JORDANIAN REQUEST FOR INTEREST BEARING ACCOUNT

S E C R E T SECTION 01 OF 02 AMMAN 008714

SIPDIS

E.O. 12958: DECL: 10/20/2014
TAGS: MARR MASS PREL IZ JO
SUBJECT: JORDANIAN REQUEST FOR INTEREST BEARING ACCOUNT


Classified By: CDA David Hale for reasons 1.4 (b),(d).

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SUMMARY
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1. (C) The Jordanian Armed Forces (JAF) have requested the
disbursement of unexpended Foreign Military Financing (FMF)
funds into an interest bearing account (IBA). The JAF
believes an IBA would help long-range planning, ease the debt
burden caused by delays in Coalition Support Fund (CSF)
payments, and provide additional funds needed to maintain
operational readiness. END SUMMARY.

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JORDANIAN RATIONALE
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2. (S) In an August 24 letter to Embassy Defense Attache
(text provided in paragraph 4 below),the JAF Director of
Planning and Organization, Brigadier General Mohammad
Farghal, formally requested the creation of an IBA for
unexpended FMF funds. JAF Head of Finance/Comptroller at the
Directorate of Planning and Organization, COL Abdul Majed
Abadi, told PolOff and MAP officer October 5 that disbursing
unexpended FMF funds into an IBA would help the JAF's
long-range planning, ease the debt burden incurred by delays
in CSF payments for day-to-day operations, and provide
additional funds to purchase US-origin spare parts needed to
maintain operational readiness. Abadi claimed the JAF's
long-range planning was hindered by an outstanding balance of
approximately USD 195 million in CSF payments. The JAF has
been reimbursed to date only USD 52 million for expenditures
in support of Jordanian field hospitals in Afghanistan and
Iraq, Royal Jordan Air Force (RJAF) repairs to airbases
attributable to operations in support of the coalition,
border security, and task forces in Afghanistan.


3. (C) Abadi said this shortfall in CSF reimbursement
hampered JAF day-to-day operations; it posed significant
challenges in maintaining JAF operational readiness as the
maintenance and spare parts needed to upkeep forces has to be
paid out of readily available funds. Being able to draw upon
interest earned in an IBA to help finance operational
readiness would free up funds and provide flexibility to
better plan for future JAF needs.

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POST COMMENT
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4. (C) The GOJ regards itself as the most steadfast Arab ally
of the U.S. in the region, and thus understandably wants to
join Egypt in accruing interest on its unexpended FMF funds.
Approval for an IBA would be a strong gesture of our
appreciation for Jordan's resolute and important support of
our efforts in the global war on terrorism. It would also
contribute to Jordanian military modernization and readiness
(a key post goal),and encourage continued and strengthened
support for the coalition in the face of debt burdens caused
by delayed CSF reimbursement. At an interest rate of 1%,
Jordan would receive nearly USD 2.5 million annually based on
an estimated sum of USD 240 million in the account. The
additional funds would be more than symbolic; they would give
Jordan the flexibility either to sustain its force or to
strengthen other needed programs in compliance with the
criteria of the IBA. Post will work with the GOJ to manage
its financial expectations and anticipated use of interest
funds.


5. (U) Text of BG Farghal's letter:

24 August, 2004
Colonel David MacLean
Chief, Military Assistance Program and Defense Attache
Embassy of the United States
Amman

Subject: Interest Bearing Account (IBA) request

Dear David,


1. I would like to seize this opportunity to express our
profound and sincere appreciation for your continuing
support of JAF, and to emphasize our pride in the level of
cooperation and friendship that we both have reached over
the years.


2. In our continuing endeavor to answer JAF's defense
needs, we are trying to spare no efforts in managing the
military assistance funds efficiently and professionally.
Also, as you are well aware, our FMF program doesn't
incorporate or enjoy Cash Flow Financing facilities (multi
year commitment) unlike other U.S. allies in this region
(FMF recipients). This consequently makes it very
difficult for JAF to make any long range planning for FMF.


3. In view of the above, you are kindly requested to
assist in enabling JAF to deposit the unexpended balance of
FMF into an Interest Bearing Account (IBA) in the US
Federal Reserve Bank in an endeavor to utilize the earned
interest to finance some of JAF's additional programs.


4. While anticipating your assistance, as always, please
accept my highest regards and best wishes.
Yours,

Brigadier General
Director of Planning and Organization
Mohammad Farghal


6. (U) Baghdad minimize considered.

Visit Embassy Amman's classified website at

http://www.state.sgov.gov/p/nea/amman/

or access the site through the State Department's SIPRNET
home page.
HALE