DEMARCHING THE ARAB MULTILATERAL AID

C O N F I D E N T I A L ABU DHABI 001876 SIPDIS STATE FOR NEA, NEA/ARP, NEA/RA AND EB E.O. 12958: DECL: 04/19/13 TAGS: EAID PREL PGOV IZ KU TC SUBJECT: DEMARCHING THE ARAB MULTILATERAL AID AGENCIES REF: A) STATE 100455, B) KUWAIT 1468 ¶1. (U) CLASSIFIED BY DCM RICHARD A. ALBRIGHT FOR REASONS 1.5 (B,D). ¶2. (C) ECONCHIEF RAISED REF A DEMARCHE APRIL 19 WITH FINANCE MINISTRY UNDERSECRETARY KHALID AL- BUSTANI. AL-BUSTANI SAID THAT THE UAE WOULD BE FAVORABLY DISPOSED TOWARDS CONSIDERATION OF WAYS IN WHICH THE ARAB FUND FOR ECONOMIC AND SOCIAL DEVELOPMENT (AFESD) COULD ENGAGE POSTIVELY WITH IRAQ. THAT SAID, HE NOTED THAT THE UAE AS HOST OF THE UPCOMING BOARD OF GOVERNORS MEETING -- AND AS AN ONLY MODEST CONTRIBUTOR TO AFESD -- WOULD NOT BE PREPARED TO TAKE A LEADERSHIP ROLE ON THIS ISSUE. HOWEVER, AS LONG AS AFSED DG ABDULLATIF AL-HAMAD WAS FULLY ON BOARD, THE UAEG OFFICIAL PREDICTED THAT THE MATTER WOULD BE WELL IN HAND. ¶3. (C) AL-BUSTANI NOTED THAT THE APRIL 22-23 GATHERING IN ABU DHABI WOULD BE BROADER THAN JUST THE AFESD SESSION. THE ARAB MONETARY FUND BOARD WOULD ALSO BE MEETING, AS WOULD A NUMBER OF SMALLER ARAB MULTILATERAL LENDING INSTITUTIONS, SUCH AS THE ARAB AUTHORITY FOR AGRICULTURAL DEVELOPMENT AND THE ARAB ORGANIZATION FOR INVESTMENT PROTECTION. IF THE USG'S INTEREST IS IN SEEKING IRAQ'S REHABILITATION, WE WOULD BE WELL ADVISED TO CAST OUR NET MORE BROADLY THAN JUST AFESD, THE EMIRATI REMARKED. ¶4. (C) COMMENT: AL-BUSTANI'S OBSERVATION STRIKES US AS ON TARGET. WE WOULD NOTE THAT THE ARAB MONETARY FUND -- WHICH IS ACTUALLY RESPONSIBLE FOR ORGANIZING THE APRIL 22-23 MEETINGS -- IS CURRENTLY OWED MORE THAN 369 MILLION USD BY IRAQ (189 MILLION IN PRINCIPAL, THE REST IN INTEREST). IRAQ HAS MADE NO PAYMENTS TO THE AMF IN MORE THAN A DECADE, THE NUMBER TWO OFFICIAL TOLD ECONOFF IN LATE 2002. POST THEREFORE SUGGESTS THAT IN ADDITION TO THE AFESD- SPECIFIC POINTS OUTLINED IN REF. A, CONSIDERATION BE GIVEN TO BROADENING THE DEMARCHE TO ASK THAT ALL THE RELEVANT ARAB FINANCIAL INSTITUTIONS MEETING IN ABU DHABI LATER THIS MONTH TAKE THE NECESSARY STEPS TO ENGAGE POSITIVELY WITH IRAQ AND PARTICIPATE FULLY IN THE PROCESS OF RECONSTRUCTION. WAHBA