ARAB FUND MEETING APRIL 22-23: REQUEST FOR URGENT

C O N F I D E N T I A L KUWAIT 001468

SIPDIS

STATE FOR NEA/FO
STATE PASS USAID

E.O. 12958: DECL: 04/16/2013
TAGS: EAID PREL KU IZ
SUBJECT: ARAB FUND MEETING APRIL 22-23: REQUEST FOR URGENT
DEMARCHE


Classified By: Ambassador Richard H. Jones for reason 1.5 (D).

1.(U) This is an action request -- see paragraph 5.


2. (C) At an April 16 meeting with Ambassadors Raphel and
Carney of the Office of Reconstruction and Humanitarian
Assistance (ORHA),AbdulLatif Al-Hamad, Director General of
the Arab Fund for Economic and Social Development (AFESD)
pointed out that Iraq's membership in the Fund had been
suspended since 1992, on the basis of some KD 15 million
(approximately USD 50 million) of arrears Iraq owes to AFESD.
Each year, the Board of Governors meets to review AFESD
operations, and each year since 1992 a resolution is adopted
to continue its suspension (under current rules the only
other option is to remove Iraq from the Fund). Al-Hamad
explained that he, as Director General, cannot legally
reengage Iraq to work out a plan to address its arrears
problem and consider providing any lending or grants for any
reconstruction in Iraq until the Board of Governors
(comprising the Finance Ministers of Arab League states)
approves such an approach.

3.(C) Al-Hamad then noted that the next Board of Governors
meeting was scheduled for April 22-23 in Abu Dhabi, and that
the Board only meets once a year. If the Governors do not
approve AFESD involvement in Iraq next week, he said, it will
be a full year before they can revisit the decision (as the
AFESD charter apparently has no mechanisms for extraordinary
Board of Governors meetings).

4.(U) Other topics discussed during the meeting are reported
septel.

5.(C) Action Request: Given the potential importance of
AFESD involvement over the next 12 months in Iraq's
reconstruction, Embassy Kuwait and ORHA suggest the following
points be delivered ASAP in Arab League capitals:

-- The Board of Governors of the Arab Fund for Economic and
Social Development will meet April 22-23 in Abu Dhabi.

-- We understand that one agenda item will be whether to
renew Iraq's suspension from the organization for non-payment
of arrears, or to dismiss it from the organization
altogether.

-- We believe the Arab Fund can and should play an important
role in the reconstruction of Iraq.

-- We strongly encourage you to introduce and/or approve a
Board of Governors resolution to authorize the Directors of
the Arab Fund to engage with Iraq on a plan to address its
arrears to the Fund and to resume grant and lending
operations with Iraq.
JONES