IRAQ: UPDATE ON KUWAIT FUND ASSISTANCE

C O N F I D E N T I A L KUWAIT 004464 SIPDIS SIPDIS STATE PASS TO USAID, NEA/ARP FOR JACKSON, NEA/I, EB E.O. 12958: DECL: 11/15/2011 TAGS: ECON EFIN EAID KU SUBJECT: IRAQ: UPDATE ON KUWAIT FUND ASSISTANCE REF: A. KUWAIT 3392 ¶B. KUWAIT 4312 Classified By: Economic Counselor Timothy Lenderking for Reasons 1.4 (b ) and (d) ¶1. (SBU) This cable updates previous reporting on economic and reconstruction assistance to Iraq from the Kuwait Fund, which manages the majority but not all of Kuwaiti assistance to Iraq. While the cable provides more detail on the amounts pledged, the figures cited do not represent new assistance to Iraq. ¶2. (SBU) During a November 7 meeting, the Kuwait Fund for Arab Economic Development's Regional Manager for Arab Countries Marwan Al-Ghanem gave Econcouns the following update on assistance to Iraq managed by the Fund. Al-Ghanem said he was unsure of the total amount pledged by Kuwait to Iraq since the 2004 Madrid conference, since Kuwait's Humanitarian Operations Center, Kuwait Red Crescent Society, and the Ministry of Finance all provide additional assistance not tracked by the Kuwait Fund (post will report septel on these other inputs). He reiterated that the Kuwait Fund alone is responsible for overseeing USD 560 million in grants and loans to Iraq, which is broken down as follows: -- a USD 440 million concessionary loan, consisting of USD 200 million for power sector development, USD 100 million for schools, USD 100 million for drinking water and sewage projects, and USD 40 million for transportation, especially railroads. The Fund had reached tentative agreement on these terms with the Iraqi Ministry of Planning. The Fund would allocate the loan over a five-year period. Al-Ghanem was optimistic the loan could be disbursed in the near future. -- the remaining USD 120 million is a grant from the GOK to be administered by the Kuwait Fund. Half of the grant monies have been transferred to the Kuwait Fund account, while the remaining USD 60 million has yet to be transferred by the Ministry of Finance. The first tranche of USD 60 million is to be split evenly between projects in the education and health sectors. The education projects will involve construction and/or rehabilitation of seventeen schools in southern Iraq and are to be run as a joint venture between a Kuwaiti and Iraqi company. The health project will focus on construction of a surgical unit at the Basra General Hospital. The Kuwait Fund has advertised for a consultant to partner with the Iraqis and has received bids from seventeen interested companies. The second tranche of USD 60 million is to be divided between USD 36 million for drinking water and sewage projects in Sadr City, and USD 24 million for education projects in central and northern Iraq. ¶3. (C) Comment: These projects are slow going, but they are inching toward implementation. No money has actually been disbursed yet to implementers. The Kuwait Fund has expressed frustration about the difficulty of doing business in Iraq, as it is a unique working environment among the more than 100 countries in which the Fund has projects. Kuwait Fund staff rarely travel to Iraq themselves for security reasons, and they have complained in particular that the Iraqi Ministry of Health has had difficulty identifying priorities. We will continue to monitor progress. ********************************************* * For more reporting from Embassy Kuwait, visit: http://www.state.sgov.gov/p/nea/kuwait/?cable s Visit Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ ********************************************* Tueller