WORLD BANK MANAGER FOR KUWAIT BRIEFS ON PROGRAMS

UNCLAS KUWAIT 001109 SENSITIVE SIPDIS DEPARTMENT FOR NEA/ARP, EEB/IFD/ODF TREASURY FOR VINOGRAD E.O. 12958: N/A TAGS: EAID ECON EINV KU SUBJECT: WORLD BANK MANAGER FOR KUWAIT BRIEFS ON PROGRAMS AND PLANS ¶1. (SBU) Summary: On November 3, World Bank Country Manager Radwan Shaban told Ambassador that the Bank would be trying to implement technical assistance programs in three broad fields: improving public sector performance, private sector development, and human resources development (education). He noted that the bank would be implementing the largest governance program in the Middle East North Africa (MENA) region in Kuwait. He commented that the reporting on the World Bank's 4th refinery project was substantially accurate; the Bank's consultant had determined that the refinery was not-economically viable, but only operated on publicly available information, since KPC had not asked for this report. Shaban also noted that the World Bank also sees Kuwait as a source of funds and that he would play a role in facilitating "tin cup" visits. End Summary. ¶2. (SBU) On November 3, Radwan Shaban, the World Bank's first Country Manager in Kuwait met with Ambassador and Ecouns to discuss operations in Kuwait. He noted that he was still operating out of the Ministry of Finance, but would be moving to nearby offices. He explained that Kuwait paid for World Bank technical assistance, adding that former Finance Minister Bader Al-Humaidi had been a key driving force behind both economic reform and the establishment of the office. He stressed that the World Bank's efforts in Kuwait were "demand driven" and covered three strategic areas: improving public sector performance/governance, private sector development, and human resources development. Improving Public Sector Performance -------------- ¶3. (SBU) The World Bank would be working on several programs in this area, including procurement and budgeting. The GoK has asked the World Bank to assist in drafting procurement legislation. As part of that process, it would assess Kuwait's procurement system how it compared with international best practice. Shaban cautioned, however, that the World Bank had assisted in drafting a privatization law in 1993, which was still not implemented. He noted that the GoK was moving toward performance based budgeting and confirmed that the Ministry of Finance would continue to use $50 per barrel in its budget estimates for the 2009/2010 budget. In addition, Shaban explained that the Minister of Housing Affairs had asked the World Bank to look at how the country could more efficiently provide housing to its citizens, since there was currently a nine to twelve year backlog for a Kuwaiti to obtain government supplied housing. ¶4. (SBU) As part of its efforts, the World Bank would also be implementing the largest governance program in the MENA region in Kuwait. It would examine how the GoK was meeting UN Corruption Convention standards and help with drafting a Foreign Direct Investment law and a whistle blower law. Shaban said he was optimistic about this program, noting that the Kuwaitis had set up a steering committee including both government officials and Kuwaiti civil society. Private Sector Development -------------- ¶5. (SBU) Shaban explained that the World Bank's efforts in this area were focused on developing industrial estates and on improving the overall business environment. The World Bank was working with the Ministry of Trade to develop master plans for two industrial area master plans. Shaban noted that Minister of Trade and Industry Ahmad Baqer had been instrumental in "unsticking" these projects. With regard to the overall business environment, Shaban noted that Kuwait had fallen behind other countries in the region with regard to business reform. Kuwait dropped from 49th place to 52nd place in the World Bank's 2009 report on the ease of doing business. By comparison, Saudi Arabia had moved up to 16th place. The Kuwaiti private sector was investing outside Kuwait, because the investment climate and business environment were poor. Human Resources Development -------------- ¶6. (SBU) Shaban noted that the World Bank had been working with the GoK for six years on education issues and on building capacity at the ministry. He admitted, however, that the Kuwaitis were "not doing well," and expressed his hope that they would work on education reform. The 4th Refinery Project -------------- ¶7. (SBU) In response to Ambassador's query, Shaban briefly discussed the World Bank's much quoted and controversial 4th refinery report. He said that the Kuwait Petroleum Company (KPC) had asked the World Bank to look into how it could privatize non-essential assets. The World Bank had asked to have its consultants look at all existing assets, including the 4th refinery (as a planned build) to see whether it made sense to privatize them. KPC specifically replied that the 4th refinery was not up for discussion. The World Bank, however, believed that for completeness' sake it needed to analyze the 4th refinery. It had come to the conclusion that the refinery was uneconomic. Excerpts from the report were subsequently leaked and used in the political debate over the refinery. Shaban admitted, however, that KPC had not given permission for the study so the consultant had only been able to work from publicly available documents. He agreed with the Ambassador's observation that many Kuwaitis believed that the 4th refinery's location (note: on the Saudi border end note.) made it primarily a sovereignty issue. Financial Assistance -------------- ¶8. (SBU) Shaban noted that his primary purpose was to implement the Bank's technical assistance program. He acknowledged that he would play a role in seeking Kuwaiti financial assistance for other projects and had already facilitated two high level visits for that purpose, including one that was attempting to set up an emerging market fund that would tap into Sovereign Wealth Funds. He briefly discussed the GoK's efforts on behalf of Palestinians. While noting that there had been delays in getting the GoK to disburse pledged funds, he explained that he had recommended that World Bank President Zoellick thank the Kuwaitis for their support during the October annual meetings of the IMF and World Bank and that the Palestinian Authorities thank the Kuwaitis publicly for their assistance. He noted that the GoK receives "a lot of demands" for assistance financing, and asserted that they could "be more communicative" in explaining how much they invested. He also noted that he would play a role in facilitating transit for the World Bank's staff in, and visitors to, Iraq. Biographical Note -------------- ¶9. (SBU) Radwan Ali Shaban is a Jordanian/American dual national of Palestinian origin. Most recently, he served as the World Bank's lead country economist for Egypt. Shaban is a graduate of Swarthmore College and has a PHD in Economics from Stanford. He has been a World Bank employee since 1998. Prior to that he worked as an economics professor in the United States and at the Kuwait Institute for Scientific Research. ********************************************* * 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/ ********************************************* * JONES