KUWAITI FINANCIAL ASSISTANCE TO JORDAN

C O N F I D E N T I A L AMMAN 001426

SIPDIS

E.O. 12958: DECL: 03/10/2008
TAGS: EFIN KU JO
SUBJECT: KUWAITI FINANCIAL ASSISTANCE TO JORDAN

REF: AMMAN 1412

Classified By: AMBASSADOR EDWARD W. GNEHM. REASONS 1.5 (B) AND (D).


1. (c) Further to phone and email conversations between
Ambassadors Jones and Gnehm, a March 10 meeting between the
Ambassador and Prime Minister shed some light on the apparent
misunderstanding between the Kuwaitis and Jordanians over the
$100 million Kuwait had offered to deposit in the Jordanian
central bank. PM Abul Ragheb showed the Ambassador a letter
from the director of the Kuwait Investment Authority offering
to make such a deposit on behalf of the Kuwaiti government
and setting the financial conditions, including a one year
term for the deposit and an interest rate at 1.75 percentage
points over LIBOR.


2. (c) The Prime Minister said that since such conditions
amounted to a commercial debt that Jordan would have to pay
back quickly, he would not have the ability to freely use the
money. Thus, he had not authorized acceptance of the
deposit. He said he instructed Foreign Minister Muasher, who
is currently visiting Kuwait (reftel),to ask that the
deposit be turned into a grant or a long-term loan at
concessional interest rates (he said 25 years at 0.25%
interest). We should know more when Muasher returns to Amman.
GNEHM