Identifier
Created
Classification
Origin
06KUWAIT2025
2006-05-31 17:45:00
CONFIDENTIAL//NOFORN
Embassy Kuwait
Cable title:  

ARAB AND KUWAIT FUND HEADS CALL FOR CLOSER

Tags:  ECON EAID PGOV PREL IZ AF GZ WE XF KU 
pdf how-to read a cable
VZCZCXRO3259
PP RUEHBC RUEHDE RUEHIHL RUEHKUK RUEHMOS
DE RUEHKU #2025/01 1511745
ZNY CCCCC ZZH
P 311745Z MAY 06
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 4844
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUEHBUL/AMEMBASSY KABUL PRIORITY 0246
C O N F I D E N T I A L SECTION 01 OF 04 KUWAIT 002025 

SIPDIS

NOFORN
SIPDIS

STATE FOR COUNSELOR ZELIKOW, NEA/ARP, SCA/FO, SCA/A, EB FOR
ALEXEI MONSARRAT, USAID FOR AMBASSADOR TOBIAS

E.O. 12958: DECL: 05/30/2016
TAGS: ECON EAID PGOV PREL IZ AF GZ WE XF KU
SUBJECT: ARAB AND KUWAIT FUND HEADS CALL FOR CLOSER
COORDINATION WITH USG COUNTERPARTS ON DEVELOPMENT ASSISTANCE

REF: A. SECSTATE 80842

B. KUWAIT 890

C. KUWAIT 399

D. 05 KUWAIT 4624

Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 04 KUWAIT 002025

SIPDIS

NOFORN
SIPDIS

STATE FOR COUNSELOR ZELIKOW, NEA/ARP, SCA/FO, SCA/A, EB FOR
ALEXEI MONSARRAT, USAID FOR AMBASSADOR TOBIAS

E.O. 12958: DECL: 05/30/2016
TAGS: ECON EAID PGOV PREL IZ AF GZ WE XF KU
SUBJECT: ARAB AND KUWAIT FUND HEADS CALL FOR CLOSER
COORDINATION WITH USG COUNTERPARTS ON DEVELOPMENT ASSISTANCE

REF: A. SECSTATE 80842

B. KUWAIT 890

C. KUWAIT 399

D. 05 KUWAIT 4624

Classified By: Ambassador Richard LeBaron. Reasons 1.4 (b) and (d)


1. (C/NF) Summary: During separate meetings on May 29 and
31 with the Ambassador, Abdulwahab Al-Bader, Director General
of the Kuwait Fund for Arab Economic Development (KFAED) and
Abdulatif Al-Hamad, Chairman of the Arab Fund for Economic
and Social Development (AFESD) reaffirmed their
organizations' commitments to the new Iraqi government, while
calling for greater Iraqi unity and governance. Both
officials urged closer coordination with USG and Western
counterparts and pointed to AFESD efforts to convene a
meeting of Arab and Western donor organizations on aid
coordination. They also described a mixed record of
efficiency among other Arab donor organizations; reviewed
assistance priorities and modalities for the Palestinian
Territories, including Al-Quds University; outlined AFESD
projects in Lebanon; described GCC efforts to host a donor
conference for Yemen later this year; and welcomed closer
dialogue between KFAED and the Government of Afghanistan
(GOA) to resolve the GOA's arrears. End summary.


2. (C/NF) On May 29 and 31, the Ambassador met with KFAED
Director General Abdulwahab Al-Bader and AFESD Chairman
Abdulatif Al-Hamad, respectively, to urge timely GOK
assistance to the new Iraqi government; encourage increased
dialogue between Arab donor organizations and their USG
counterparts; solicit an update on assistance to Afghanistan,
Lebanon, and Yemen; encourage assistance to Al-Quds
university in Jerusalem (per ref A); and provide an update on
USG/Quartet efforts to establish a temporary international

mechanism for assistance to Palestinians.

Iraq Assistance: Not a Penny Spent Yet
--------------


3. (C/NF) On Iraq assistance, the Ambassador pointed to
recent political progress in Iraq as an important opportunity
for Arab donor organizations to demonstrate their support to
the new Iraqi regime through timely development assistance.
Both Al-Bader and Al-Hamad concurred with the Ambassador on
the need to bolster the new Iraqi regime and the importance
of Iraqi good governance and unity in helping to ensure the
success of the political process.


4. (C/NF) Al-Bader voiced frustration at the lack of
progress on KFAED aid disbursals, exclaiming that "not a
single penny has been spent, except for some small amount on
consulting fees." He explained that efforts to form a new
government in Baghdad had stalled bilateral talks on KFAED's
$560M assistance package (see ref C para 4),quipping that
the assistance funds, currently on deposit, were "generating
good income" in anticipation of disbursal.


5. (C/NF) Al-Hamad, commenting that near-term instability
in Iraq is to be expected, added that the time had come for
"Iraqi leaders to make up their minds" to overcome lingering
political differences in order to focus on governing and
resolving the country's social and economic woes. As an
example, Al-Hamad noted that electrical shortages in Iraq
were now a direct result of sabotage and not military
collateral damage, thereby placing an added burden on the new
government "to get its act together" to address these and
other problems.


6. (C/NF) Al-Hamad welcomed the Ambassador's recommendation
for direct talks between AFESD and the new Iraqi Finance
Minister. AFESD was awaiting the formation of a permanent
Iraqi government to begin formal dialogue to address Iraq's
suspended AFESD membership resulting from arrears under the
Saddam regime and the possibility of renewed AFESD
assistance, he said. He also pointed out that the
Kuwait-based Multilateral Investment Guarantee Institution,
an Arab institution somewhat similar to OPIC, had resumed
ties with the Iraqi government after having addressed the
institutions' debts with Baghdad dating to the Saddam regime.
(NOTE: Al-Hamad welcomed the idea of contact by the new Iraqi
Finance Minister.)

Reviving Ties with USAID and Western Aid Organizations
-------------- --------------


7. (C/NF) The Ambassador pointed to recent USG restructuring

KUWAIT 00002025 002 OF 004


efforts aimed at consolidating development responsibilities
under a single authority, evidenced by the recent appointment
of Ambassador Randal Tobias as concurrent Director of Foreign
Assistance and USAID Administrator. He underscored the
importance of closer engagement and coordination between the
USG and development organizations in the Arab world to
advance shared interests in the region.


8. (C/NF) Both Fund officials enthusiastically endorsed the
idea of reviving dormant ties with USAID and other interested
Western development organizations, including the OECD
Development Assistance Committee and counterpart agencies in
the UK, France and EU countries. Al-Hamad's described plans
(that he will oversee) to convene a meeting of Arab donor
organizations in November with the USG, EU, UK, France, OECD
and other interested Western aid organizations to foster
dialogue and coordination on development priorities.
Al-Hamad added that he proposed the idea at the April meeting
of heads of Arab/Islamic aid and development finance
organziations in Vienna and offered to host the event in
Kuwait in November or December, subject to the Arab Fund
Board's formal approval.


9. (C/NF) According to Al-Hamad, participants at the
proposed joint donor meeting would include any interested
Western development agencies and members of Arab Aid, an
umbrella donor organization headed by AFESD and comprised of
KFAED, the Arab Monetary Fund, the Abu Dhabi Fund, the
Islamic Development Bank, the Saudi Fund, the Arab Bank for
Economic Development in Africa, the Arab Gulf Programme for
United Nations Development Organizations, and the OPEC Fund
for International Development. Kuwait Fund DG Al-Bader told
us he supported this initiative and looked forward to
reinvigorating ties with USAID that had essentially been
dormant for at least a decade.

Room for Improvement Among Other Arab Donor Organizations
-------------- --------------


10. (C/NF) In response to the Ambassador's questions about
the state of other GCC development organizations, Al-Bader
pointed to "a mixed record" of effectiveness, noting that the
Abu Dhabi Fund was "more a shell than a real fund" but that
the Saudi Fund had improved its operations under new
management. Al-Hamad echoed Al-Bader's criticism of the Abu
Dhabi fund, blaming the organization's ineffectiveness on
poor management and the "absence of Shaykh Zayed's
generosity"--referring to the late UAE ruler's renowned
philanthropy. He also pointed to increased frustration among
some Arab countries with the Islamic Development Bank's
inflexible loan repayment rules preventing early repayment of
loans. (Note: The IDB held its ministerial-level meeting at
the Arab Fund building this week. Al-Hamad was not impressed
with the IDB's organiazational skills.)


11. (C/NF) The Ambassador also asked about the prospects of
Qatar establishing its own development fund. Al-Bader
endorsed the idea and noted that the Qataris were testing the
waters and that KFAED had been consulted by officials in Doha
for recommendations. Al-Hamad was dismissive of Qatar's
efforts, exclaiming that the old Qatari regime "didn't do it
out of meanness" and that the new regime was unlikely to
establish a fund "out of arrogance." "Qataris are still
operating in an Al-Jazeera mentality," he added, noting that
Doha is prepared "to give $50M to Hamas to embarrass everyone
else, but not $20M to Yemen" for urgent development projects.


Afghanistan: Afghans Should Talk To Us
--------------


12. (C/NF) On the pending Afghanistan arrears with KFAED
(ref D),Al-Bader lamented the lack of GOA follow-up with
KFAED in the aftermath of the London Afghanistan Compact
conference where a new repayment schedule had been offered to
the GOA (ref B). Al-Bader explained that the GOK was eager
to sit down and discuss the terms of the agreement with the
GOA in order to justify resuming KFAED bilateral assistance.
He welcomed the opportunity to meet with the visiting Afghan
Finance Minister this week on the margins of an Islamic
Development Bank conference in Kuwait. The Ambassador
offered to lend Embassy assistance in reaching out to the
Afghan Embassy. (Note: Post conveyed Al-Bader's points to
the Afghan Ambassador to Kuwait and visiting Afghan Finance
Minister Ahady, who confirmed that he is scheduled to meet
Al-Bader this week. Ahady has also apparently proposed to
his GOK counterpart, Finance Minister Al-Humaidhi, that the

KUWAIT 00002025 003 OF 004


Kuwait Finance Ministry buy out the GOA's arrears by paying
KFAED the outstanding arrears. Post will follow-up with KFAED
for a readout of Al-Bader's meeting with Ahady. End note.)

Assistance to Palestinians
--------------


13. (C/NF) On assistance to Palestinians, the Ambassador
pointed to ongoing Quartet efforts to establish an
alternative temporary international mechanism for channeling
assistance to Palestinians. Al-Hamad welcomed the
initiative, asserting that "there is a desperate need there,
both humanitarian and political", while reaffirming AFESD's
continued commitment to the Palestinian people. AFESD
assistance has always been channeled directly to Palestinian
beneficiaries with effective safeguards, bypassing late
President Arafat and the Palestinian Authority, to ensure
transparency and accountability, Al-Hamad stressed. He also
explained that over the last four years, Arab donor
organizations have provided 10 percent of their annual
revenues as grants in support of Palestinian humanitarian
needs.


14. (C/NF) Al-Hamad also described an AFESD scholarship fund
established to fund university education for Palestinian
students, in an effort to "create some hope in the next
generation and keep them off the streets." According to
Al-Hamad, other projects under consideration include health
and water resourcing projects.


15. (C/NF) The Ambassador encouraged increased assistance
to Al-Quds University (AQU) in Jerusalem (per ref A).
Al-Hamad, although critical of AQU officials as "too bloody
aggressive" in demanding "more than their fair share" of
assistance, explained that AQU, along with other needy
academic institutions in the territories, would continue to
receive AFESD assistance based on legitimate needs and not
because of name recognition or political lobbying by
sympathetic Arab officials. (Note: Al-Hamad revealed that
AQU officials had apparently convinced Arab League Secretary
General Amr Moussa to lobby him for additional AFESD
assistance. End note.) Al-Bader pointed out that KFAED had
provided $500,000 through the Arab Fund to support the
university's study center as part of its commitment to the
school, and had been instrumental in the establishment of the
university.

We Will Always Be There for Lebanon
--------------


16. (C/NF) Al-Hamad also described AFESD plans to fund
administrative reform projects (IT resources, governance
training) and other "loose end" projects in Lebanon in an
effort to foster economic development and help promote
political stability. Some of these projects would include
connecting treatment plants to idle networks; road projects,
school construction, and river development projects intended
to spur rural development. Larger projects under review
include power projects that would link Lebanon to a regional
gas pipeline with Egypt, Jordan and Syria. "The Arab Fund
will always be there for Lebanon," Al-Hamad asserted.

Yemen: Not Right for GCC Membership
--------------


17. (C/NF) On assistance to Yemen, Al-Hamad (protect)
scoffed at the Kingdom of Saudi Arabia's suggestion to GCC
counterparts that Yemen join the regional organization.
Al-Hamad commented that the KSA offer was proposed by King
Abdullah, "a generous, frank, and open man--unlike his
brothers" whose suggestion for Yemeni membership was
unrealistic and rejected by other GCC countries, including
Kuwait. He added that as a compromise, GCC countries have
agreed to channel increased assistance to their southern
neighbor in an effort to address Yemen's dismal economic
situation with plans underway to host a GCC-chaired donor
conference for Yemen in London this fall, in coordination
with the World Bank. (Note: We have not seen other
references to Al-Hamad's claim that King Abdullah proposed
GCC membership for Yemen, Sanaa 01208 describes the donor
effort.)


********************************************
For more Embassy Kuwait reporting, see:
http://www.state.sgov.gov/p/nea/kuwait/?cable s


KUWAIT 00002025 004 OF 004


Or Visit Embassy Kuwait's Classified Website:
http://www.state.sgov.gov/p/nea/kuwait/
********************************************
LEBARON