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