SPECIAL KUWAIT MEDIA REACTION, JANUARY 23: VISIT OF

UNCLAS SECTION 01 OF 04 KUWAIT 000253

SIPDIS

STATE FOR INR/R/MR, NEA/ARP, NEA/PPD, PA, INR/NESA
STATE FOR IIP/G/NEA-SA, INR/B
WHITE HOUSE FOR PRESS OFFICE
LONDON FOR GOLDRICH
PARIS FOR OFRIEL
USDOC FOR 4520/ANESA/ONE/FITZGERALD-WILKS
USDOC FOR ITA AND PTO/OLIA

E.O. 12958: N/A
TAGS: OIIP KU KDMR
SUBJECT: SPECIAL KUWAIT MEDIA REACTION, JANUARY 23: VISIT OF
SPECIAL PRESIDENTIAL ENVOY JAMES BAKER TO KUWAIT


1. SUMMARY: Local media reports that the Kuwaiti government
has agreed to "substantial reduction" of the debt owed by
Iraq to Kuwait in response to the visit to Kuwait on January
22 by Special Presidential Envoy James Baker provided
Kuwait's National Assembly approves this policy. Prime
Minister Sheikh Sabah Al-Ahmed and Foreign Minister Sheikh
Mohammed Al-Sabah are reported in media as saying that the
debt reduction is contingent upon establishment of an
"internationally recognized Iraqi government" and approval
of the action by Kuwait's National Assembly. Both the Prime
Minister and Foreign Minister are reported as saying that
the issue of Iraqi reparations owed to Kuwait for damages
inflicted during the 1990-91 invasion and occupation were
discussed with Baker, and that Baker was "cognizant of the
difference" between the Kuwaiti position on reparations and
on debt owed by Iraq.

The tone of reported responses by members of Kuwait's
National Assembly range from caution to outright rejection
of debt reduction for Iraq. Several MPs state that debt
reduction should not "be rushed into," with one stating that
it should wait until a "fully elected (Iraqi) government
with constitutional accountability" is in place. Another MP
opposes "giving up even one penny" of the debt owed to
Kuwait.

Of the three editorial opinions that have appeared thus far,
two support the conditions placed on debt reduction by the
Kuwaiti government, emphasizing the responsibility to
support "the friend and ally of Kuwait, the United States,"
on this issue. A third commentator ties debt reduction to
the awarding of reconstruction contracts to regional
companies. END SUMMARY.


2. News stories: On January 22, all newspapers dedicated
front-page coverage and banner headlines to the January 21
visit of Special Presidential Envoy James Baker to Kuwait:

--Al-Watan: "Sabah Al-Ahmed to Baker: The reparations are
not to be touched and we are ready for a substantial
reduction of debt with the approval of the National
Assembly."

--Al-Rai Al-Aam: "Kuwait to Baker on debts: yes, but..."

--Al-Seyassah: "Kuwait heads towards writing off Iraqi debt
and MPs warn: no relinquishing of the people's benefits."

--Al-Qabas: "Sabah Al-Ahmed to Baker: We seek a substantial
reduction of debt but the decision is in the hands of the
National Assembly."

--Al-Anba: "The ball of Iraqi debts is in the National
Assembly's court."

--Arab Times: "It's only money... Kuwait vows debt cut."

--Kuwait Times: "Iraq debt waiver awaits National Assembly
nod."

All newspapers published the full text of the statement
issued by the Iraqi Minister of Finance and the governor of
the Iraqi Central Bank following their meeting with SPE
Baker and the American Embassy in Kuwait.

Government response:


3. All newspapers carried excerpts from a statement issued
by the Prime Minister's office stating, "Kuwait, along with
other countries, seeks to achieve a substantial reduction in
Iraqi debts this year." All newspapers highlighted two
conditions set forth by the government to this decision.
First, debt reduction was contingent upon the "approval of
constitutional institutions in the country"-- the National
Assembly-- and second, that any agreement be "acceptable to
an internationally recognized Iraqi government."


4. All newspapers carried statements from the Foreign
Minister, Dr. Sheikh Mohammed Al-Sabah, highlighting the
terms of the agreement reached:

--Al-Rai Al-Aam and Kuwait News Agency (KUNA): The Prime
Minister and Foreign Minister both emphasized the importance
working with other creditor nations and the importance of
coming to "an international resolution from the Paris Club
on the issue of Iraq's debt." He added that Kuwait is not
the only nation concerned with the issue of debt. Dr.
Mohammed explained: "Kuwait commits to the decisions made by
the Paris Club concerning nations' debt and cannot bypass
its resolutions, especially since a unanimous decision will
be made for all Iraq creditor nations."

--Al Watan quoted Dr. Mohammed as saying: " We have agreed
to go to the Paris Club. When we reach an international
decision on Iraqi debt, we will return to the National
Assembly and explain exactly the position of the
international community. The matter will then be in the
hands of the legislative authority."

--Al-Rai Al-Aam and Al-Qabas report Dr. Mohammed stated
that, "regardless of all other matters, we must gain the
approval of constitutional authorities in Kuwait, because as
per the constitution, no one has the right to reduce any
debt owed to the country except the Kuwait National
Assembly. Therefore, we consider the matter to be
premature."

On the subject of reparations owed Kuwait by Iraq for damage
during the 1990-91 invasion and occupation, Dr. Mohammed
said, "The issue of Iraqi debt is fundamentally different
from reparations. Kuwait has therefore absolutely rejected
discussing the issue of reparations since there is a UN
resolution issued in this regard, something which the
American administration clearly understands." Prime Minister
Sheikh Sabah Al-Ahmed told KUNA that this difference was
stressed to Baker and that "Baker was cognizant of that
difference."


5. Al-Rai Al-Aam reported that according to "informed
sources," "Baker expressed understanding of the Kuwait
position and valued the Kuwait position. He also reassured
Kuwait that Washington is taking Kuwaiti claims into
consideration and realizes that Kuwait has a right it must
take."


6. Al-Rai Al-Aam editorialized that the GOK response can
characterized as "yes, but.." The newspaper added that
during the discussions, Kuwait never indicated there would
be possibility the debt may be written off. According to Al-
Rai Al-Aam, Kuwait clearly informed Baker that, "any
procedure pertaining to debt must be linked in return to
contracts to rebuild (Iraq),as a deserved entitlement and a
form of compensation."

Response from the National Assembly:


7. MP Abdul-Wahab Al-Haroun, head of Parliament's Finance
Committee, told Reuters that any talk about reducing debts
or compensation is premature since Iraq is ruled by an
interim council, not a fully elected government with
constitutional accountability: "Such a matter should be done
through negotiations between governments, not between a
government and an interim council that can be changed at any
minute." (Al Qabas, January 22)

--MP Khalid Al-Adwa strongly rejected "giving up even a
penny" of the debts or reparations owed to Kuwait by Iraq,
stating that it is "a national duty" to reject calls to
write off any Iraqi debts. He called on the National
Assembly to stand up to attempts to relinquish the rights of
Kuwaiti people, "especially since those who are in power in
Iraq [on the Iraqi Governing Council] surprise us with
statements that make Kuwaitis nervous and apprehensive, and
which remind us of the aspirations of the former Iraqi
tyrant and his cronies." (Al-Seyassah, January 22)

--MP Hassan Al-Mezyed called for rejecting calls to write
off the debts "which belong to the Kuwaiti people in favor
of an Iraqi leadership that still abides by Saddam's
ideology." (Al-Seyassah, January 22)

--MP Basil Al-Rashid stressed the necessity of taking into
consideration all security, economic, and political
interests before thinking of writing off Iraqi debts. (Al-
Seyassah, January 22)

--MP Jamal Al-Omar said, "We must not rush into writing off
the debts." (Al-Seyassah, January 22)

--MP Dr. Nasser Al-Sanea said that the issue of Iraqi debts
"requires consultations between the legislative and
executive authorities to hear more details." He added that,
"among the available alternatives is the reduction of the
debts through a Paris Club agreement."

Editorial Opinion:


8. Lawyer Rashed Al-Radaan wrote in independent Al-Watan
(1/22): "Since we are a strategic ally of the United States
and have the fortune to be treated with gratitude by this
great country that is currently seeking to forgive debts
owed by Iraq, we must therefore be clear and direct with the
special presidential envoy. If the Kuwaiti government wants
to write off the debts [owed by Iraq to Kuwait], the Kuwaiti
citizens who suffered painfully as a result of Saddam's
invasion cannot agree to give up their claim to reparations
despite their respect for and knowledge that the brethren
Iraqi people are not to blame for what happened."


9. "What Did We Prepare for the Baker Visit?"
Dr. Fahd Abdul Rahman Al-Nasser wrote in independent Al-
Qabas (1/22): "The people of the region are more worthy
than Iraq of benefiting from these debts. If the Americans
want to write off the Iraqi debts, they must treat the
companies of the region in a special way. They must give
[regional] governments and companies priority in rebuilding
Iraq instead of ignoring them and writing off debts owed to
their countries."


10. "Leadership Fills the Vacuum."
Lawyer Jamal Al-Kandari wrote in independent Al-Watan
(1/23): "The government said the truth when responding to a
request made by the friend [Special Presidential Envoy
James] Baker to write-off Iraqi debts. This was done by
announcing the government's preliminary agreement, so as not
to lose the friend and his government, while at the same
time setting the condition of dealing and negotiating with
an internationally recognized Iraqi government. The most
important thing is the approval of the Kuwait parliament in
order to show respect for the country's constitution. This
is something that should not upset our allies, since it
constitutes the heart of a democracy."


URBANCIC