CBJ MOVING FORWARD ON TREASURY AGENDA

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 008168

SIPDIS

E.O. 12958: DECL: 10/13/2015
TAGS: ECON EFIN IZ JO PGOV
SUBJECT: CBJ MOVING FORWARD ON TREASURY AGENDA

REF: AMMAN 08031

Classified By: CDA DAVID HALE FOR REASONS 1.4 (B),(D) AND (E)


1. (C) SUMMARY. In a second follow-up meeting to Treasury
DAS Glaser's recent visit to Amman (see ref),Central Bank of
Jordan (CBJ) Deputy Governor Faris Sharaf was optimistic the
Anti-Money Laundering (AML) bill might pass by December, and
agreed tentatively to a December FIU study tour in Egypt.
Sharaf
failed to be persuaded on the desirability of a cash
declaration policy at ports of entry and exit to stem the
flow of illicit money, emphasizing that the "issue is not our
exit borders but their (Iraq's) borders" and pointing to
fears of a negative market reaction to such a move. Sharaf
ended the meeting with a sober assessment of Jordan's
economy. While strong monetary-influenced macroeconomic
indicators are evident, the government,s poor fiscal
policies and an anti-reform parliament continue to jeopardize
Jordan's economic health in Sharaf's view. END SUMMARY.

An Action-Planned December
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2. (C) Deputy Governor Sharaf (protect) told emboffs Oct 11
he did not think that technical changes to the AML law which
may now be required (given the time elapsed since its
original drafting two years ago) would delay passage of the
law. Sharaf's hope that the AML bill would pass in the
December session of Parliament was tempered with a personal
belief that Parliament "represents a microcosm of corruption
and inefficiency." NOTE: Sharaf's remarks about Parliament
underscore the CBJ's limited role in pushing the AML bill any
further at this stage in the legislative process. END NOTE.


3. (C) Given the success of the visit to Treasury's FINCEN in
August by a CBJ delegation, Sharaf agreed to send a follow-on
delegation to Egypt to further study how a regional FIU
operates. Sharaf said he would contact his Egyptian
counterpart to coordinate a December study tour.


Cash Declaration Policy: A Hypothetical in the Short-Term
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4. (C) Sharaf reiterated his opposition to a cash declaration
policy at ports of entry and exit. Philosophically, the
problem of "cash transiting into Iraq is an Iraqi problem",
he began. Sharaf argued that expecting Jordan to create a
law to control cash leaving its borders is not in line "with
international standards." When the discussion was narrowed
to cash coming into Jordan, Sharaf voiced three arguments
against CBJ action: First, a cash declaration policy
requires a legal framework (i.e., an AML law) that has yet to
be established. Second, the policy should be a Customs and
law enforcement directive, not a CBJ one. Third and most
important for Sharaf was the fear the market would
misinterpret a cash declaration policy as a central bank
attempt to control cash flow, and put undue pressure on the
Jordanian Dinar. Despite these impediments, Sharaf did shed
light on how a hypothetical policy might work. Sharaf
envisioned that the limit on undeclared transfers would be
set in Dinars, and would be determined by a "Higher
Council"-type body established by the AML law. NOTE:
Considering CBJ hesitation in creating a cash declaration
policy and the other actors identified, EMBASSY will explore
alternate options for progress on the issue. END NOTE.

Reform the Reformers
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5. (C) The meeting concluded with Sharaf offering his
assessment of Jordan's economic future. Sharaf was confident
in the CBJ's ability to manage inflation and promote economic
growth, but showed little faith in the Ministry of Finance
(MinFin) and Parliament. An institution devoid of "even one
economist worth his degree," Sharaf accused MinFin of having
missed a number of opportunities to service debt efficiently,
and of pursuing actions that were "penny wise, pound
foolish." On the Parliament, Sharaf described its members as
"corrupt and inefficient" legislators who spent their annual
$12 million budget "flying to Paris" and legislating the
"purchase of expensive cars for themselves," rather then
hiring staff and passing effective legislation. COMMENT:
Sharaf does not move in circles that would have first-hand
knowledge of legislative lifestyles, but tales of high-living
parliamentarians are common fodder for discussion among some
circles in Jordanian society. END COMMENT.

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