IRAQ COMPACT: KUWAIT'S LINE-UP AND UPDATE ON ARAB

C O N F I D E N T I A L KUWAIT 000665

SIPDIS

NOFORN
SIPDIS

DEPT FOR NEA/I, TREASURY FOR DEPUTY SECRETARY KIMMITT

E.O. 12958: DECL: 10/08/2011
TAGS: EAID ECON EFIN ETRD IZ KU PGOV PREL
SUBJECT: IRAQ COMPACT: KUWAIT'S LINE-UP AND UPDATE ON ARAB
FUND ARREARS

REF: A. KUWAIT 605


B. BAGHDAD 1464

C. BAGHDAD 1475

D. KUWAIT 575

E. KUWAIT 584

Classified By: Economic Counselor Timothy A. Lenderking for Reasons 1.4
(b) and (d)


1. (C) Econcouns spoke with Ambassador Khalid Maqamis, the
MFA's head of Coordination and Follow-up and primary point of
contact on the Iraq Compact, on May 2 to confirm Kuwait's
participation in the May 3 ICI signing event. Maqamis
confirmed that he would accompany Kuwait FM Shaykh Dr.
Mohammed Al-Sabah Al-Salem Al-Sabah to the ICI. He
reaffirmed Kuwait's support for the ICI and said the FM would
make a strong supporting statement at the event.


2. (SBU) Econcouns also spoke with Dr. Abdelatif Y.
Al-Hamad, Chairman of the Arab Fund for Social and Economic
Development. Al-Hamad confirmed that Dr. Khalifa Ali Dau,
Senior Financial Advisor, would represent the Fund.

Arab Fund Arrears Close...but Unresolved
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3. (C) Econcouns asked Al-Hamad about recent developments on
resolving the arrears issue with the GOI since Iraq
Coordinator Satterfield's meeting with Al-Hamad on April 23
(Ref A). As noted in Refs B and C, Al-Hamad said he had had
two conversations with Iraq Central Bank Governor Shabibi
concerning the arrears. He said that the previous week he
had received a call from Shabibi requesting a meeting in
Kuwait, which he agreed to. Shabibi was to be accompanied by
UN Special Advisor Gambari. Al-Hamad said that shortly
before the agreed meeting time, he received a call that
Shabibi wished to reschedule the meeting. Al-Hamad said he
was not able to accommodate the change, so no meeting with
Shabibi and Al-Hamad or anyone else at the Arab Fund
occurred. Al-Hamad received a second call from Shabibi some
days later. In this conversation, Shabibi brought to
Al-Hamad's attention a statement by the GOI leadership
indicating that Iraq would honor its obligations to
international lenders. Shabibi requested that on that basis
the Arab Fund announce at the ICI meeting new lending to
Iraq. Al-Hamad told Shabibi the Arab Fund could not move on
the basis of a "vague" public statement; rather, the GOI had
to agree to the repayment plan previously discussed with
Minister Baban. "If they send us a letter indicating
agreement, we can help," Al-Hamad said. He stressed to
Econcouns that he has known Shabibi for a long time, and
"he's a good man." Al-Hamad noted that the Fund's next board
meeting is in June, and he hoped the issue could be resolved
by then so the Board could bless it. Resolution or not,
Al-Hamad asserted to Econcouns that the Fund would make a
strong, supportive statement at the ICI.


Comment
--------------


4. (C) We concur with Embassy Baghdad that a resolution on
the arrears issue is close at hand. What is required is a
letter from the GOI indicating agreement to the repayment
terms spelled out between Minister Baban and Dr. Al-Hamad
last October. If the GOI remains unclear about what the
terms are, then Minister Baban or Governor Shabibi should
call the Arab Fund to clarify. The amount of debt in
question (USD 108-110 million) is not insurmountable, and the
Fund is prepared to proceed with a substantial program of
concessional loans to Iraq once it has received written
assurances from the Iraqis.


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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/
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LeBaron