KUWAIT GAS OPTIONS AND ILSA CONCERNS: GOK SAYS

C O N F I D E N T I A L KUWAIT 001913 SIPDIS FOR NEA/ARPI - BERNS AND EB/ESC/IEC/EPC - DOWDY E.O. 12958: DECL: 05/08/2015 TAGS: ENRG EPET ETTC PREL KU IR IZ OIL SECTOR KUWAIT IRAN RELATIONS SUBJECT: KUWAIT GAS OPTIONS AND ILSA CONCERNS: GOK SAYS IRAN IS A HEADACHE BUT IT'S DIFFICULT TO CLOSE ALL DOORS REF: A. KUWAIT 1884 ¶B. STATE 83661 ¶C. KUWAIT 1089 ¶D. KUWAIT 943 ¶E. DOWDY/MOORE/NEWSOME/WERBERG EMAILS Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d) ¶1. (C) During a May 7 meeting with Ministry of Foreign Affairs Under Secretary Khaled Al-Jarallah, the Ambassador detailed U.S. concerns (ref B) about investment in Iran and advised that the proposed gas deal could trigger ILSA sanctions against companies involved in such investments. He further cautioned that timing of the MOU was poor given Iran's position on the nuclear issue. He said the U.S. was sympathetic to Kuwait's gas needs and suggested that Iran was not a reliable supplier for natural gas. He added the U.S. was aware of the problem between Saudi Arabia and Qatar regarding a gas pipeline through Saudi waters, and while the U.S. did not want to be a party to this bilateral issue, we would raise the matter with the SAG and encourage a prompt settlement. ¶2. (C) Al-Jarallah agreed that Iran was not a reliable partner, but said Kuwait's gas situation was critical. The GOK had not abandoned the idea of receiving gas from Qatar and was working to resolve the territory issue with the SAG and GOQ. Turning to the gas deal, Al-Jarallah described the negotiations as protracted, but said in the end, the deal was weighted towards Kuwait in terms of price and quantity. Still, Kuwait was not pleased with Iran, especially its views toward GCC countries. Specifically, he accused the GOI of meddling in the UAE and Bahrain and encouraging Shi'a groups. Kuwait also shared U.S. concerns about Iran's nuclear aspirations and Al-Jarallah was adamant "Iran should not be nuclear weapon state." He noted the U.S. approach to "isolate" Iran. Kuwait's approach, given its geographic position, was to attempt to create some mutual interests. Al-Jarallah further explained that the GCC's shared interests with Iran focused on trade -- he described the annual volume of trade between Iran and Dubai as $1 billion -- and security. He said GCC relations with Iran have historically been negative, but the GCC recently decided to welcome a GCC-Iran dialog that would hopefully lead to better relations and regional security. Despite Kuwait's decision to reach out to Iran, the GOK still lacks confidence in the GOI and described the relationship as a "headache." ¶3. (C) Commenting on Iranian elections, Al-Jarallah relayed reports that Khatemi supporters were promoting extremists with the notion that should they assume power, their views, combined with Iran's precarious regional and international situation and domestic security concerns, would combine to damage the extremists. ¶4. (C) See ref A for an assessment that the Iran-Kuwait gas deal is unlikely to proceed quickly. ********************************************* Visit Embassy Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ You can also access this site through the State Department's Classified SIPRNET website ********************************************* LEBARON