BACKGROUND ON KEY ISSUES FOR THE WASHINGTON VISIT

S E C R E T SECTION 01 OF 05 KUWAIT 001976

SIPDIS

NOFORN

FOR NEA/FO, NEA/I, NEA/ARPI; LONDON FOR GOLDRICH

E.O. 12958: DECL: 05/11/2015
TAGS: PREL PHUM PGOV MARR ECON EAID CVIS IZ KU TERRORISM
SUBJECT: BACKGROUND ON KEY ISSUES FOR THE WASHINGTON VISIT
OF KUWAITI FM SHAYKH DR. MOHAMMED AL-SABAH

REF: A. KUWAIT 1947

B. KUWAIT 1913

C. KUWAIT 1908

D. KUWAIT 1907

E. KUWAIT 1900

F. KUWAIT 1884

G. KUWAIT 1863

H. KUWAIT 1777

I. KUWAIT 1752

J. KUWAIT 1729

K. KUWAIT 1594

L. KUWAIT 1542

M. KUWAIT 1501

N. KUWAIT 1295

O. KUWAIT 1201

Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d)


1. (C) Summary: Kuwaiti Foreign Minister Shaykh Dr. Mohammed
Sabah Al-Salem Al-Sabah will arrive in Washington May 17, in
advance of an anticipated July visit by the Prime Minister.
Shaykh Dr. Mohammed's visit follows his participation in the
Arab-South America Summit held in Brazil, and planned return
to Kuwait for the May 16 vote on women's participation in
Municipal Council elections. Following a strategy laid out
by Prime Minister Shaykh Sabah Al-Ahmed Al-Jaber Al-Sabah
after the liberation of Iraq, Kuwait continues to seek the
strengthening of its economic and commercial ties with
strategic partners, and the Foreign Minister will want to
discuss Kuwait's progress towards a FTA. Kuwaiti fuel for
OIF, which involved lengthy negotiations, may be raised in
the context of security cooperation and GOK support for U.S.
strategic presence in the region. The Minister will welcome
reaffirmation of Kuwait's importance as a valued and trusted
ally. Key topics for U.S. interlocutors include regional
cooperation; counterterrorism; and democracy and human rights
issues such as women's suffrage, trafficking in persons, and
MEPI. Another priority is increasing the numbers of Kuwaiti
students studying in the United States. End Summary.

U.S.-Kuwait TIFA
--------------


2. (C) Kuwait and the U.S. signed a Trade and Investment
Framework Agreement (TIFA) in February 2004, and held the
first TIFA Council meeting in Washington in May 2004. Absent
significant progress by the Kuwaitis, however, USTR has been
reluctant to schedule a second Council meeting. The GOK
contends it has made significant progress and is pushing hard
for a second meeting. Also behind the GOK desire for a
second meeting is its embarrassment that Oman and the UAE --
which both signed TIFAs after Kuwait -- are in FTA
negotiations, while Kuwait has had just one TIFA Council
meeting.


3. (C) A USTR representative traveled to Kuwait March 16-17,
2005, and met with members of Kuwait's TIFA team to assess
Kuwait's progress since the inaugural TIFA Council meeting
(ref N). During the talks, it became clear that little
reform has been achieved. Many of the proposals the GOK has
made to open its economy are still in the development stage
with line ministries; other draft laws languish with a
Parliament that has shown little willingness to buy into the
GOK's liberalization vision. The Kuwaiti team was also
reluctant to allow the USG or industry groups to review draft
legislation before submission to the National Assembly, thus
missing a good opportunity to ensure that the laws meet FTA
criteria and will not require additional changes.


4. (C) The GOK seems to be under the misimpression that even
without significant economic change, Kuwait will be given an
FTA because it is a key U.S. ally. The Embassy and
Washington agencies have tried to dispel this view and have
clearly told the GOK that it will need to make measurable
progress in a number of areas before we can move forward. It
would be extremely useful to reinforce with the Foreign
Minister that Kuwait must bring its laws into compliance with
its WTO commitments. Specific steps that must be taken
include: (a) elimination of the International Conformity
Certification Program (ICCP),which the U.S. considers a
technical barrier to trade; (b) significant improvement in
Kuwait's poor intellectual property rights protection record
(Kuwait is on the Special 301 Priority Watchlist again for
2005); and (c) increased protection for labor and respect for
ILO conventions. We should at the same time make it clear
that the USG wants to see negotiations succeed and that we
will supply technical assistance as needed through MEPI and
other channels. The Ambassador has also urged the GOK to
appoint (and empower) a senior figure to coordinate the GOK
side and interact more effectively with U.S. agencies.

OIF/AIK Fuels
--------------


5. (C) From December 2002 - December 2004, Kuwait provided
nearly $2 billion in free fuel for U.S. and Coalition Force
use in Operation Iraqi Freedom (OIF) and as Assistance in
Kind (AIK) for Kuwait-specific activities under the Defense
Cooperation Agreement (DCA). Through March 2004 this
assistance was permitted by GOK wartime appropriations. Since
April 1, 2004 the Kuwait Petroleum Corporation (KPC) has
covered the fuel deliveries with a no-cost contract
retroactively signed in December 2004. The GOK is now
requesting payment for OIF fuel deliveries (approximately
800,000 gallons per day) made since January 1, 2005. DOD has
accepted a Kuwaiti offer of heavily subsidized fuel for OIF
($24 per barrel for jet fuel),but details of how this
agreement will be implemented have not been ironed out. The
GOK affirms its obligation to absorb the cost of AIK fuel
(used in Kuwait by U.S. forces) as provided for in the DCA,
but has withheld deliveries since January 1 pending a clear
statement from CENTCOM of its use as DCA-related. Shaykh Dr.
Mohammed likely believes that the fuel issue has been
"solved." He intends, however, to discuss other aspects of
GOK assistance to the U.S., with the objective of upgrading
military cooperation.

Security and Counterterrorism
--------------


6. (S/NF) In the past 30 months, Kuwait has experienced four
terrorist attacks against U.S. citizens, primarily U.S.
military personnel or contractors. During the summer of
2004, Kuwait State Security (KSS) arrested several Kuwaiti
males for traveling to Iraq to fight against coalition
forces. They and other jihadis were recently sentenced to
prison terms of up to 3 years and fines of $10,000 (ref C).
In January, KSS uncovered an extremist cell planning for
attacks against U.S. military convoys, residential complexes
occupied by westerners, and key GOK facilities. Security
services launched an extensive search for cell members which
resulted in four significant shootouts and the deaths of four
police officers and nine cell members. This was the first
incident of Kuwaiti-on-Kuwaiti terrorism and served as a
wake-up call for GOK leaders who previously were adamant that
leveraging family or tribal ties, or co-opting would-be
militants, were successful tactics in dealing with terrorism.
In response to these home-grown threats, the GOK passed a
new arms law, launched a weapons collection program, began
enforcing existing laws such as forbidding veiled women to
drive, and requiring military staff to seek approval for
foreign travel, and initiated a discussion on educational
reform. While this particular extremist cell has been
disrupted, there is still the possibility of other cells
planning operations in Kuwait and some terror supporters --
Mohsin Al-Fadhli and Khaled Al-Dosari -- remain at large and
wanted. Embassy Kuwait maintains an active CT dialog at the
political, intelligence, and security levels; and an
inter-ministry team of Kuwaitis recently participated in an
ATA training course in the U.S. Nevertheless, there is room
for improvement: Kuwait needs a focused, sustained approach
to CT; must strengthen anti-terror finance laws; and promote
coordination and cooperation among its security bodies.


7. (S/NF) Eleven Kuwaiti detainees remain at Guantanamo
Bay, Cuba. Nasser Al-Mutairi, who was returned to Kuwait in
January, was released on bail, without MFA concurrence, in
April on humanitarian grounds (ref M). His trial is
scheduled to resume June 3. While the GOK has not recently
raised detainee issues with the Embassy, the Foreign Minister
will raise it, partially to deal with strong domestic
pressure on the issue. Securing the repatriation of the 11
Kuwaitis is a priority for the Government which faces
constant criticism from Parliament on the detainee issue.
The FM will seek more transparency in USG intentions to
prosecute or return the Kuwaitis. The GOK has promised to
detain and prosecute all detainees and considers that its
recent performance on CT matters, illustrates its ability to
be tough on terror. Additionally, GOK officials regularly
argue that detainees have been returned to Yemen and Bahrain,
countries which provide far less support to OIF and other
U.S. interests, and therefore should be returned to a close
ally as well. The 3-year sentences for the jihadis represent
harsher penalties for terror suspects, but Post continues to
question whether the GOK will sustain its firm stance against
terror. At least two Kuwaitis are also detained in Iraq.

Support for Iraq
--------------


8. (C) Kuwait has been an indispensable ally in U.S. and
coalition efforts to promote peace, stability and democracy
to Iraq, and should be thanked for its continued assistance.
Before, during, and after Operation Iraqi Freedom (OIF),the
GOK turned over to the U.S. more than half of its territory,
diverted much of its commercial traffic from the Port of
Shuaiba, allowed the use of a large percentage of the
country's sole commercial airport, allowed the use of three
airbases and the building of a new desert base. It extended
fuel pipelines to three facilities and continues to provide
in excess of $100 million per month in fuel as
assistance-in-kind. Most significantly, the GOK and its
people are solidly behind the U.S. and view the success of
our operations in Iraq as intertwined with their own fate.
Even as a Major Non-NATO ally, Shaykh Dr. Mohammed will be
looking for acknowledgment that his country is more than just
a loyal friend, it is a valued and trusted ally.


9. (C) The GOK committed $1.5 billion in aid after the
liberation of Iraq, but claimed that $1 billion was already
disbursed through various types of support for coalition
forces and other pre-liberation activities. The Humanitarian
Operations Center (HOC) and the Kuwait Fund for Arab Economic
Development (KFAED) have been the two major disbursement
channels to date for the remaining funds. The HOC was set up
in 2003 in order to coordinate the humanitarian campaign in
Iraq and facilitate the efforts of Kuwaiti, international,
governmental, and non-governmental organizations providing
assistance into Iraq through Kuwait. Besides funding the
operations of the HOC itself, the GOK gave the HOC $5 million
to disburse in direct humanitarian aid in Iraq, most of which
it has been giving out in cash and small grants for
rebuilding in Najaf. Additionally, the GOK recently began
discussions with the ITG on the use of $60 million for the
construction of schools and hospitals, and refurbished the
Iraqi Embassy in Kuwait (ref E). Senior officials have made
supportive public comments about the new government and await
the nomination of an Iraqi ambassador. We seek prompt action
on the transfer of Development Fund for Iraq (DFI) assets
(ref E). The Kuwait Mission to the UN is holding
approximately $78 - 80 million in DFI funds and we have
encouraged the GOK to make those funds immediately available
to the ITG. Contrary to the U.S. position, Kuwait maintains
there is a claim on at least part of the money, but has
offered to transfer a significant amount to the ITG while the
claim issues is resolved. Post suggests that the Secretary
raise this if the transfer has not occurred by the time of
the meeting.

Democracy and Human Rights Issues
--------------


10. (C) The Prime Minister reasserted in late February the
GOK commitment to securing full political rights for women.
While the ultimate goal is full participation at the national
level, the immediate focus has been granting women the right
to vote and run for Municipal Council, a 16-member body that
oversees technical issues, such as zoning, roads, and
permits. A May 2 vote resulted in indecision and the
National Assembly is scheduled to reconsider the matter on
May 16. The passage of the measure would pave the way for
female participation in Municipal Council elections in 2009
and has possible implications for National Assembly
elections. Nevertheless, many women activists have called on
MPs to vote against the bill, arguing that it is half-measure
and the ongoing debate has turned women's rights into a
political ploy (ref G). In addition to the lack of political
rights, there are other gender inequalities. For example,
women require a male sponsor in order to obtain a passport
and are discriminated against in housing policies that favor
male heads-of-household. Post suggests that USG
interlocutors press the FM for a coherent plan to achieve
full political rights for women.


11. (C) Kuwait is a destination country for foreign workers,
most of whom hail from South Asia. They populate the service
sector and are subject to exploitation. Many endure adverse
work conditions and low, and occasionally no salary, because
they went into debt to travel to Kuwait. Recent protests by
Bangladeshi laborers over systematic non-payment of wages
have renewed local and international interest in the plight
of laborers in Kuwait. In response, the Ministry of Social
Affairs and Labor prosecuted the employer; established a
hotline for worker complaints; and set up a direct-deposit
e-banking requirement to ensure workers receive salaries (ref
I). Underage camel jockeys also remain a concern and in
2004, the GOK banned minors from working as jockeys and the
GOK formed May 9 a committee to further examine the
regulations on children's participation in camel races. The
GOK recognizes there is a trafficking in persons problem and
is committed to resolving it by working with the U.S. (ref
J). The FM's visit presents an opportunity to reinforce the
importance of this issue and identify areas for immediate
improvement, including use of the media to raise public
awareness, use of robot jockeys as in Qatar and the UAE,
increased funding and staffing for agencies charged with
combating TIP, and amendments to the labor law to cover
domestic employees.

12. (C) Kuwaitis have participated in MEPI and BMENA
activities, and alumni of participant exchanges, among them
women political activists, women entrepreneurs, and young
business people, are developing into a resource for
additional programming. We are working through GOK concerns
about direct funding by MEPI to local NGOs. The GOK is
concerned that such funding, which is illegal under current
law, would open the door to unwanted Iranian links with
sympathetic groups in Kuwait (ref J).

Regional Issues
--------------


13. (C) In March, Kuwait announced the transfer of $40
million to the Palestinian Authority (PA),and again extended
an invitation to PA President Mahmoud Abbas, who visited
Kuwait in December 2004 to return soon (ref H). The GOK has
expressed confidence in Abbas and members of his cabinet,
specifically Finance Minister Salam Fayyad. We should
encourage a resumption of diplomatic relations and a regular
flow of bilateral assistance to the PA. Kuwait has, and
continues, to assist the Palestinian people through
contributions to the UNRWA.


14. (C) Kuwait and Iran have shaken hands on, but not
finalized, a memorandum of understanding for Kuwait to import
gas from Iran in a 25 year, $7 billion deal. While noting
the U.S.'s understanding of Kuwait's gas needs, the
Ambassador explained to Ministry of Foreign Affairs U/S
Khaled Al-Jarallah on May 7 that investment in Iran through
such a deal could trigger ILSA sanctions (ref B). He further
cautioned that timing of the MOU was poor given Iran's
position on the nuclear issue. The Ambassador also told
Al-Jarallah that the U.S. would approach the SAG to ask for
Saudi cooperation on a stalled Qatar-Kuwait gas deal, in
order to broaden Kuwait's options for gas sources. From a
well-placed source at KPC, PolOff learned that Kuwait viewed
Iran as a secondary source for natural gas, and asserted that
Kuwait would ideally like to import gas from Qatar (ref F).
The Al-Jarallah described Kuwait's gas needs as "critical,"
but also explained Kuwait's views that it is better to work
with a troublesome and dangerous neighbor such as Iran than
alienate it. The FM will be interested in the U.S.
assessment of Iranian behavior, particularly on the nuclear
issue.


15. (SBU) In April, Minister for Diwan Affairs Shaykh
Nasser Mohammed Al-Ahmed Al-Sabah led a delegation on a
three-day visit to Sudan to examine rebuilding the
war-devastated country (ref L). U/S Al-Jarallah told the
Ambassador Kuwait was ready to cooperate with Sudan on
activities that would benefit the people and preferred to
grant loans through the KFAED. Despite promises from the GOS
to change investment laws to attract more foreign investors,
Kuwait is not convinced conditions are right for direct
bilateral investment. In addition to the loans, the GOK has
tentatively agreed to send troops to Sudan, but not to the
Darfur region. The GOK would likely request U.S. assistance
for deployment to Sudan and the FM should be queried on
Kuwait's intentions and timing.

Kuwaiti Students and Visas
--------------


16. (U) Post has begun a coordinated effort to reverse an
alarming decline in the number of Kuwaiti students choosing
U.S. colleges and universities (ref O). A significant
percentage of current government, oil industry and private
sector leadership in Kuwait hold U.S. degrees and holds the
United States in very high regard. The 35 percent drop in
Kuwait enrollments in the U.S. since 9/11, greater than the
decline in Saudi Arabia, was alarming for two principal
reasons: 1) the loss of the immediate/intensive exposure of
young Kuwaitis to America and Americans, and 2) the long-term
loss to the United States of a cadre of leaders in
government, business, education and other sectors who receive
not only a high quality education, but who understand
American culture and the way Americans respond to the world.
We have a strategic interest in making sure that the next
generations of leaders in Kuwait have experienced the
excellent educational opportunities in the U.S. Embassy
Kuwait's strategy to combat this decline includes
interdisciplinary group within the mission to develop and
implement actions, a stronger working relationship with
AMIDEAST Kuwait, links with the National Union of Kuwaiti
Students, Embassy website coverage of student issues, a
database of distinguished Kuwaiti alumni of American
universities, expanded Consular outreach to prospective
students, and aggressive lobbying of Kuwaiti officials to
direct more scholarship students to the U.S


17. (SBU) Members of the ruling family and senior officials
have expressed their frustration with the requirement for a
personal appearance for non-official travel. Post has
attempted to address their concerns by scheduling private
appointments for senior officials for biometric scanning in
the Consul's office, but Kuwaitis, who consider themselves
good friends and supporters of the U.S. still complain and
feel slighted. Moreover, with the start of the summer travel
season, the waiting period for NIV interviews has lengthened.
Post is now accepting appointments for July 13. Exceptions
are made for medical cases, student visa applications, and a
limited number of VIPs, but with two and one-half officers
handling all visa applications and the time required for
clearance and review, Post can accommodate no more than 150
applications per week. We are sympathetic to the GOK's
concerns, but without additional resources are unable to
process applications faster. It would be helpful to be able
to advise Shaykh Dr. Mohammed that additional TDY consular
help will be supplied to Embassy Kuwait.

Update on Northern Oilfields Project/Major Power Project
-------------- --------------


18. (C) According to Embassy sources, the recent favorable
report from the National Assembly's Finance Committee on the
Northern Oilfields Project (Project Kuwait) makes it almost
certain that the project will be approved by the entire
National Assembly. KPC and the GOK hope to have the assembly
vote on the project before the June 28 recess date which will
mark the end of the legislative year. The Energy Minister is
committed to the project and is making every effort to ensure
its passage by year's end. The U.S. companies (Chevron,
Exxon-Mobil, Occidental) involved in the three bidding
consortia remain concerned about transparency in the bidding
process and about the terms of the deal, once KPC is
authorized to open the contract for bidding. Many U.S.
companies have watched the progress of this project for a
long time and hope to see movement on it soon, as an example
of Kuwait's commitment to economic reform and openness to
foreign investment. U.S. companies are also in the bidding
process for the very large power generation project known as
Al Zour North. This is a project that has been on the books
for some time and for which U.S. firms will be treated as
local firms, in recognition of the U.S. role in Kuwait's
survival.

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