SCENESETTER FOR SECRETARY POWELL'S VISIT

1. (S/NF) Mr. Secretary, welcome back to Kuwait. You are
currently scheduled to meet with the Prime Minister, Shaykh
Sabah al-Ahmed al-Sabah on Saturday, July 31st. Foreign
Minister Dr. Shaykh Mohammed al-Sabah will most likely also
be in attendance. Since your last visit on March 20, there
has been movement on several bilateral issues: DNSA Fran
Townsend delivered a strong message on May 4 for the need to
take aggressive action against extremists -- Kuwait has since
cracked down on elements it accuses of funding and/or
recruiting insurgents for Iraq; the GOK informed us June 30
that from now on it will charge us for fuel supplied to our
forces for Iraq operations; the GOK submitted the Article 98
agreement to the National Assembly for ratification but has
backed off a promise to ratify it by Amiri decree during the
current parliamentary recess and will instead leave the
matter for the National Assembly to take up when it returns
to session in October; the GOK welcomed a US offer to
transfer one Kuwaiti detainee from Guantanamo, but wants all
twelve back; Kuwait welcomed our transfer of sovereignty to
the Interim Iraqi Government; and Kuwaitis were reminded
again of the benefits of our strong bilateral cooperation
when Saddam Hussein and top figures form his regime appeared
in an Iraqi court.



2. (S/NF) COUNTER-TERRORISM: The GOK has recently moved to
crackdown on Kuwaiti Sunni extremists, rounding up on July 22
and 23 a reported 10-20 Kuwaitis accused of funding
insurgents in Iraq and recruiting young Kuwaitis to go fight
there. The suspects have been interrogated by Kuwait State
Security (KSS) and are expected to remain in KSS custody
while the Ministry of Justice reviews their cases for
possible prosecutorial action. The roundup comes on the
heels of the return from Iraq (via Syria) of five Kuwaiti
youths who had been recruited to engage in 'jihad' against
coalition forces, but refused to engage in suicide bombings
there. The Prime Minister was not happy to receive Ms.
Townsend's May 4 message; he insisted that the GOK was
following the right approach by monitoring extremists and
trying to persuade them to eschew violence. However,
prominent press coverage of the return of the Kuwaiti
'jihadists,' along with information obtained as a result of
their interrogations, refocused the attention of the GOK on
the threat posed by Sunni extremists. Despite the recent
crackdown, KSS currently suffers from weak leadership and
remains constrained by legal restrictions (although the GOK
has been fully cooperative with US and UN requests to freeze
bank accounts suspected of involvement in terrorist finance,
funding insurgents abroad is not yet seen as being a crime in
Kuwait).



3. (S/NF) FUEL FOR OIF: In addition to providing the
indispensable platform for Operation Iraqi Freedom (OIF),
Kuwait has supplied free-of-charge unlimited fuel for OIF
forces: over $450 million worth in 2003 (compared to $8
million in 2002), and continuing at the rate of approximately
1.2 million gallons/day. Following the transfer of sovereign
authority to the Iraqi Interim Government, the GOK informed
us that it would keep supplying fuel for OIF but would charge
us for it starting June 29, 2004 (ref D). Assistant
Secretary of Defense Rodman has recommended to SecDef that

SIPDIS
the Iraqi Interim Government be requested to ask the GOK to
continue providing the fuel free-of-charge on its behalf. We
strongly doubt the GOK would respond positively to such a
request. Kuwaitis still remember all too well what happened
the last time they acceded to an Iraqi request to provide oil
on its behalf. The GOK was surprised that Deputy Secretary
Armitage did not raise the issue during his July 18 meeting
(ref E) with Acting Prime Minister Shaykh Nawaf al-Ahmed
al-Sabah and they may have interpreted this as our
acquiescence. The Prime Minister will probably be prepared
to discuss the issue with you should you choose to raise it.



4. (C) ARTICLE 98: The Prime Minister told the Deputy
Secretary April 19 that the Article 98 agreement signed on

SIPDIS
June 18, 2003 could be brought into force without
parliamentary ratification (ref C). However, since then, the
Cabinet Legal Committee has concluded that parliamentary
ratification is required, and the agreement has been
submitted to the National Assembly. Parliament adjourned
without acting on the matter. The Foreign Minister had
promised us that the GOK would bring the agreement into force
by means of an Amiri decree during the parliamentary summer
recess, which began on June 30. However, the Foreign
Minister informed the Ambassador July 24 that the GOK will
not issue this decree, but will await the October reconvening
of the National Assembly (ref F). (NOTE: We treat the
existence of the agreement as Confidential, because it has
never been publicly confirmed by the GOK. END NOTE.)



5. (C) GUANTANAMO: Twelve Kuwaitis are among the detainees
at Guantanamo, and one of them is a party in a case that made
it to the US Supreme Court, which ruled that detainees have
the right to challenge their detention in the US courts.
Washington recently informed the GOK that it was prepared to
transfer one of the Kuwaitis to GOK custody; the GOK wants
them all back, and says it would be prepared to prosecute
them.



6. (C) IRAQ: The GOK continues to be a strong supporter of
the Iraqi political transition process. Despite being irked
that Prime Minister Allawi omitted Kuwait from the list of
countries he thanked for their support, Prime Minister Shaykh
Sabah made clear that would not be allowed to mar relations.
Prime Minister Allawi will arrive in Kuwait on July 31 for
bilateral discussions with Shaykh Sabah and Foreign Minister
Dr. Shaykh Mohammed. The appearance in an Iraqi court of
Saddam Hussein and several other top officials of the former
regime, including "Chemical Ali," reminded Kuwaitis of the
threat that regime had posed and the service we have done to
their country and the region by eliminating it. A Kuwaiti
lawyer appointed by the GOK is assisting the Iraqi Special
Tribunal process.



7. (SBU) IPR: Kuwait has one of the worst IPR records in the
Gulf, according to industry sources and USTR. At the
Embassy's recommendation, Kuwait was placed on the Special
301 Priority Watch List this year. It would be helpful if
you stressed that effective protection of IPR is central to
the success of the Trade and Investment Framework Agreement
(TIFA) signed in March, which both sides see as the first
step towards a Free Trade Agreement. Information Minister
Mohammed Abulhassan told the Ambassador July 5 that the GOK
is committed to getting off the Priority Watch List this year.
TUELLER