Identifier
Created
Classification
Origin
02AMMAN2892
2002-06-03 14:53:00
CONFIDENTIAL
Embassy Amman
Cable title:  

KING, PM AND FONMIN PITCH A/S BURNS ON DEBT RELIEF

Tags:  EFIN PREL JA US JO 
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C O N F I D E N T I A L AMMAN 002892 

SIPDIS

E.O. 12958: DECL: 06/03/2012
TAGS: EFIN PREL JA US JO
SUBJECT: KING, PM AND FONMIN PITCH A/S BURNS ON DEBT RELIEF

REF: AMMAN 2725

Classified By: Amb. Edward W. Gnehm for reasons 1.5 (B) and (D)

C O N F I D E N T I A L AMMAN 002892

SIPDIS

E.O. 12958: DECL: 06/03/2012
TAGS: EFIN PREL JA US JO
SUBJECT: KING, PM AND FONMIN PITCH A/S BURNS ON DEBT RELIEF

REF: AMMAN 2725

Classified By: Amb. Edward W. Gnehm for reasons 1.5 (B) and (D)


1. (C) Prime Minister Ali Abul Ragheb and Foreign
Minister Marwan Muasher asked A/S Burns and the Ambassador
June 2 for greater U.S. support for Jordan's request for a
reprofiling of its debt. Abul Ragheb said that Muasher's
just-concluded meetings in Japan on debt had not gone well,
with the Japanese arguing that Jordan's economic situation
does not justify this type of treatment. The Japanese
told Muasher that they will support a two-year rescheduling
of pre-cutoff debt and will provide USD 16 million in grant
assistance and financing for a wastewater treatment plant
in Zarqa this year, but will not support long-term debt
rescheduling or reprofiling.


2. (C) In the ensuing discussion, the Foreign Minister
and Prime Minister debated the most effective way to
clarify and press Jordan's argument. Muasher emphasized
the "political argument" -- the importance of the
commitment of U.S. leaders to helping Jordan economically.
Abul Ragheb stressed instead the economic value of
reprofiling, saying that Jordan's budgetary dependence
on foreign grant assistance should be taken into account
and should strengthen the economic rationale for
reprofiling. A generous debt relief package would set
the stage for stronger growth and get Jordan out of the
trap of having to return to the IMF and Paris Club
every few years. Abul Ragheb said King Abdullah would
be traveling to the UK, Spain, Italy, Germany, and
Austria in June and would raise debt issues.


3. (C) In a later meeting June 2 with A/S Burns and the
Ambassador, King Abdullah said that all of the social
liberalization and economic programs he is trying to
implement risk being trapped under Jordan's debt burden.
He urged the U.S. to work with other Paris Club nations
for more generous rescheduling terms for Jordan.


4. (C) A/S Burns responded that the President wants to
be helpful on this issue. The U.S. understands Jordan's
needs, but we see no meaningful support for debt
reprofiling. Washington is prepared right now to
support a generous two-year Paris Club rescheduling.
Although there is a political argument for debt relief,
Jordan needs also to make a strong economic case and
should work with the IMF to complete its report on
Jordan.


5. (C) COMMENT: The Jordanians are clearly very
committed to obtaining something more from the Paris Club
than a two to three year flow rescheduling. They are
working with the IMF to develop the economic arguments
that will supplement Jordan's political case for a
"reprofiling" of its stock of debt (including the large
post-cutoff date debts mainly owed to Japan). It plans
to present these arguments to Paris Club creditors over
the next month. Given the interest that we and other
Paris Club members share in Jordan's success in the
region as a model of good economic policy, we believe
that it will be important for our partners to hear
Jordan's case and treat it seriously before coming to
definitive decisions on positions in Paris Club
negotiations.


6. (U) A/S Burns has cleared this message.
Gnehm