Identifier
Created
Classification
Origin
05KUWAIT4483
2005-10-18 13:10:00
UNCLASSIFIED
Embassy Kuwait
Cable title:  

KUWAITI PERSONAL DEBT FORGIVENESS VERSUS IRAQ DEBT

Tags:  PGOV PREL KU KUWAIT IRAQ RELATIONS 
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UNCLAS KUWAIT 004483 

SIPDIS

STATE FOR NEA/ARPI SWALKER, LONDON FOR LTSOU

E.O. 12958: N/A
TAGS: PGOV PREL KU KUWAIT IRAQ RELATIONS
SUBJECT: KUWAITI PERSONAL DEBT FORGIVENESS VERSUS IRAQ DEBT
AND FOREIGN AID

UNCLAS KUWAIT 004483

SIPDIS

STATE FOR NEA/ARPI SWALKER, LONDON FOR LTSOU

E.O. 12958: N/A
TAGS: PGOV PREL KU KUWAIT IRAQ RELATIONS
SUBJECT: KUWAITI PERSONAL DEBT FORGIVENESS VERSUS IRAQ DEBT
AND FOREIGN AID


1. (U) Kuwaiti opposition groups in the National Assembly
opposed to debt relief for Iraq and assistance to the U.S.,
Pakistan and other countries have renewed their call for the
cancellation of Kuwait citizens' personal debt. They see
that as the preferred accompaniment or alternative to
cancellation of Iraqi debt and continued GOK aid abroad. The
GOK claims there to be as much as $12-14B in Iraqi debt and
press reports have cited a figure as high as $17 billion.
The GOK has pledged $500M to the U.S. for Hurricane Katrina
assistance and $100M to Pakistan for earthquake assistance.



2. (U) The renewed debate, spurred by GOK considerations of
debt relief for Iraq and the government's large budget
surplus (estimated by private financial services as exceeding
$24B for Kuwaiti FY05-06),is spearheaded by Islamists, the
Popular Action Bloc headed by Ahmed Al-Saadoun, and other
members of parliament (MPs),including Dr. Awad Barad
Al-Enezi, presumably seeking to score political points with
relevant constituents in preparation for the 2007
parliamentary elections.


3. (U) Press reports cite some MPs calling on the GOK to
cancel private Kuwaiti consumer loans (estimated by the
Central Bank at $5.4B),including real estate loans and phone
bills. Others have suggested awarding each Kuwaiti household
10,000 Kuwaiti Dinars ($34,000) to cover living expenses. The
Prime Minister has dismissed the proposals as politically and
economically unfeasible. Liberal MPs are also opposed to
such measures and would like to see increased fiscal
discipline imposed on Kuwaiti citizens, including the
adoption of a national income tax to cover expats as well as
citizens of Kuwait. (Note: Kuwaiti citizens today are exempt
from paying any personal taxes.)


4. (U) Comment: The issue of debt relief for Kuwaiti citizens
will complicate the GOK's efforts to cancel Iraqi debt when
this matter reaches the National Assembly.


LEBARON