NEA DAS GRAY ENGAGES GOK ON AID, IRAN, IRAQ,

C O N F I D E N T I A L SECTION 01 OF 04 KUWAIT 005063

SIPDIS

SIPDIS

STATE FOR NEA/ARPI, LONDON FOR TSOU, PARIS FOR ZEYA

E.O. 12958: DECL: 12/06/2015
TAGS: PREL PGOV PARM EAID KDEM KPAO CVIS KU
FREEDOM AGENDA
SUBJECT: NEA DAS GRAY ENGAGES GOK ON AID, IRAN, IRAQ,
U.S.-KUWAIT RELATIONS, AND VISAS

REF: A. KUWAIT 5031

B. KUWAIT 4905

C. KUWAIT 4624

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


1. (C) Summary: NEA DAS Gordon Gray met with Director
General of the Kuwait Fund for Arab Economic Development
(KFAED) Abdulwahab Al-Bader, Ministry of Foreign Affairs
(MFA) Acting Undersecretary Ambassador Khaled Al-Babtain,
National Assembly Speaker Jassem Al-Khorafi, and Minister of
Social Affairs and Labor Faisal Al-Hajji on December 6 during
his visit to Kuwait. Al-Bader reviewed GOK assistance to
Iraq, Pakistan, the Palestinian territories, Lebanon,
Afghanistan, and Yemen. Al-Babtain and Al-Hajji expressed
frustration with U.S. visa policies. Al-Khorafi was
cautiously optimistic about the situation in Iraq, but
Al-Babtain said it was "not yet" time for Kuwaiti diplomatic
representation in Iraq. Al-Khorafi and Al-Babtain encouraged
more open USG dialogue with Iran and criticized the USG's
timing in confronting Iran over certain issues.


2. (C) Despite their criticism, however, Kuwaiti officials
were very positive about U.S.-Kuwait relations; Al-Khorafi
said the bilateral relationship "couldn't be better" and
Al-Babtain was at a loss to provide any suggestions on
improving ties. DAS Gray expressed concern about the decline
in the number of Kuwaiti students studying at American
universities and encouraged more visa applications, a message
he repeated during a successful roundtable with local media
on U.S. regional policy that received front-page coverage in
several dailies on December 7. End summary.

Kuwait Fund Assistance to Iraq,
--------------


3. (C) DAS Gray met December 6 with Director General of the
Kuwait Fund Al-Bader who reviewed funding currently being
administered by KFAED. On assistance to Iraq, Al-Bader said
KFAED is the "executing agent" for a $60 million GOK grant:
$30 million to build schools in northern Iraq, which he
predicted would be ready for contracting in early-March 2006
after a joint feasibility study was finished by the Kuwaiti
Pan Arab and the Iraqi Al-Jarrah consultancy groups; and
another $30 million to provide medicine storage facilities
and a mobile hospital for the Iraqi Ministry of Health.
Al-Bader said the Iraqi Transitional Government (ITG) wanted
to use part of another $60 million GOK grant approved in June
for schools in/around Baghdad and a sewage project, possibly
in Sadr City, but predicted it would likely take a year to
finalize the project and disburse the funds.


4. (C) KFAED is responsible for $440 million in
concessionary loans for development projects in Iraq, and is
negotiating with the ITG on projects to fund, Al-Bader said.
At one point, the ITG suggested using all $440 million for a
power plant in northern Iraq, but the GOK would prefer to
diversify funding. Al-Bader blamed the security situation
and ITG inaction for disbursement delays and complained KFAED
had yet to receive information it requested on projects.
(Note: MFA Undersecretary Al-Jarallah told the Ambassador
that during his November 26 visit ITG Planning Minister
Barham Saleh would "soon" present KFAED with funding
proposals. End note.) Al-Bader expressed confidence in
Saleh and explained that KFAED had asked that ITG assistance
requests come solely from the Ministry of Planning.

Earthquake Aid to Pakistan,
--------------


5. (C) KFAED is also administering a $50 million, 25-year
concessionary loan at one percent interest as part of the
GOK,s $100 million assistance package to Pakistan for
earthquake relief, Al-Bader said. He noted, however, that
despite advance approval for project funding from the KFAED
Board, the Pakistani government had yet to identify specific
projects.

And the Palestinian Territories
--------------


6. (C) Al-Bader said aid to the Palestinian territories was
"totally different." KFAED administers two $25 million GOK
grants for education and health sector projects, but cannot
grant concessionary loans because of the territories' legal
status. In a separate conversation addressing Palestinian
issues, Al-Khorafi urged DAS Gray to "help Abu Mazen

KUWAIT 00005063 002 OF 004


(Palestinian Authority Chairman Mahmoud Abbas) and do not let
the Israelis embarrass him." He argued that the U.S. should
not let the fanatics on both sides influence the majority.
DAS Gray noted the President's invitation to Abbas to visit
the White House and stressed that the U.S. was committed to
working with Israeli and Palestinian political leaders. He
also highlighted U.S. support for "tangible results" in the
Palestinian territories to demonstrate that the peace process
works.

Other Development Projects
--------------


7. (C) On Afghanistan, Al-Bader said the Fund had already
administered one grant, but an old unresolved Afghanistan
government debt was blocking additional funding. Al-Bader
hoped a long-term repayment plan could be agreed upon to
resolve Afghanistan's pending bilateral arrears related to an
old project (ref C) and open the way for further KFAED
funding. (Note: U.S. Treasury has advised the GOA to resolve
Russian debt issues before closing the arrears issue with
Kuwait.) Al-Bader said KFAED was also considering a new
project in Lebanon and was starting to reconsider funding
projects in Yemen. DAS Gray emphasized the importance of
assistance to Lebanon at this critical juncture. Al-Bader
agreed that Lebanon "needs a lot of assistance."

KFAED Funding Criteria
--------------


8. (C) Al-Bader said the Fund uses two criteria when
deciding to fund projects. The first and primary criterion
is the readiness of the project. The second is the regional
allocation of projects: at least 50% of projects must be in
Arab countries; the Fund also tries to maintain 20-25% of
projects in Asia and 20-25% in Africa. He downplayed
political motivations for funding, though he acknowledged
that political support could help speed the approval process.


Al-Badar Encouraged to Visit Washington
--------------


9. (SBU) The Ambassador and DAS Gray encouraged Al-Bader to
travel to the U.S. to visit aid agencies, like USAID, the
World Bank, and the Millennium Challenge Corporation (MCC).
DAS Gray noted the similarities between the Kuwait Fund and
the MCC's development objectives and funding criteria, and
suggested a meeting would be very beneficial.

Kuwait-Iraq Relations: Cautiously Optimistic
--------------


10. (C) National Assembly Speaker Jassem Al-Khorafi was
cautiously optimistic about the situation in Iraq. He was
"very happy" with the President's November 30 speech, which
he said came "at the right time and in the right place;" and,
"very importantly," put an end to speculation on U.S.
withdrawal. Al-Khorafi claimed that Iraq's leaders, many of
whom have visited Kuwait, "know cooperation is essential,
despite their differences." DAS Gray emphasized the
importance of Iraqi stability to the region and expressed
hope the December 15 elections would be a positive step. In
a separate meeting at the MFA, Gray asked if the GOK was
planning to re-open its embassy in Iraq, Acting U/S
Al-Babtain said, "Not yet."

GOK Officials Encourage USG Dialogue with Iran
-------------- -


11. (C) Al-Babtain and Al-Khorafi encouraged the USG to
engage in dialogue with Iran. Al-Khorafi argued that U.S.
policies and poor timing undermined support for "moderates"
within Iran. DAS Gray pointed out that the U.S. cannot
select the timing of certain issues and said the U.S. had
been very patient and hoped to return to negotiations on the
nuclear issue. He emphasized, however, that the U.S. was
looking for "actions, not promises." DAS Gray also said the
U.S. was trying to reach out to the Iranian people and
continued to be concerned about Iranian meddling in Iraq.


12. (C) Al-Babtain characterized Kuwait-Iran relations as
"very frank, but friendly." He later qualified this
statement, saying he should have used the word "flexible"
rather than "friendly." Al-Babtain assured DAS Gray that "we
have been very frank (with the Iranians) that we are against"
the nuclear program due to the potential for environmental

KUWAIT 00005063 003 OF 004


disaster. Al-Babtain acknowledged, however, that if Iran
developed "certain nuclear power" it would "pose a threat."
Al-Babtain said it was in the "benefit of the whole region
not to confront Iran."

U.S.-Kuwait Relations
--------------


13. (C) Asked to characterize U.S.-Kuwait relations,
Al-Khorafi said, "It could not be better." He complained,
however, that the USG gives Kuwait "too many lectures,"
particularly on human rights issues, which "embarrasses" the
GOK. "In the end, it is our country," he commented. DAS
Gray explained that human rights issues are a high priority
for the USG. Al-Khorafi also complained that USG officials
do not spend more time in Kuwait when visiting the region.
DAS Gray encouraged him, as Speaker, to invite his
counterparts in U.S. to Kuwait. Al-Khorafi concluded by
emphasizing that there "should be no doubt of our friendship
with the U.S." Al-Babtain offered no suggestions on
improving relations.


14. (C) In his meetings, DAS Gray also expressed U.S.
gratitude for the GOK's generous hurricane Katrina
assistance, a message that was greatly appreciated by the
Kuwaiti officials.

Kuwaiti Students Encouraged to Apply for Visas
-------------- -


15. (C) In his separate meetings with MFA Acting U/S
Ambassador Khaled Al-Babtain and Minister of Social Affairs
and Labor Faisal Al-Hajji, DAS Gray expressed concern about
the decline in the number of Kuwaiti students studying at
American universities. "People-to-people contact is the best
foundation for sustaining our good relationship," DAS Gray
said. Al-Babtain and Al-Hajji expressed frustration with
"complicated" U.S. visa procedures and said stories of
harassment, particularly at airports, from Kuwaitis returning
from the U.S. discouraged others from traveling there. DAS
Gray noted that procedures are more transparent and efficient
than in the initial period after September 11, and encouraged
businessmen, tourists, and students to apply for U.S. visas.

Next Steps in Female Political Participation
--------------


16. (C) Al-Hajji said the next steps in female political
participation are: 1) encouraging female voter registration,
and 2) sponsoring seminars/meetings to educate them on their
new rights. (Note: Kuwaiti women were given the right to
vote in May 2005. They can register to vote in Feb. 2006.
National elections are scheduled to take place in 2007. End
Note). He posited, however, that most women were neither
aware of nor willing to exercise their political rights. The
Minister predicted women's suffrage would primarily benefit
Islamist political associations, like the Salafis. He
believed many female candidates were not adequately preparing
themselves for the 2007 parliamentary elections and would
only run because "it is a fashion." Although he did not
expect any female candidates to be elected, Al-Hajji said
their participation in the elections would be a positive
development.

100% GOK Control Over Charity Organizations?
--------------


17. (C) DAS Gray emphasized to Al-Hajji the importance of
combating terrorist financing and asked what measures the GOK
was taking to control charity organizations. Al-Hajji said
the GOK exerted 100% control over charity organizations in
Kuwait, though he acknowledged that "we cannot control"
unofficial groups. He assured DAS Gray the GOK would act if
any questionable activities were uncovered.

Media Roundtable
--------------


18. (U) DAS Gray iterated U.S. policy positions on a range
of issues, including visa policies, Iraq, Iran, Syria, and
the Israeli-Palestinian conflict, in a very successful
media-roundtable with Kuwaiti journalists and editors on
December 6. DAS Gray also emphasized the close U.S.-Kuwait
bilateral relationship and the two countries, shared
strategic vision. The event received front-page coverage in
the Arabic-daily Al-Rai Al-Aam and the English-daily Kuwait
Times on December 7; other major dailies also had substantial

KUWAIT 00005063 004 OF 004


coverage. A full transcript of the press conference will be
placed on Embassy Kuwait's public website:
www.kuwait.usembassy.gov.


19. (U) This cable has been cleared by DAS Gray.

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