Gulf Arab officials appeared acutely aware the internal threat they now faced “doesn’t quite yoke the Americans in the same way” the external threats once did.

On Syria, Iran and Bahrain, arenas for a region-wide tussle for influence between Sunni and Shi’te powers, Washington’s preference for dialogue appears weak to some Gulf Arabs.

“HERE TODAY, GONE TOMORROW”

In Bahrain, home of the U.S. Fifth Fleet and an important Western ally in keeping Hormuz open, a simmering revolt by its Shi’ite Muslim majority has prompted calls by some in Washington for U.S. ships to base elsewhere.

Echoing the view of many Western analysts, Dubai-based Robert Jordan, a former U.S. ambassador to Riyadh, said he was concerned about the message – “we’re here today and gone tomorrow” – that a pullout would send. “Perception becomes reality in this part of the world,” he said.

Gulf rulers are acutely aware they depend for their security on people who live thousands of miles away, who do not share their religion or lifestyle, and above all who sympathize with the democratic impulse at the origin of the Arab revolts.

In December a summit of the six-nation Gulf Cooperation Council announced plans to set up a unified military command to tighten defense cooperation.

GCC states are increasingly well-armed. Defense spending by GCC states rose about 9 percent to $74 billion last year, estimated Nicole Loeser, Middle East analyst at Forecast International. She predicts it will hit $86 billion in 2017.

Yet Gulf Arab states have faced a host of obstacles to military integration, including a lack of common equipment and their own reliance on bilateral accords with their U.S. ally.

Abdulkhaleq Abdullah, a political scientist in the United Arab Emirates, said confidence in America had dropped because of disagreements with Washington over Syria and dismay over its security failures in Iraq and Afghanistan.

But America remained indispensable. “We live in a very dangerous region, so … our ties with America remain strong”.

(Additional reporting by Phil Stewart in Washington and Mahmoud Habboush in Dubai; editing by Janet McBride)

(Dubai’s police chief Dhahi Khalfan poses at his office during an interview with Reuters in Dubai April 2, 2013. REUTERS/Ahmed Jadallah)

Sunni Muslim-ruled Gulf Arab states are often wary of subversion from their powerful Shi’ite neighbour Iran, but Dubai’s veteran police chief reserves most of his wrath for the “dictators” of the Muslim Brotherhood.

Dhahi Khalfan’s suspicions focus mostly on the Egyptian branch of the Sunni Islamist organisation, propelled to power in the most populous Arab country in elections since the overthrow of President Hosni Mubarak in a popular uprising in 2011.

“The Brotherhood as a ruling party in Egypt has no right to interfere with other countries. They are no longer a political party and should respect the independence of other countries,” Khalfan told Reuters in an interview this week.

He reiterated charges that Egypt’s Muslim Brotherhood was linked to an alleged plot to topple the UAE government, saying the group’s ultimate goal was Islamist rule in all Gulf states.

Khalfan, who has often railed against the Brotherhood on his Twitter account, is one of only a few UAE officials to speak publicly about politics.

While he says his tweets are personal views, diplomats say they reflect concerns among the UAE ruling elite about the regional popularity of Islamists and the possibility that the West will engage with them.

Khalfan complained that the West “sympathises, adopts and supports” the Brotherhood, saying he did not understand why.

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Dhahi Khalfan’s suspicions focus mostly on the Egyptian branch of the Sunni Islamist organization, propelled to power in the most populous Arab country in elections since the overthrow of President Hosni Mubarak in a popular uprising in 2011.

“The Brotherhood as a ruling party in Egypt has no right to interfere with other countries. They are no longer a political party and should respect the independence of other countries,” Khalfan told Reuters in an interview this week.

He reiterated charges that Egypt’s Muslim Brotherhood was linked to an alleged plot to topple the UAE government, saying the group’s ultimate goal was Islamist rule in all Gulf states.

Khalfan, who has often railed against the Brotherhood on his Twitter account, is one of only a few UAE officials to speak publicly about politics.

While he says his tweets are personal views, diplomats say they reflect concerns among the UAE ruling elite about the regional popularity of Islamists and the possibility that the West will engage with them.

Khalfan complained that the West “sympathizes, adopts and supports” the Brotherhood, saying he did not understand why.

“REGIME CHANGE”

His stance testifies to new tensions in the Arab world arising from two years of popular ferment that has unseated autocrats in Tunisia, Egypt, Libya and Yemen, although it has so far spared U.S.-allied dynasties in the Gulf and elsewhere.

Khalfan, one of the Gulf’s longest serving security officials, defended a trial of the 94 alleged Emirati plotters that human rights groups have criticized as unfair.

“These are dictators,” he said of the Brotherhood, which is banned in the UAE, a wealthy, politically stable federation of seven emirates including free-wheeling global trade hub Dubai.

“They want to change regimes that have been ruling for a long time, but they also want to rule forever…We have evidence this group was planning to overthrow rulers in the Gulf region.”

He said the defendants, who include lawyers, teachers, judges and a member of the ruling family of one of the emirates, had reached an advanced stage in their alleged conspiracy.

Foreign reporters and international human rights groups have not been allowed to attend the trial that began on March 4.

UAE newspapers have said the defendants belong to al-Islah, a local Islamist group. Al-Islah says it wants peaceful reforms and has no direct links to Egypt’s Muslim Brotherhood, although it acknowledges that its ideology is similar.

“The UAE…acted at the right time to stop the Muslim Brotherhood plan that is being directed by the Murshid,” Khalfan said, referring to Egypt’s Brotherhood leader Mohamed Badie.

The Brotherhood in Egypt, one of whose members, Mohamed Mursi, was elected head of state in June, rejected Khalfan’s accusations that the group was involved in subversion abroad.

“We do not act outside the law in any country. We guard the preservation of the law,” Brotherhood spokesman Ahmed Aref said. “He (Khalfan) has no evidence of this, of any conspiracy.”

IRAN “HARD TO PLEASE”

UAE-Egyptian ties have been strained since the fall of Mubarak, an ally of Gulf Arab states and a foe of the Brotherhood, which was founded in Egypt in 1928.

Some UAE Islamists, inspired by the rise of religious groups in Egypt and Tunisia, have stepped up their activities, angering officials in a state where no political opposition is permitted.

Asked to describe threats to the UAE, Khalfan said at least two Emiratis had gone to Syria to fight for rebels trying to depose President Bashar al-Assad, but suggested al Qaeda-style militants were not widely supported in the Emirates.

The main Islamist current in the UAE was the Muslim Brotherhood, he said.

Asked about neighboring Qatar’s close ties to the Brotherhood, Khalfan said the UAE respected the Qatari leadership, even if the two countries had differing views.

On Iran, Khalfan, head of Dubai’s police force for three decades, criticized what he called Tehran’s interference in the affairs of Gulf Arab states and its threats to close the Straits of Hormuz in its standoff with the United States.

However, his language on Iran was relatively restrained, describing it as a neighbor “that is very hard to please”.

(Writing by William Maclean; Editing by Sami Aboudi and Alistair Lyon)

An assertive performance at an Arab summit in Qatar this week showed that independent-minded Moaz Alkhatib is prepared to take risks in pursuit of this goal, banking on populist rhetoric and his personal popularity inside Syria.

His plain speaking indicated he was not scared even of alienating the Arab states which fund his campaign.

The 53-year-old Sunni Muslim cleric from Damascus took Syria’s vacant seat at the Arab League summit on Tuesday, in a demonstration of Assad’s international isolation two years into a war that has cost an estimated 70,000 lives.

Responsibility for that moment of diplomatic theatre rests with the assembled Arab states, whose consent made it possible.

It was what Alkhatib did next that illustrated his high-stakes approach: he started by outlining a vision of a unified movement politically independent of the outside powers who fund much of the rebels’ humanitarian and military support.

“They ask who will rule Syria. The people of Syria will decide, not any other state in this world,” he said, apparently aiming his remarks at a Syrian domestic audience as much as an international one.

But Alkhatib then departed from diplomatic protocol, boldly urging Arab leaders to free their own political prisoners and join Syrians in breaking “a link of repression”.

INDEPENDENT STREAK

Skeptics might question the wisdom of remarks that might antagonize Arab powers supportive of Alkhatib’s coalition, but the opposition leader’s admirers say he had little choice.

He lacks an organized power base, so must compensate by playing on his credibility at home, especially in Damascus, where he was formerly imam of the ancient Ummayad mosque.

Alkhatib is a political moderate, and is believed to look askance at the rising influence of hardline Islamists in the Qatari-backed umbrella group set up in Doha in November.

Many Syrians fear the rise of Islamists within the armed opposition, and Assad has made political capital by declaring that Syria’s real enemies are al Qaeda-style militants.

As a result, Syrian liberals argue, the opposition must do all it can to present an inclusive image and avoid a further descent into sectarianism. Saying there is only a military solution sends the wrong message, they say.

Alkhatib has shown an independent streak before. Earlier this year he dismayed colleagues by saying he would be ready to meet a senior government official if Assad met conditions such as freeing tens of thousands of political prisoners.

RESIGNATION

And on Sunday, Alkhatib jolted his associates again by announcing his resignation as head of the National Coalition for Syrian Revolutionary and Opposition Forces, blaming the world’s failure to back the armed revolt. He told Reuters he was surprised by a cool Western response to his appeal at the summit for Patriot missile support for rebel-held northern areas.

Opposition sources said another significant motive for his resignation was disquiet about the preponderant role of Qatar, a strong ally of the Muslim Brotherhood, within the coalition.

“Moaz Alkhatib has legitimacy beyond the coalition, among the population, even among the population reluctant to change, because of his moderate speech and his peace initiative,” Samir Aita, editor-in-chief of the Arabic edition of Le Monde Diplomatique, told Reuters.

“At the summit he showed that there is large interference from Qatar, and that this is unacceptable.”

The coalition was formed in Doha in November as an alternative to Assad, superseding the Syrian National Council, another umbrella opposition organization largely influenced by the powerful Muslim Brotherhood which now, along with its allies, is a dominant bloc in the coalition.

But the coalition, and a fledgling provisional government strongly backed by Qatar, still suffer from an image as foreign-backed exiles immersed in political wheeling and dealing.

For its part, Qatar dismisses allegations of partiality towards the Brotherhood and of warmongering.

Speaking at a news conference at the end of the summit Qatar Foreign Minister Sheikh Hamad bin Jassim al-Thani said arming the rebels was not ideal but that there was little alternative.

“We have done all we could to find a peaceful solution,” he said. “Unfortunately this solution did not come because … the regime was betting on a solution by force.”

Speaking to Reuters on Wednesday, Alkhatib declined to be drawn on his next political moves, insisting that all he wanted was to build consensus among disparate opposition factions.

He cast his message in terms of Syria’s national interest, saying: “I say: ‘Don’t help the opposition. Think of helping the Syrian people’.”

(Additional reporting by Khaled Oweis in Amman, Yara Bayoumy, Sami Aboudi and Regan Doherty in Doha; Editing by Alistair Lyon)

Alkhatib, a popular figure in the opposition, also said he would not rescind his resignation as leader of the main anti-Assad alliance but he would still perform leadership duties for the time being.

NATO said on Tuesday it had no intention of intervening militarily in Syria after Alkhatib said he had asked the United States to use Patriot missiles to protect rebel-held areas from Assad’s air power.

“Yesterday I was really surprised by the comment issued from the White House that it was not possible to increase the range of the Patriot missiles to protect the Syrian people,” Alkhatib told Reuters in an interview.

“I’m scared that this will be a message to the Syrian regime telling it ‘Do what you want’.”

Asked about his resignation on Sunday as leader of the rebel coalition – which he has said was motivated mainly by frustration at Western reluctance to increase support for the opposition – he said: “I have given my resignation and I have not withdrawn it. But I have to continue my duties until the general committee meets.”

Alkhatib took Syria’s vacant seat at an Arab League summit in Qatar on Tuesday, deepening the Assad government’s diplomatic isolation two years into a conflict that has cost an estimated 70,000 lives.

The 22-nation League lent its support to giving military aid to the Syrian rebels and a summit communique also offered some of its sternest language yet against Assad, affirming member states had a right to offer help.

But Tuesday’s proceedings offered no clarity on Alkhatib’s position in the leadership, a question central to Arab and Western efforts to shore up the political credibility of the opposition and heighten pressure on Assad and his inner circle.

In his remarks to Reuters, Alkhatib sought to portray himself as a conciliatory figure, declining to be drawn on his next political moves.

Asked whether he would withdraw his resignation, he replied: “This is the situation as it stands.”

He said that until the coalition meets, he would focus on “narrowing differences and building a bridge between the factions in the opposition”.

Opposition rifts are many. They include rivalry between liberals and various sorts of Islamists, between exiles and groups that operate within Syria, and between those seeking a political settlement and those who insist an armed campaign is the only solution.

Those divisions are reflected among Arab states, which agree on little other than their professed abhorrence of the bloodshed caused by an increasingly sectarian conflict.

Alkhatib’s decision to quit, which he blamed on the world’s failure to back the armed revolt, also appeared to be motivated by internal disputes in the alliance. It undermined the alliance’s claim to provide a coherent alternative to Assad.

Liberals saw it as a protest against what they view as the rising influence of hardline Islamists in the Qatari-backed umbrella group set up in Doha in November

On Wednesday, Alkhatib indicated irritation with the efforts of outside powers to influence the course of the rebellion.

“This is a game that the Syrian people are now used to. They say ‘do this and we’ll help you, do that and we’ll help you,” he said, without naming individual countries.

But he also sought to play down internal differences within the coalition.

“The most distinguished parliaments in the world have differing points of view. That’s normal. There are lots of different point of view. We have already come up against some obstacles and we have overcome them.”

(Additional reporting by Regan Doherty; Editing by Angus MacSwan)

Alkhatib, a popular figure in the opposition, also said he
would not rescind his resignation as leader of the main
anti-Assad alliance but he would still perform leadership duties
for the time being.

NATO said on Tuesday it had no intention of intervening
militarily in Syria after Alkhatib said he had asked the United
States to use Patriot missiles to protect rebel-held areas from
Assad’s air power.

“Yesterday I was really surprised by the comment issued from
the White House that it was not possible to increase the range
of the Patriot missiles to protect the Syrian people,” Alkhatib
told Reuters in an interview.

“I’m scared that this will be a message to the Syrian regime
telling it ‘Do what you want’.”

Asked about his resignation on Sunday as leader of the rebel
coalition – which he has said was motivated mainly by
frustration at Western reluctance to increase support for the
opposition – he said: “I have given my resignation and I have
not withdrawn it. But I have to continue my duties until the
general committee meets.”

Alkhatib took Syria’s vacant seat at an Arab League summit
in Qatar on Tuesday, deepening the Assad government’s diplomatic
isolation two years into a conflict that has cost an estimated
70,000 lives.

The 22-nation League lent its support to giving military aid
to the Syrian rebels and a summit communique also offered some
of its sternest language yet against Assad, affirming member
states had a right to offer help.

But Tuesday’s proceedings offered no clarity on Alkhatib’s
position in the leadership, a question central to Arab and
Western efforts to shore up the political credibility of the
opposition and heighten pressure on Assad and his inner circle.

In his remarks to Reuters, Alkhatib sought to portray
himself as a conciliatory figure, declining to be drawn on his
next political moves.

Asked whether he would withdraw his resignation, he replied:
“This is the situation as it stands.”

He said that until the coalition meets, he would focus on
“narrowing differences and building a bridge between the
factions in the opposition”.

Opposition rifts are many. They include rivalry between
liberals and various sorts of Islamists, between exiles and
groups that operate within Syria, and between those seeking a
political settlement and those who insist an armed campaign is
the only solution.

Those divisions are reflected among Arab states, which agree
on little other than their professed abhorrence of the bloodshed
caused by an increasingly sectarian conflict.

Alkhatib’s decision to quit, which he blamed on the world’s
failure to back the armed revolt, also appeared to be motivated
by internal disputes in the alliance. It undermined the
alliance’s claim to provide a coherent alternative to Assad.

Liberals saw it as a protest against what they view as the
rising influence of hardline Islamists in the Qatari-backed
umbrella group set up in Doha in November

On Wednesday, Alkhatib indicated irritation with the efforts
of outside powers to influence the course of the rebellion.

“This is a game that the Syrian people are now used to. They
say ‘do this and we’ll help you, do that and we’ll help you,” he
said, without naming individual countries.

But he also sought to play down internal differences within
the coalition.

“The most distinguished parliaments in the world have
differing points of view. That’s normal. There are lots of
different point of view. We have already come up against some
obstacles and we have overcome them.”

(Additional reporting by Regan Doherty; Editing by Angus
MacSwan)

(Reuters) – A Chinese businessman indicted in the United States over sales of missile parts to Iran is still making millions of dollars from the trade, say security officials who monitor compliance with Western and U.N. sanctions.

These officials, speaking on condition of anonymity, said the businessman, Li Fangwei, has earned at least $10 million from illegal sales to Iran since his indictment by the New York County District Attorney in 2009.

Trade sanctions are at the heart of international efforts to curb Iran’s nuclear program for fear it is for military ends – a suspicion Iran rejects. Li’s alleged activities may point to Iran’s resourcefulness in circumventing those sanctions and turn a spotlight on China’s ability to police its own export restrictions.

It is hard to quantify the contribution of foreign firms and individuals to Iran’s nuclear and missile programs, but analysts believe some vital components are all but impossible for Tehran to produce at home.

Contacted by Reuters on Feb 4, Li said he continued to get commercial inquiries from Iran but only for legitimate merchandise, such as steel products. Li said his company, LIMMT, had stopped selling to Iran once the United States began sanctioning it several years ago.

He dismissed allegations by the security officials that he had used deception, including changes of company names, to supply Iran with Chinese and foreign-made parts such as high-grade alloys that can be used to enrich uranium and guidance devices suitable for missiles.

“Sure, we did business with Iran, but we did not export the goods they said we did, missiles or whatever,” Li said. “We still get inquiries from Iranian clients, but we don’t respond to them.”

A Chinese Foreign Ministry spokeswoman said Beijing was adhering to trade restrictions, including a U.N. ban on helping Iran build missiles that can deliver nuclear warheads.

Officials from Iran, including at firms the security officials said were clients of Li and at the embassy in Beijing, did not respond to requests for comment. A Chinese bank which the security officials said Li used for Iranian business denied it had breached U.N. sanctions.

SERIES OF U.S. MEASURES

In 2006, the U.S. Treasury barred Li from the U.S. financial system for allegedly selling goods with potential military uses to Iran.

Three years later, the New York County District Attorney unsealed a fraud indictment against Li and his metals company LIMMT on suspicion they had used false names to process further payments for sales to Iran through several U.S. banks.

The U.S. banks employed by Li were innocent of any wrongdoing because Li and other suspects had concealed their identities, the then District Attorney, Robert Morgenthau, said.

On Feb 4, 2013, Li said that at the time of the indictment he had felt there was no point in saying anything because U.S. courts and prosecutors “don’t listen to reason. It’s useless.”

Three weeks ago, on February 11, the U.S. State Department issued fresh sanctions against Li, saying he had “engaged in missile technology proliferation activities that require the imposition of missile sanctions”, and placing additional restrictions on any missile technology trade involving him.

A State Department official said Li had been sanctioned because of his “proliferation to Iran” since his 2009 indictment. Li did not respond to calls seeking comment on the Feb 11 action.

China reacted with irritation to the February 11 measures. Foreign Ministry spokeswoman Hua Chunying said the U.S. step “seriously violates the norms of international relations and harms China’s interests” and urged the United States to immediately revoke “these irrational sanctions”.

China has no extradition treaty with Washington.

ALLOYS, GYROSCOPES

The security officials allege that since the 2009 indictment Li, working in concert with the Iranian embassy in Beijing, had supplied parts to firms that make Iranian missiles, in particular the U.N.-blacklisted Shahid Bakeri Industrial group (SBIG). SBIG did not reply to faxes and emails sent by Reuters for comment.

The goods allegedly supplied included 15 metric tons of high-grade aluminum alloy, more than 20 metric tons of ultra-high strength steel, and 1,700 kg of graphite cylinders.

Li agreed in 2011 to supply 1,500 gyroscopes and accelerometers to SBIG, the security officials alleged, referring to devices that can be used in missile guidance and control systems – a quantity sufficient for about 500 missiles.

Gyroscopes are “controlled items” under the Missile Technology Control Regime (MTCR), an informal and voluntary partnership between 34 mainly Western countries. China is not a party to the MTCR but has similar export controls of its own.

Li also supplied more specialized devices known as fiber-optic gyroscopes, the officials allege; their main uses are in missiles, robots or remotely operated land or sea vehicles.

The officials accuse Li of advising SBIG and other Iranian clients to change details of shipments, including the falsification of the end-user and supplier details in contracts.

Li denies all the allegations.

Between 2010 and 2012, Li took over $10 million in payments from SBIG alone and travelled often to Iran, the officials allege. He used deception within China to hide his activities not only from the authorities but from Chinese companies as well, the officials added.

In 2012, they said, Li listed a Chinese company as a false end user to obtain repair equipment he intended to send to SBIG in Iran.

A diplomat in Iran’s Beijing embassy helped Li, who is aged about 40, to fix meetings with defense officials when he visited Tehran, the security officials allege. In the Iranian capital, the officials said, some contacts knew him only as “The Tailor” to conceal his identity.

CRITICAL COMPONENTS

The officials alleged that some of his clients were not always satisfied with the quality of his goods but kept on using him, perhaps for lack of choice.

Asked in Beijing whether China knew of Li’s purported activities, Foreign Ministry spokeswoman Hua said China’s position was “clear and steadfast” on non-proliferation: China had always upheld U.N. Security Council resolutions on non-proliferation. If a Chinese individual or company was doing anything illegal, it would be dealt with.

An internal report for the U.S. Congress in December concluded that sanctions, respected by China, were making it increasingly tough for Tehran to obtain certain critical components and materials for its missiles.

From 2004 to 2007, Chinese arms transfer agreements with Iran totaled about $300 million at today’s prices; between 2008 and 2011 total arms transfer agreements dropped to less than $50 million, according to the report by the non-partisan Congressional Research Service (CRS) on Iranian missiles.

Li said his company, LIMMT, had stopped selling to Iran once the United States began sanctioning it several years ago. He did not indicate a date, but the U.S. Treasury first sanctioned LIMMT in June 2006, citing its alleged support of and role in the proliferation of weapons of mass destruction to Iran.

“We used to export steel, things like that. Nothing to do with missiles,” he said.

At two buildings in the northeastern city of Dalian which the security officials said had been used by Li, people either had never heard of him or said he had left some years ago.

(Additional reporting by William Maclean, Ben Blanchard and Michael Martina in Beijing and Dalian, Marcus George in Dubai, Dan Williams in Jerusalem, and Mark Hosenball, David Ingram and Anna Yukhananova in Washington; Editing by Janet McBride)

(william.maclean@thomsonreuters.com)(+97143664253)(Reuters Messaging: william.maclean.thomsonreuters.com@reuters.net)

What transpired between Mubarak and Foreign Minister Sheikh Abdullah bin Zayed al-Nahayan is not known, beyond the fact that a letter from UAE ruler Sheikh Khalifa bin Zayed al-Nahayan was delivered.

But the significance of the February 8, 2011 visit was clear: It was a gesture of understanding and concern for a longtime friend who had been a trusted diplomatically for most Gulf Arabs, not least in their confrontation with non-Arab Iran.

Fast forward to 2013 and the picture is starkly different.

The UAE-Egyptian relationship has been strained by the regional spread of Islamist influence – Egypt now has an elected Islamist president – with implications not only for the two protagonists but all Arab states hit by the uprisings against dictators and dynasties that began two years ago.

Poorer, densely populated Arab states like Egypt often look to Gulf states for investment and financing, as well as overseas work for their nationals, a need ever more acute with rulers under unprecedented pressure to produce jobs and services.

The UAE, home to around 380,000 Egyptian expatriates and a major investor in Egypt, pledged $3 billion of aid to Cairo in 2011. But the funds have not yet been transferred, an Egyptian source familiar with the matter told Reuters, mainly due to the political instability in post-revolution Egypt.

A break in relations between the Arab political heavyweight and the Gulf financial powerhouse would be unthinkable. But the unfamiliar chill in their dealings reflects an increasingly complicated relationship between these two groups of countries.

Gulf states historically have sent aid and investment to less moneyed fellow Arabs, and in return have received diplomatic support and sometimes military protection.

The UAE-Egypt spat “does have a huge bearing on the success of the Arab transitions”, said Jane Kinninmont of the British think tank Chatham House.

HUGE ECONOMIC NEEDS

“Here you have a number of countries which are going through transitions but which have huge economic needs. The obvious place for them to look is the wealthy Gulf Arab countries.”

Arab countries received 62 percent of all Gulf aid from 1970 to 2008, according to a study by researchers Bessma Momani and Crystal Ennis in the Cambridge Review of International Affairs.

For its part, the UAE needs to tread a careful line, analysts say.

Aggravating Egypt’s Muslim Brotherhood could also affect UAE relations with other countries, like Syria, where Islamists are playing a major role in the revolt against President Bashar al-Assad.

And irking Egypt’s new rulers could also push Cairo closer to Shi’ite Iran, arch-adversary of the Gulf Arabs.

Gulf Sunni Muslim rulers fear that, despite being a Sunni group itself, the Brotherhood is soft on Iran, unlike Mubarak.

“The Emirates recognize that Egypt’s centrality in Arab affairs is an important counter to Iran,” said Frederic Wehrey, Middle East program senior associate at Carnegie Endowment for International Peace think-tank.

Gulf Arab states need a prosperous Egypt for a host of reasons, not least to protect their own investments.

But history shows that financial help from the region sometimes reflects shifts in the diplomatic climate – even if governments insist their assistance is not political.

For example Jordan’s ties with Gulf were hurt in 1990 when it refused to join an alliance against Iraq after it invaded Kuwait. Many Palestinians and Jordanians lost jobs in the Gulf where they enjoyed welfare state benefits as expatriate workers.

There are implications, too, for Gulf Arab states. Most saw Mubarak’s fall as the result of a U.S. decision to cast adrift an erstwhile ally and common adversary of Iran, rather than as an acceptance of an unstoppable revolution.

Crucially, Gulf Arab rulers alarmed by Mubarak’s ouster were further disconcerted by the subsequent ascent to power of the Muslim Brotherhood, Mubarak’s sworn foe and a group once cited in a U.S. diplomatic cable as the UAE’s “mortal enemy”.

If Washington was ready to deal with the Muslim Brotherhood in Cairo, could it do the same in the Gulf, if a new democratic dispensation swept away the region’s tradition of princely rule?

ANXIETY

There is no shortage of evidence of UAE worries about the reach of Islamists. On January 27 the UAE announced 94 of its citizens would go on trial on charges of seeking to seize power, accusing them of being in communication with the Brotherhood.

Many are believed to be members of al-Islah, an Islamist group suspected of links to the Brotherhood, a movement founded in Egypt in 1928 and which is banned in the Gulf Arab state. Islah says it has no connection to the global Brotherhood.

Some analysts say the arrests are meant to send a message that Islamist activities will not be tolerated, rather than reflecting a belief they pose a significant security threat.

“The UAE has a rule: zero tolerance for political organizations of any sort whether Islamists or non-Islamists, and these guys (Emiratis and Egyptians) broke the law. Pure and simple,” UAE political scientist Abdelkhaleq Abdullah said.

But the UAE has continued to strike a firm tone in public.

In October, Sheikh Abdullah, the foreign minister, said: “The Muslim Brotherhood does not believe in the nation state. It does not believe in the sovereignty of the state.”

An Emirati source close to the government said the minister’s comments were directed at the Brotherhood, not Egypt, and the UAE saw the bilateral relationship as a strategic one.

On January 1, a local newspaper reported that the UAE had also arrested 11 Egyptians on suspicion of training Islamists in how to overthrow governments.

The Brotherhood replied by saying the 11 were wrongfully arrested. Local media in the UAE said the Gulf Arab states had rejected a subsequent request by Cairo to free the detainees.

For its part, the Brotherhood has sought to reassure Gulf Arabs it has no plan to push for political change beyond Egypt’s borders. Egyptian President Mohamed Mursi has said there is no plan to “export the revolution” – comments welcomed by the UAE.

Both Egypt and the UAE publicly assert that they have a special relationship. After all, Sheikh Abdullah had a meeting with Mursi, whose roots are in the Brotherhood, in Egypt in September 2012 and delivered an invitation for him to visit the UAE. A response is awaited.

PERIODS OF STRAIN

And yet the discordant tone will stir questions over Gulf Arab willingness to make good on promises of support to Egypt, which desperately needs funds to avert financial crisis.

While Gulf Arabs have pledged large sums to Egypt, helping stabilize its currency, they are motivated by their own interests, Richard LeBaron, a former U.S. ambassador to Kuwait, wrote in a study for the Atlantic Council think-tank.

He said most Gulf Arab states, wary of the Brotherhood, had adopted a “wait and see” attitude toward new leaders in Egypt and Tunisia before committing significant additional funds and seemed not to sense any urgency in making such decisions.

Carnegie Endowment’s Wehrey wrote that while UAE-Egypt ties could face more turbulence, matters could be resolved due to shared interests including a need to counter Iranian influence and the Brotherhood’s need for Gulf investment.

“A key first step is for both sides to avoid strident and provocative statements that fuel the rancor that currently afflicts the relationship,” he said.

(Additional reporting by Yasmine Saleh in Cairo; Writing by Sylvia Westall; Editing by William Maclean and Mark Heinrich)

The Government Communications Headquarters (GCHQ) said those aged 16 or over and not already working in cyber security could apply to test their ability to guard a computer network but only 150 contestants at most would be eventually allowed to compete.

While politicians around the world are increasingly worried by cyber threats, Britain sees them as a particular priority because GCHQ has had problems retaining Internet sleuths who can double or triple their salaries in the private sector.

GCHQ director Iain Lobban, whose service breaks codes and intercepts communications, said in October 2011 that British government and industry computer systems were facing a “disturbing” number of cyber attacks that posed a threat to Britain’s economic wellbeing.

In a June 2012 speech, Jonathan Evans, Director-General of the MI5 Security Service, warned of “industrial-scale” cyber espionage and theft against Britain and cited the case of an unnamed London-listed company which lost 800 million pounds ($1.24 billion) as the result of a state cyber attack.

The test, called Balancing the Defense, will run from October 1 to 8 and require the players to analyze a mocked-up government computer communications network and look for vulnerabilities that an attacker could exploit.

TIGHT BUDGET

They will be asked to prioritize the threats and suggest defensive controls, both technical and policy-based, to reduce risks while abiding by a tight budget, organizers say.

Participants must be Britons resident in the United Kingdom and will have to supply personal details when they apply to play here

Karl, a GCHQ official who declined to give his full name for security reasons, told Reuters the service had designed the competition to have a maximum of 150 players.

Those not chosen to play would be able to apply to other cyber contests promoted by Cyber Security Challenge UK, an educational organization supported by the government and the private sector to raise Britain’s cyber skills. Those will be accessible from the same website link.

Karl said the intention of the GCHQ test was to raise the public’s knowledge of cyber threats and also identify potential gifted recruits for the spy service and for the private sector.

A GCHQ statement announcing the game made no mention of its staffing situation, but said the service was committed to finding and developing new cyber security skills in Britain.

Parliament’s Intelligence and Security Committee, which oversees Britain’s spy services, said in a 2011-2012 annual report that its main concern about the agencies’ staffing was “the ability of GCHQ to retain Internet specialists”.

It said GCHQ was “losing critical staff with high-end cyber technology skills at up to three times the rate of the corporate average”. Employing more than 5,000 staff, GCHQ has almost twice as many people as each of its sister agencies MI5 and MI6.

It is not the first such test by GCHQ. It devised an online competition called “Can You Crack It?” last year. A GCHQ puzzle is currently part of an exhibition on codebreaking at Britain’s Science Museum marking the centenary of the birth of World War Two codebreaker and mathematician Alan Turing.

(Editing by Rosalind Russell)