FINANCE MINISTER REFUSES TO RELEASE NEC CONTAINERS

C O N F I D E N T I A L SECTION 01 OF 02 KHARTOUM 000052

SIPDIS

SIPDIS

DEPARTMENT FOR A/S FRAZER, S/E WILLIAMSON, OBO, AND AF/SPG
NSC FOR PITTMAN AND HUDSON
ADDIS ABABA FOR USAU

E.O. 12958: DECL: 01/15/2018
TAGS: PGOV PREL KPKO UN AU SU
SUBJECT: FINANCE MINISTER REFUSES TO RELEASE NEC CONTAINERS
UNLESS EMBASSY PAYS DUTIES

Classified By: DCM Roberto Powers, for reasons 1.4 (b) and (d)


1. (C) Summary: GOS Finance Minister Zubair Ahmed Al-Hassan
told visiting PDAS Linda Thomas-Greenfield that he will not
authorize the release of the containers for the New Embassy
Compound unless the Embassy pays the customs duties and
demurrage fees, due to the deteriorating relationship between
the U.S. and Sudan. Al-Hassan said the release of the
containers last year was a one-time exception but Sudan-U.S.
relations have deteriorated even further since then.
Thomas-Greenfield told the Finance Minister that political
issues should be separated from Embassy issues and pointed
out that the State Department has facilitated a new location
for the Sudanese Embassy in Washington and will assist with
an OFAC waiver for the mortgage. CDA Fernandez pointed out
that the State Department likely will not authorize payment
of customs duties, which by international convention should
be exempt. End summary.


2. (U) Visiting Principal Deputy Assistant Secretary (PDAS)
for African Affairs Linda Thomas-Greenfield and CDA Fernandez
met with Government of Sudan Finance Minister Zubair Ahmed
Al-Hassan January 13 to request the release of the containers
for the construction of the New Embassy Compound (NEC).
Completion of the NEC has been held up because 26 containers
with materials for the project are currently blocked because
the GOS will not approved customs exemtions to clear the
materials from the port.


3. (C) Minister Al-Hassan welcomed PDAS Greenfield and
expressed his condolences for the tragic deaths of the two
USAID employees on New Year's Day. PDAS Greenfield thanked
the Minister and pointed out that this tragic incident
demonstrated clearly the dangers faced by U.S. diplomats.
PDAS explained that the purpose of her visit was to request
the release of the containers for the NEC project. She
invited the Minister to visit the current embassy, which is
unsafe and in terrible condition. PDAS pointed out that much
of the NEC is complete and sought from the Minister a
commitment to move forward, noting that everyone had told her
that the Finance Minister is the one to meet with about the
containers. PDAS suggested that closing the project would
not be good for U.S.-Sudan relations.


4. (C) Al-Hassan said he explained the Sudanese position on
the NEC containers to NSC Africa Director Bobby Pittman
during his October 2007 visit to Washington. Al-Hassan said
that Sudan wants better relations with the U.S. "in security
cooperation, and in many other ways" but that U.S. sanctions
are hurting Sudan and that the U.S. has prevented Sudan from
having normal relations with the World Bank and the IMF. He
also noted that Sudan's accounts had been frozen and that
money from these accounts had been awarded by the U.S. courts
as compensation for the USS Cole attack. Al-Hassan said that
U.S. policy had also created problems for the Sudanese
Embassy in Washington, which as a result of sanctions must be
audited monthly, which costs the Embassy $3000 per month in
accountancy fees. Al-Hassan claimed that the U.S. gives
development and humanitarian assistance to the South and to
Darfur, but not to the North, and that USAID does not
coordinate with the Sudanese government regarding its
assistance to Sudan. Al-Hassan also claimed that the
National Intelligence Service is mocked "for giving free
meals to the U.S. for nothing," noting that Sudan had
received nothing in return for counterterrorism cooperation
and that Sudan is still on the State Sponsors of Terrorism
list. "All of this bad treatment by a rich country like the
U.S. which is now trying to get exemptions - I'm not going to
help by giving those exemptions." Therefore, concluded
Al-Hassan, "I cannot advise my government to give you the
materials free from duties." However, Al-Hassan offered that
if the U.S. is willing to pay the customs fees and demurrage
charges for the materials, he will release the containers.


5. (C) PDAS Greenfield suggested that political issues should
be separated from embassy issues and pointed out that the
State Department has facilitated a new location for the
Sudanese Embassy in Washington and will assist with an OFAC
waiver for the mortgage. PDAS said that the State Department
has assisted with every problem faced by the Sudanese embassy
in Washington. PDAS pointed out that, contrary to Sudanese
media reports, the new U.S. Embassy in Sudan will not be the
largest U.S. Embassy in Africa - that Pretoria, Nairobi, and
Cairo are much larger - and explained that the only objective

KHARTOUM 00000052 002 OF 002


is to provide U.S. diplomats with a safe place to work. With
regard to the claim that the U.S. does not coordinate with
the GOS on development and humanitarian assistance, PDAS said
that USAID can provide information on its activities in Sudan
to improve cooperation in this area. PDAS explained that
some parts of the U.S. Government are trying to remove Sudan
from the State Sponsors of Terrorism list, but that like in
Sudan, there are various parts of the government with
different points of view. PDAS also pointed out that Sudan
benefits from counterterrorism cooperation.


6. (C) CDA Fernandez reminded the Finance Minister that the
customs and demurrage fees issue was discussed in September
2006, and that President Bashir exempted incoming containers
of building materials from all customs and other duties in
spring 2007. At the time, the State Department made clear
that according to the Vienna Convention, diplomatic missions
are exempt from paying these fees, and that while the Embassy
can certainly check with the Department again, it is unlikely
that the USG will pay the fees. With regard to U.S.
assistance to Sudan, CDA pointed out that the U.S. has
provided assistance to the North, such as the relief
assistance provided during the flooding of the Nile. CDA
also pointed out that the Sudanese people will benefit from
the NEC, since it will allow the Embassy to begin providing
visa services in Khartoum.


7. (C) Al-Hassan replied that the NEC is not essential for
good relations between Sudan and the U.S. "26 containers are
not a priority against good relations," he said. "We
released the first batch last year in the hope that relations
would improve." However, as you are a strong country, "we
hope that you will be the initiator of improvements in the
relationship."


8. (C) PDAS Greenfield concluded acknowledging that "we may
not agree today" but promised to assist with the Sudanese
Embassy in Washington and urged that the two countries
continue in a respectful relationship. PDAS warned, however,
that she cannot allow the U.S. Embassy to remain where it is
now.


9. (C) Comment: We have heard most of the Finance Minister's
arguments before, though perhaps not articulated quite this
clearly. The offer to allow the U.S. to pay the customs fees
is a red herring because the Sudanese know from our meetings
with them last year that the USG will not pay such fees.
However, it is likely the Sudanese will hold up this offer as
an example of their "flexibility" on this issue, knowing that
the offer is meaningless, and too little, too late.


10. (U) PDAS Thomas Greenfield did not have an opportunity to
review this cable prior to her departure from Khartoum.
FERNANDEZ