(U) IRAN TO PROVIDE KUWAIT WITH FRESH WATER

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 005719

SIPDIS

STATE FOR NEA/ARP, NEA/NGA

E.O. 12958: DECL: 12/17/2013
TAGS: PREL EMIN ETRD KU IR
SUBJECT: (U) IRAN TO PROVIDE KUWAIT WITH FRESH WATER

Classified By: CDA John G. Moran for reasons 1.4 (b) and (d)


1. (C) Summary: The December 13 Kuwaiti-Iranian water
importation agreement lays the foundation for Iran to begin
supplying Kuwait with up to 900,000 cubic meters (over 200
million imperial gallons) of fresh water per day for a
30-year period. This would significantly increase Kuwait,s
supply of fresh water, bolstering Kuwait,s current
production of 300 million imperial gallons of desalinated
water. According to the Ministry of Energy, the agreement is
not government-to-government -- a structure the Iranians
requested, but the GOK was adamantly opposed to. Rather the
pipeline is to be privately financed, constructed and managed
by an as yet unnamed international consortium. Details of
the agreement, including the specific water prices the
consortium will pay Iran and charge Kuwait have not yet been
agreed to. Construction of the pipeline could begin within
6-8 months, after the GOK finds an investor, and should take
about 2.5 years. End Summary.


2. (C) On December 16, Poloff met the Ministry of Energy's
Assistant U/S for Planning, Training and Supervisory Centers,
Yousef Al-Hajri. Al-Hajri had recently returned from Iran
with Minister of Energy Shaykh Ahmed Fahad Al-Sabah, where
the Minister had concluded a widely publicized 30-year
agreement allowing for the importation of up to 900,000 cubic
meters per-day of Iranian fresh water.


3. (C) As reported in local dailies, the $1.5 billion project
would include the construction of a 540-km pipeline that will
carry water from Karkheh Dam in the Iranian Khuzestan
province to the bank of the Arvand River in the city of
Abadan (a distance of 330km),then run 210 km under the sea
to the Kuwaiti coast. Discussions about Iranian-Kuwaiti water
sales were initiated over two years ago, when Saddam Hussein
was still in power, and the planned pipeline thus assiduously
avoids Iraqi territory.


4. (C) Asked about the structure of the deal, Al-Hajri
stressed that it was not a direct partnership between the GOK
and Iran. Rather, he said, the two governments had agreed in
principle to the sale of Iranian water to Kuwait, but agreed
to leave the financing, building and operation of the
pipeline to a consortium of private companies. Al-Hajri said
that Iran had pushed strenuously for direct governmental
joint partnership, but Kuwait had insisted on a third party
in order to insulate the project from possible political
pressures.


5. (C) For political reasons, Al-Hajri said, the consortium
would consist of one Iranian, one Kuwaiti and one
"international" company. The consortium has not yet been
identified -- a process he expects to be completed within the
next few months ) but Al-Hajri said initial construction
could begin within 6-8 months. He estimated the project
would take roughly two and a half years to complete.
Al-Hajri indicated that details, including the price Iran
would charge the consortium and the price the GOK would pay,
would have to be negotiated by the consortium.


6. (C) Kuwait currently depends almost solely on
desalinization for its fresh water requirements. During the
summer of 2003, Al-Hajri said, the GOK was forced to
carefully manage its 300 million imperial gallon daily fresh
water production when consumption rates reached record
levels. "We almost ran out (of water)," he said. When asked
if Kuwait projects vastly increased water demands in the near
future, Al-Hajri said plans by the Minister of Public
Works/Minister of State for Housing Bader Nasser Al-Hmaidi to
develop 70,000 housing units in the next five years played a
role in Kuwait's decision to close the deal with Iran. (Note:
Al-Hajri was either unwilling or unable to share Kuwait's
projected water needs, but he did confirm that the Iranian
deal would help meet current needs "at least for the next 30
years." End Note.)


7. (C) Al-Hajri said the water Kuwait plans to import from
Iran represents "less than 1%" of the available water behind
the Karkheh Dam, and will have a negligible effect on Iran's
water supply. The deal allows Iran to sell water it is
currently unable to easily distribute domestically due to
extreme mountainous topography of the Khuzestan region.
Asked about Iraq as a source of water, Al-Hajri said Kuwait
never investigated the possibility because of Saddam Hussein
and concerns that Iraqi water was polluted. Al-Hajri said
the Iran-Kuwait water pipeline would be cheaper than building
another desalinization plant, and has the added benefit of
being environmentally friendly.


8. (C) As for the current status of the agreement, Al-Hajri
said it requires ratification by the Council of Ministers
before further action can be taken. Al-Hajri expects this
decision will take place within two weeks, at which time the
GOK will focus on putting together a consortium to begin
working on the project.


9. (C) Comment: The conclusion of this agreement should be
interpreted as an act of necessity by Kuwait, rather than a
new effort at strategic cooperation between the two
countries. Despite public comments by GOK officials
indicating a willingness to work more closely with Iran,
Kuwait has consistently shown reluctance to deal directly
with the Iranian government on matters of strategic
importance to Kuwait (gas, water, etc,). It is unlikely that
this distrust will disappear anytime soon, notwithstanding
the removal of the common enemy, the regime of Saddam
Hussein. That said,the deal should reinforce neighborly
relations at a time when Iran faces strong international
pressure due to its nuclear ambitions.
MORAN