IRAQI DEBT: MEETING WITH SAUDI MINISTRY OF FINANCE

C O N F I D E N T I A L RIYADH 001923

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/17/2017
TAGS: EFIN PREL IZ SA
SUBJECT: IRAQI DEBT: MEETING WITH SAUDI MINISTRY OF FINANCE

Classified By: DCM Michael Gfoeller for reason 1.4(b).


1. (C) Summary. In a meeting on September 16 with the DCM,
Hamad Al-Baz'y, Deputy Minister for Economic Affairs in the
Ministry of Finance, conveyed a lack of urgency in
reconciling the debt owed by Iraq to he Kingdom. Al-Baz'y
described the three meetings in which the Saudis and the
Iraqis have discussed this issue, and shared his expectation
that both sides would disclose the amount of debt they
believe is owed during the fourth such meeting scheduled to
commence on or around September 22 (see discussion of the
lack of clarity on the meeting schedule in para. 5) in
Riyadh. Al-Baz'y did not appear to be aware of the Iraqi
request to suspend payments to the UN Compensation Committee
Fund but seemed to instinctively oppose it. End Summary.


2. (C) Upon the DCM's prompting, Al-Baz'y explained his
view of the history and status of the Kingdom's negotiations
with Iraq regarding the debt owed to it by Iraq. Al-Baz'y
said that they have had three meeting with the Iraqis on this
issue. He reported that the Iraqis came to the first meeting
without any documentation relating to the debt and that the
team's notion of the amount owed was formed only by what they
had "heard." The Iraqis claimed the documentation had been
looted, but Al-Baz'y found it "strange" that the Iraqis have
documentation of the debt owed to some creditors, e.g.,
Russia and European countries, but not that relating to the
debt owed to the Kingdom. The SAG then provided the Iraqis
with the documentation they have. Al-Baz'y said that no
progress was made in the second meeting because the Iraqis
raised the same questions that the Saudis thought they had
answered in the first meeting. He thought the third meeting
was better focused (though the Saudis again had to provide
the same documentation) and expressed appreciation that the
Iraqi Central Bank Governor and Deputy Minister of Finance
attended those meetings and will attend the upcoming fourth
meeting as well.


3. (C) Al-Baz'y expects that the amount of the debt owed
will be discussed for the first time during the upcoming
meeting. While the SAG has provided the numbers it has to the
Iraqis, the Iraqi team has not responded to those numbers.
Al-Baz'y says that he hopes the SAG's and the Iraqis' numbers
are close, because it will be "quite difficult" if their
numbers are far apart. While Al-Baz'y did not comment on the
SAG's opening position on the amount owed, he did state that
in their view some interest (though not commercial interest)
was owed, especially on the $9 billion of cash loans.
Al-Baz'y said that it would exceed his mandate to confirm
that the SAG remains committed to forgiving 80% of Iraqi
debt, and instead observed that it was important to reconcile
the numbers before moving to the "next stage."


4. (C) The DCM asked for the Kingdom's reaction to the
Iraqi request to suspend payments to the UN Compensation
Committee Fund. Al-Baz'y did not appear to be aware of this
request, but correctly recalled that the Kingdom is still
owed for environmental claims. While his response was vague,
Al-Baz'y seemed to instinctively oppose the request.


5. (U) Al-Baz'y expressed confusion regarding the schedule
for the upcoming fourth meeting. Al-Baz'y's understanding is
that the Iraqi team has moved its arrival forward to the
evening of September 22. While the Saudis could meet that
evening, September 23 is Saudi National Day and the SAG will
not be able to conduct meetings on that day. Further,
Al-Baz'y would like to clarify whether the team's departure
has also been moved up a day.
FRAKER