SCENESETTER FOR COUNSELOR ZELIKOW'S FEB. 28 -

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000594 SIPDIS SIPDIS EMBASSY CAIRO PLEASE PASS TO COUNSELOR ZELIKOW OFFICE OF COUNSELOR ZELIKOW FOR DAVID AIDEKMAN NEA/FO FOR GORDON GRAY LONDON FOR TSOU E.O. 12958: DECL: 02/21/2016 TAGS: ECON EAID ENRG KU IZ IR SUBJECT: SCENESETTER FOR COUNSELOR ZELIKOW'S FEB. 28 - MARCH 1 VISIT TO KUWAIT REF: A. KUWAIT 0399 ¶B. KUWAIT 0167 ¶C. KUWAIT 0524 ¶D. KUWAIT 0462 ¶E. KUWAIT 0201 ¶F. 05KUWAIT 5299 ¶G. KUWAIT 0578 ¶H. KUWAIT 0397 ¶I. KUWAIT 0425 ¶J. KUWAIT 0559 ¶K. KUWAIT 0465 ¶L. KUWAIT 0467 ¶M. KUWAIT 0490 Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d) ¶1. (U) We look forward to your visit to Kuwait. We have requested meetings with Deputy Prime Minister and Minister of Foreign Affairs Shaykh Dr. Mohammad Al-Sabah Al-Salem Al-Sabah, Minister of Energy Shaykh Ahmad Fahd Al-Ahmad Al-Sabah, and Minister of Finance Bader M. Al-Humaidhi. Your visit is an excellent opportunity to discuss the Strategic Investment Initiative, regional security, and energy issues. Strategic Investment Initiative -------------- ¶2. (C) The GOK's initial reaction to the Strategic Investment Initiative (SII) proposal has been positive but guarded. SII was introduced by Secretary Rice at the Forum for the Future conference in Bahrain; A/S Wayne and Treasury DAS Ahmed Saeed briefed GOK and Kuwaiti aid officials during their follow-up work in Kuwait on January 7, 2006. Kuwaiti officials are receptive to, and agree with, the USG view that financial investment will bolster the region's stability and is crucial. However, the GOK views the four proposed beneficiaries, i.e., Iraq, Afghanistan, Lebanon, and the Palestinian Authority (PA),as requiring unique approaches. The GOK may be hesitant to group them together under one institutionalized approach, fearing a loss of political and financial flexibility in promoting its interests. For example, the GOK does not provide direct aid to the PA because of concerns about corruption, and prefers to work through the Islamic Development Bank; they see Lebanon's political crisis as the major problem there, not economic need; aid to Afghanistan, they note, is hampered by the GOA's arrears on an unresolved 1977 loan; and aid to Iraq is constrained by GOI inefficiency, a poor security environment, historical suspicion, and previous loan arrears. (Refs A and B.) Advanced Energy Initiative -------------- ¶3. (C) Kuwait's OPEC Governor Ms. Seham Razzouqi told us recently that Kuwait "did not appreciate" the comments in the recent SOTU address about U.S. "addiction to oil" and a need to reduce dependency on oil imports from the Middle East. She asked for further clarification on these points, especially how the major producers should interpret the Advanced Energy Initiative after being encouraged to increase investment in production capacity over the past year. Razzouqi's remarks echo comments from other oil sector participants. (Refs C and D.) Iraq - Kuwait Relations -------------- ¶4. (C) Kuwait and Iraq are slowly rebuilding their diplomatic and economic relationship, in fits and starts. Kuwait has informally selected the Chief of the Humanitarian Operations Center (HOC) retired Lt. General Ali Al-Mu,min as its Ambassador to Iraq but has not yet publicized the decision or set a date for a mission to open in Iraq. The Iraqi Charge d,Affaires in Kuwait, Hamid Al-Sharifi, recently met with the Ambassador to discuss Iraq's debt to Kuwait and other issues. The Iraqi Embassy in Kuwait is still under renovation. ¶5. (C) Iraq owes Kuwait approximately $11 billion in pre-Gulf War debt. Kuwait has agreed to meet the Paris Club commitment of 80% debt reduction, but will need legislative approval for the debt relief, a politically charged issue. Since the Madrid Conference, Kuwait has also committed $575 million in aid to Iraq, in the form of $135 million in grants KUWAIT 00000594 002 OF 002 and $440 million in soft loans, to be administered by the Kuwait Fund for Arab Economic Development. However, only $15 million has been disbursed so far. (Refs E, F, and B.) Kuwait and Iran -------------- ¶6. (C) Kuwait walks a fine line with its large neighbor across the Gulf, enjoying extensive economic and commercial ties but remaining wary on the political front. Dr. Yacoub Al-Hayati, one of Kuwait's five members on the Gulf Cooperation Council's (GCC) Advisory Committee, told Poloff in a February 19 meeting the GCC was hesitant to directly confront Iran over its nuclear program for fear of being labeled by Iran as pro-Israeli. He also explained that the association between Israel's nuclear program and Iran's was "logical" to Arab publics and made it particularly difficult to publicly criticize Iran's nuclear program without criticizing Israel's at the same time. According to Al-Hayati, however, if "directed" by the international community, the GCC would be more "unveiled" with the Iranian government in its opposition to Iran's nuclear program. (Refs G and H.) Kuwait and the Palestinian Authority -------------- ¶7. (C) Kuwait's Speaker of Parliament and an MFA official have both recently told us that Kuwait supports engagement with Hamas, but the GOK has made no official statement concerning the continuation of its own aid to the PA. There are reports that Khaled Meshaal will visit Kuwait soon. (Refs I and J.) Kuwait's Recent Succession and New Cabinet -------------- ¶8. (SBU) After the death of Shaykh Jabir Al-Ahmed Al-Sabah, there was a brief internal struggle for power among the Al-Sabah family. The previous Prime Minister, Shaykh Sabah Al-Ahmed Al-Sabah, became the Amir, after Crown Prince Shaykh Sa'ad Al-Abdullah Al-Salem Al-Sabah was voted medically unfit for the position by the National Assembly. Vice President Cheney visited Kuwait and met with then Prime Minister Shaykh Sabah on January 17 to convey condolences. ¶9. (C) Amir Shaykh Sabah approved on February 9 a new Cabinet, which was particularly notable for the appointment of a second Shi'a minister and one of the leaders of the Islamic Constitutional Movement (ICM),the political arm of the Muslim Brotherhood in Kuwait. The appointments likely indicate Shaykh Sabah's desire to build unity in the new Government by co-opting Kuwait's different political communities. The re-appointments of the Minister of Planning Dr. Ma'souma Al-Mubarak, Kuwait's first female minister, and Minister of Information Dr. Anas Al-Rashaid are also significant and may indicate Shaykh Sabah's support for their reform policies. While there were a number of changes in the Cabinet, few are likely to significantly affect Kuwaiti government (GOK) policy, which will still be directed by Shaykh Sabah. (Refs K, L and M.) ******************************************** Visit Embassy Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ ******************************************** LEBARON