CONFUSION OVER PORT FEES FOR COALITION SHIPS

S E C R E T SECTION 01 OF 02 KUWAIT 003873

SIPDIS

E.O. 12958: DECL: 11/10/2014
TAGS: MOPS EWWT PREL KU IZ
SUBJECT: CONFUSION OVER PORT FEES FOR COALITION SHIPS
DOCKING IN KUWAIT

Classified By: Deputy Chief of Mission Matthew H. Tueller, Reasons
1.4(a) and (b)


1. (S) Summary and Comment. The Kuwait Ports Authority (KPA)
has intermittently charged US and coalition shipping agents
various vessel and cargo-handling fees, in apparent
contravention of the US-Kuwait Defense Cooperation Agreement
(DCA). Despite repeated MFA assurances that these vessels
were exempt from all fees, shippers nevertheless have
incurred charges. Consequently, Maersk-Kuwait has declined
to bring USNS Charlton into Kuwait's port of Shuaiba (aka Ash
Shuaybah). KPA Director of Finance Abdullah Al-Shamali
(protect) provided minutes from his October 26 meeting with
representatives from MFA and MOD, at which it was decided to
recommend to the Council of Ministers that US vessels (but
not other coalition countries) be exempt from fees and
duties. Al-Shamali declined to provide a letter saying that
US vessels would be exempt until the Council of Ministers
takes a decision. Al-Shamali agreed, however, to schedule a
meeting of all concerned parties before the January 2005
scheduled rotation of coalition forces to minimize confusion
during that operation. On November 9, MFA Americas Department
Head Ambassador Khalid Al-Babtain said that he anticipated
that the Council of Ministers would decide to exempt US
vessels, but he would not speculate when that action might be
taken.


2. (C) Comment. We are concerned about the delays that this
confusion over port fees could cause, and the potential
impact on operations in Iraq. That concern has been
expressed to KPA and MFA. We also have pushed for the
exemption of other coalition members from vessel and
cargo-handling fees. We find a reference to the DCA in the
port fees committee's minutes as an agreement that applies
only to "the American forces present in Kuwait" unsettling,
as it leaves open the possibility of excluding support for
operations in Iraq. We have urged Al-Babtain to ensure that
the fees exemption includes all US and coalition vessels, not
just those supporting operations in Kuwait. End Summary and
Comment.

(U) Port Fees Dispute Leaves USNS Charlton Stranded at Sea
-------------- --------------


3. (U) Over the past several months, the Kuwait Ports
Authority (KPA) has now and then charged US and coalition
military shipping agents various vessel and cargo-handling
fees, in apparent contravention of the US-Kuwait Defense
Cooperation Agreement (DCA). Despite repeated assurances
from the Ministry of Foreign Affairs that these vessels were
exempt from all fees and that KPA had been instructed to
cease and desist, shippers have continued to incur fees. On
November 5, post learned that the US Military Sealift
Command's (MSC) shipping agent, Maersk-Kuwait, had declined
to accept responsibility for bringing USNS Charlton into
Kuwait's port of Shuaiba (aka Ash Shuaybah). The firm
asserted its concern that KPA might charge unauthorized fees
and demanded a letter from its contracting officer, stating
that the USG would reimburse Maersk-Kuwait for any
unauthorized fees imposed by KPA. On November 5, as a result
of Maersk-Kuwait's decision, the USNS Charlton was unable to
dock and unload equipment for the 42nd Infantry Division as
scheduled. Instead, the Charlton was forced to circle in the
Arabian Gulf while waiting for permission to enter Shuaiba
port.

(S) USNS Charlton Fires on Approaching Dhow
--------------


4. (S) In addition to the disruption in resupply that this
dispute has caused, its force protection implications became
quickly apparent when on November 7, a dhow approached the
Charlton and failed to respond to warning whistles, flares or
warning shots. The dhow changed course only after the
Charlton had fired M-16 and M-60 rounds into its hull and
bow. To prevent further such encounters, MSC and
Transportation Command (TRANSCOM) at first ordered the
Charlton into the Gulf of Oman pending resolution of the port
fees issue. However, on November 10 MSC headquarters
instructed Maersk-Kuwait to facilitate the Charlton's arrival
into Shuaiba port, guaranteeing that MSC would reimburse
Maersk this time only for any improper fees that KPA might
charge.

(C) Council of Ministers Must Approve Fee Exemption
-------------- --------------


5. (C) On November 8, EconCouns and EconOff met with KPA
Director of Finance Abdullah Al-Shamali (protect) to seek
KPA's justification for charging port fees. Shamali said
that he had met on October 26 with representatives from the
Ministry of Foreign Affair's (MFA) legal department and the
Ministry of Defense (MOD) to discuss port fees. In
confidence, Shamali provided a copy of the meeting minutes.
According to the minutes, KPA complained that it was facing
financial difficulties because some shipping companies,
claiming that they had not been paid by the US military, were
withholding payment for services rendered. The committee
then debated at MFA whether the US-Kuwait DCA offered them a
legal basis for exempting US and coalition vessels from all
fees and taxes. The MFA representative argued that the DCA
differed from other countries' status of forces agreements
(SOFA) with Kuwait, and that only US -- and not other
coalition countries' -- ships would be exempt under the DCA.
The committee ultimately decided to recommend to the Council
of Ministers that US vessels should be exempt from fees and
duties but that other coalition countries should not be
exempt. They also agreed that the Council of Ministers should
establish a mechanism to compensate KPA for its DCA-related
expenses.


6. (C) EcounCouns urged Al-Shamali to exempt coalition ships
as well, noting that US and coalition cargo could arrive
mixed together on various countries' vessels. Al-Shamali
said that this should be raised with the MFA legal
department. EconCouns then asked Al-Shamali to provide a
letter saying that US vessels would be exempt from all fees,
explaining that vessels were waiting in the Gulf because the
shippers did not want to incur more fees. Al-Shamali
declined, saying that no such guarantee could be made until
the Council of Ministers takes a decision. He could not
provide a timeline for the decision but said that until then,
shipping agents might be required to make advance payment on
various but undefined cargo-related charges before they would
be allowed to dock. EconCouns noted that there would be a
large troop and equipment rotation in January 2005, and
stressed the need to find a durable solution in advance.
Al-Shamali agreed to schedule a meeting of Ports Authority,
military and concerned shipping agent representatives before
then, to minimize confusion and misunderstanding ahead of
this period of port congestion.

(C) MFA Expects Approval but Doesn't Know When
-------------- -


7. (C) In subsequent conversations on November 9, MFA
Americas Department Head Ambassador Khalid Al-Babtain told
EconCouns that he anticipated that the Council of Ministers
would decide in favor of exempting USG military cargo from
fees under authority of the DCA. He would not hazard a guess
on when that action might be taken, but noted the urgency in
clarifying the fees issue.


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