IRAQ COMPACT DEBT RELIEF - UAE VIEWS

C O N F I D E N T I A L ABU DHABI 004260

SIPDIS

SIPDIS

DEPARTMENT FOR NEA/ARP ADN EB/IFD/ODF
TREASURY FOR DAS SAEED

E.O. 12958: DECL: 11/08/2016
TAGS: EFIN ECON PREL IZ AE
SUBJECT: IRAQ COMPACT DEBT RELIEF - UAE VIEWS

REF: A. ABU DHABI 4238


B. STATE 181094

Classified By: Ambassador Michel J. Sison for reasons 1.4 (b & d).


1. (C) Summary: Senior UAEG leadership has consistently
told us that, although they support the idea of debt relief
for Iraq "in principle," the ultimate decision must be a
GCC-wide one. The UAE has shown no interest in taking on a
GCC leadership role in providing Iraq with debt relief. For
its part, the GoI has not pushed the UAE on debt relief,
which it currently is not being pressured to pay. On
November 5, MFA A/US for International Cooperation reiterated
that, in his view, the time was not right for providing Iraq
with debt relief. End Summary.


2. (C) On November 5, Econchief and polchief met with MFA
A/US for International Cooperation Mohammed Abduljalil, head
of the UAE's delegation to the October 31 Iraq Compact
Preparatory Group meeting in Kuwait, to discuss debt relief
for Iraq. Abduljalil strongly disagreed with the idea that
the UAE should provide Iraq debt relief as part of its Iraq
Compact commitment. He argued that it was not the "right
time" to forgive debt as Iraq was a rich, but badly managed,
country. He argued that Iraq first needed to deal with
corruption and security problems as higher priorities, before
dealing with debt relief. He noted, rhetorically, that the
debt problem might affect the Iraqi government, but that it
did not affect the Iraqi people, who suffered from a lack of
security, medicines, etc. Econchief argued that debt
diverted resources from other government expenditures, but
Abduljalil remained unconvinced. Abduljalil expressed his
view that prior UAE statements on debt relief did not
constitute any commitment. (Comment: Abuljalil's remarks
that the UAE has not committed to providing debt relief do
not/not reflect the commitment made by senior UAE government
officials -- including then Abu Dhabi Crown Prince, now
President Sheikh Khalifa bin Zayed Al-Nahyan and Deputy Prime
Minister Sheikh Hamdan bin Zayed Al-Nahyan -- to providing
debt relief to Iraq, nor the UAE's publicly announced
decision in 2004 to waive most of Iraq's debts. End Comment.)


3. (C) As post reported ref a, the UAE, although committed at
senior levels to debt relief "in principle," has maintained
that the ultimate decision must be GCC-wide. Despite
repeated approaches by the USG to senior UAEG officials, the
UAE is unwilling to play a leadership role on this issue,
probably because it holds less Iraqi debt than both Saudi
Arabia and Kuwait. It has been apparent in previous
approaches to the UAEG that this has not been a major topic
of discussion between the Iraqi government and the Emiratis.
We have been assured on numerous occasions that the Iraqis
are not making payments on their debt, which may account for
the Iraqis focusing their debt reduction efforts elsewhere.


4. (C) Turning briefly to the Iraq Compact, Abduljalil said
he thought the Kuwait meeting had been positive in providing
an opportunity to keep the international community and the
Iraqis engaged. He thought three issues were clearly
apparent at the meeting. One, security must be improved. For
the Iraqi people, security is as important as economic
development, if not more so, he said. Two, the level of
corruption in Iraq is very high and something that the Iraqi
government urgently needs to address. Iraq, he said, could
be a rich country if it could deal with corruption, which was
also preventing tangible benefits from reaching the people.
Three, the international community and/or the Iraqi
government needed a mechanism to supervise projects to ensure
that benefits reached the Iraqis and funds were not diverted.
He argued that the Iraq Compact participants didn't need to
discuss new plans and reforms, but needed to focus on
practical steps to provide tangible benefits to the Iraqi
people. The benefits, he argued, needed to go to the "normal
people, not the elites."


5. (C) Comment: Post believes that the UAE would join a GCC
consensus on the debt issue, but the UAE has repeatedly
demurred on taking a leadership role. An approach by senior
Iraqi officials (probably to include PM Maliki and DPM
Salah),followed by a senior USG approach could however,
stress the importance of this issue. As part of a
coordinated approach to the other key debt holders in the
GCC, it might help move the process forward. The Iraqis,
however, would need to balance their need for debt relief
with their interest in receiving further assistance. In the
case of the UAE, Baghdad appears to be focusing on new
sources of assistance rather than forgiveness of debt which,
so far, they are not under pressure to repay. End Comment
SISON