(C) SCENESETTER FOR VPOTUS MEETING WITH FONMIN

S E C R E T SECTION 01 OF 04 KUWAIT 001003

SIPDIS

STATE FOR NEA/ARP, NEA, D, PM, S/WCI
WHITE HOUSE FOR OVP
TUNIS FOR NATALIE BROWN

E.O. 12958: DECL: 03/28/2014
TAGS: PREL MARR IZ KU
SUBJECT: (C) SCENESETTER FOR VPOTUS MEETING WITH FONMIN

REF: A. KUWAIT 368

B. KUWAIT 379

C. KUWAIT 728

D. KUWAIT 758

E. SECTO 42

Classified By: CDA FRANK URBANCIC; REASON: 1.4 (B,D)


1. (C) Meeting with the Vice President March 31 will be the
highlight of Kuwaiti Foreign Minister Shaykh Dr. Mohammed
Sabah al-Salem al-Sabah's visit to Washington. It will also
be the GOK'S highest-level meeting with the USG since Prime
Minister Shaykh Sabah al-Ahmed al-Jaber al-Sabah's September
10 bilateral and lunch with the President at the White House.
Dr. Mohammed has said he would like Deputy Prime Minister
and Defense Minister Shaykh Jaber Mubarak al-Hamad al-Sabah
to attend his meetings with senior US officials. He is also
scheduled to meet with NSA Rice and Deputy Secretary
Armitage, and participate in the Major Non-NATO Ally (MNNA)
ceremony on April 1.

(U) KUWAIT: THE ONE INDISPENSABLE ALLY
--------------


2. (C) Kuwait was the one indispensable ally for Operation
Iraqi Freedom (OIF). It is unique: the only Arab state
where both the government and public opinion openly supported
us in eliminating Saddam Hussein's regime by force. Besides
granting unqualified permission for basing and unlimited
overflight/landing clearances for OIF, Kuwait built fuel
pipelines for our forces and provided free fuel, as discussed
in detail below. The Kuwaitis understand that they need us
to succeed in Iraq, and they are eager to help. They have
provided strong political support to the Iraqi Governing
Council, most recently by inviting Iraq to the Neighboring
Countries Ministerial held here February 14-15, as a full and
equal participant. The Government and private sector are
working together to crystallize a creative vision of an Iraq
integrated into the Gulf region and beyond. Kuwait's total
pledge at the Madrid Conference, $1.5 billion, encompasses
about $1 billion already spent in support of the liberation
of Iraq, including over $122 million for humanitarian
operations. The GOK says it will consult with the Iraqis on
how best to spend the remaining half-billion dollars. The
MFA Undersecretary confirmed to Charge March 28 that Kuwait
is in the process now of transferring its $10 million pledge
for IRFFI, half to UNDP and half to the World Bank.

(C) SHARING THE BURDEN
--------------


3. (C) The GOK continues to view the US as its long-term
partner and protector. It understands, perhaps better than
most, that even though we do things in a very heavy,
expensive way, we get results. They like being on the
winning team, and feel vindicated for having sided with us in
the liberation of Iraq. That said, this is a small country,
rich on a small scale, and our Iraq operations dwarf its
income: the US $87 billion supplemental is more than double
Kuwait's GDP of $35-40 billion. The Kuwaitis also want their
contributions acknowledged, and they need to know what we
expect them to provide and for how long.


4. (C) The GOK's Assistance-In-Kind (AIK) fuel for US and
Coalition forces is a significant issue that needs to be
addressed: from $8 million in 2002, it rose to well over
$400 million in 2003, and is projected to be over $400
million for 2004. This represents about 22 percent of
Kuwait's jet-fuel production, 4.5 percent of government
revenues from oil sales, and 1.2 percent of GDP,
proportionately equivalent to some $150 billion in the US.
Since Assistant Secretary Bloomfield's successful visit in
January (refs A, B),the fuel has continued to flow at the
rate of about 1.3 million gallons/day (worth approx. $1.2
million),but who ultimately will pay for it remains
undetermined. The GOK says it needs an agreement spelling
out quantities to be provided and for how long, in order to
fend off parliamentary criticism. However, the Kuwaiti
leadership has been reluctant to specify any limit,
apparently hoping we will put a cap on the AIK ourselves.
Meanwhile, the fuel comes out of the MOD budget, severely
constraining the Kuwait military's ability to pay for its own
operations and development. (NOTE: Deputy Secretary
Armitage will set the stage for follow-on discussions April 2
between Dr. Mohammed and a State-DOD team. END NOTE.)


5. (S/NF) A Serious Operational Impact: reaching final
agreement on the AIK fuel issue is critical to our continued
ability to deploy forces into Kuwait. In but the most recent
example of deployment problems caused by this lack of
agreement, in February USCENTCOM requested the basing of two
(2) EC-130H Compass Call aircraft at Kuwait's Ali al-Salem
Airbase. These aircraft were being deployed specifically to
provide jamming and sophisticated electronic warfare support
to defeat Improvised Explosive Devices (IEDs) that are
responsible for the majority of coalition casualties in Iraq.
The Chief of Staff of the Kuwait Armed Forces did not allow
the deployment, based on the need to reach an arrangement on
the provision of fuel. Essentially we are now unable to move
any additional aircraft into Kuwait pending resolution of
this issue. To date, ground force deployment has not been
affected (presumably because the forces are rotating to Iraq
and not remaining in Kuwait). However, the freeze on
aircraft basing is having an operational impact.


6. (C) With the fall of Saddam's regime, Kuwait is in the
process of reviewing its security and defense requirements.
The Ministry of Defense is increasingly concerned with its
budget, and has begun to evaluate the costs associated with
support to U.S. and Coalition Forces. We expect exercises,
Foreign Military Sales, Assistance in Kind, and
Burden-sharing costs to receive close scrutiny. Kuwait has
already scaled back participation in bilateral military
exercises, we believe primarily for budgetary reasons. OSD
will host the bilateral Joint Military Commission (JMC),the
first since 1999, on March 30-31 in Washington. Minister of
Defense Shaykh Jaber Mubarak will attend.


7. (C) Iraq Debt Relief: Secretary Baker obtained the Prime
Minister's support for substantial reduction of Iraq's debt
this year. The GOK has made clear it intends to act in
concert with the Paris Club, and only when there is a
sovereign Iraqi government to negotiate with directly.
Iraq's bilateral debt to Kuwait is estimated at $8 - 15
billion. This is apart from Gulf War reparations which are
dealt with by the UNCC under UNSC resolutions.

(C) COUNTER-TERRORISM COOPERATION
--------------


8. (S) Although general CT cooperation has been excellent
throughout OEF, since a change in Ministers of Interior last
summer, the GOK has become slow to grasp the seriousness of
the Sunni Islamist threat among Kuwaitis. It needs to
respond more quickly and substantively to our requests for
information on Kuwaiti Sunni extremists, especially those
active in Iraq.

(C) GUANTANAMO
--------------

9. (S) Improved cooperation would strengthen the GOK's case
on Guantanamo detainees: during Secretary Rumsfeld's
February 22 visit, Prime Minister Shaykh Sabah spent much of
their meeting pressing for the Kuwaiti Guantanamo detainees
to be repatriated. Even after SECDEF made clear they are
dangerous individuals, the PM insisted he wanted them back,
stating they could be incarcerated pending trial and the GOK
could adequately monitor their activities if they were
released. Shaykh Sabah reiterated this to Secretary Powell
March 20. The GOK is now putting together a team to visit
Washington for detailed talks on charges that could be
brought against the thirteen Kuwaiti detainees, what
penalties could be imposed, and how the GOK could ensure they
would not cause harm if they were to be released.

(C) ARTICLE 98
--------------


10. (C) Kuwait signed an Article 98 agreement with
Undersecretary Bolton last June, but has so far dragged its
feet on bringing the agreement into force. This is perhaps
no surprise, given the GOK's basic policy of maintaining good
relations with all major powers, especially UNSC members.
The MFA Undersecretary told Charge March 28 he would push to
have enabling documentation sent to Embassy Kuwait before the
Foreign Minister's arrival in Washington. As MFA made clear
later in the day, this step requires the Minister's approval,
and he has already left the country.

(C) MIDDLE EAST PEACE
--------------


11. (C) Kuwait condemned the Israeli killing of HAMAS
founder Ahmed Yassin. Dr. Mohammed publicly accused Israel
of trying to kill the peace process. We have seen no
acknowledgment from the GOK or the Kuwaiti media of HAMAS's
commitment to terrorist violence and rejection of the
principle of peace with Israel.

(C) REFORM
--------------

12. (C) Secretary Powell was able to reassure the Kuwaiti
leadership that the Greater Middle East Initiative is not a
program that we intend to impose, and that we understand
reform must come from within the Arab world. Prime Minister
Shaykh Sabah had earlier been quoted as saying that Kuwait
had received nothing on GME and did not want to. When put
into its proper context, however, the GOK, and the Prime
Minister in particular, seemed less concerned about
cooperating with the US on essential reforms.

(C) IRRITANTS
--------------


13. (C) Special 301: After a promising upsurge in 2002,
Kuwait took little action to protect IPR in 2003. Its rate
of piracy of optical media is considered the worst in the
Gulf, partly because other states have made dramatic
improvements in the past few years. In keeping with
industry's recommendation, Kuwait is likely to be escalated
to Special 301's Priority Watch List this year (ref C).


14. (C) Trafficking In Persons (TIP): Since Secretary
Powell raised the issue with Dr. Mohammed (then Minister of
State for Foreign Affairs) last April, the GOK has made
progress on the major TIP problem in Kuwait, the exploitation
of (mostly female) domestic servants by some employers. The
GOK has not fully engaged with us, however, and lags behind
other GCC states that have had more time to come to grips
with the issue because they were listed in the TIP Report
earlier than Kuwait.


15. (U) US Visas: Student-visa applications in Kuwait rose
about 25 percent in 2003, rebounding from the post-9/11
decline. The Kuwaiti government and public have not made an
issue of the recent requirement for biometric data
(electronic fingerprint) collection.

(C) ADDITIONAL DETAILS ON MILITARY COOPERATION
-------------- -


16. (C) Our estimate of Kuwait's financial support to the
US-led coalition follows for the period 1 November 2002 - 31
October 2003:

- Kuwait MOD Budget: $2.145 billion.

--- Burden-sharing payments to US amount to $207 million.
Includes costs for base operations, supplies, personnel
support and military exercises.

--- Assistance in Kind (AIK). Estimated cost sharing of $73
million. Includes fuel, food, TELECOM, laundry, and utilities
for 20,000-40,000 US military personnel.

--- Foreign Military Sales (FMS): Kuwait also pays $308
million in FMS payments to the US Treasury annually.

--- Total paid to the U.S.: $644 million or approx. 30
percent of MOD budget.

- Previously planned and agreed construction: Kuwait
previously agreed, and began construction of, Camp Arifjan in
order to move ARCENT/CFLCC current operations off Camp Doha
and return that site to Kuwait. The remaining $55 million
for completion has been delayed by GOK. This delay has
resulted in extending "split base" operations for CFLCC
at increased cost and loss of efficiency. An extensive
program of safety and maintenance upgrades to Kuwait's
airbases has likewise been delayed, apparently for financial
reasons. While not as mission critical as the Camp Arifjan
project, this $50 million project also should be completed by
Kuwait as it previously agreed.

- In addition to the above, and as discussed in paragraph 3
above, Kuwait continues to provide AIK fuel for US forces
associated with Operation IRAQI FREEDOM operating in/from
Kuwait; through February 2004, this is estimated at 551
million gallons worth $463 million (rate: $0.84/gal.),
currently averaging 35 million gallons per month.


17. (S) Strategic Aerial Port of Debarkation/Embarkation
(APOD): The principal APOD servicing not only Kuwait but
also Iraq is located at Kuwait City International Airport
(KCIA). Kuwait has requested the US relocate that operation
to enable it to pursue commercial development there.
USCENTCOM has briefed the Chief of Staff of Kuwait's armed
forces on a proposal to relocate the APOD to Kuwait's Ali
al-Salem Airbase, to include a significant amount of
construction of runway and facilities, with a price tag
approaching $500 million. The Chief of Staff, who is not the
decision-maker on funding, indicated that Kuwait does not
need this project, implying that if we want it, we should be
prepared to pay for it. In the meantime, USCENTCOM plans to
ask for a delay in relocating APOD functions from KCIA to May

2005.


18. (U) Baghdad minimize considered.
URBANCIC