SCENESETTER FOR SECRETARY RICE'S APRIL 21-22, 2008

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000435

SIPDIS

NOFORN
SIPDIS

DEPT FOR S, D, P, NEA AND NEA/ARP

E.O. 12958: DECL: 04/13/2018
TAGS: PREL PGOV ECON EAID OVIP KU IZ IR
SUBJECT: SCENESETTER FOR SECRETARY RICE'S APRIL 21-22, 2008
VISIT TO KUWAIT

Classified By: CDA Alan G. Misenheimer for reasons 1.4 (b,d)


1. (C/NF) Embassy Kuwait looks forward to your return
for the April 21-22 Iraq Neighbors Conference. Ambassador
Jones arrives April 19, and receiving you will be her
first official act. In addition to your primary focus
on the multilateral Iraq event, the timing is propitious
for advancing bilateral engagement between Iraq and Kuwait.
You will see PM Shaykh Nasser Mohammed al-Ahmed Al Sabah
and FM Dr. Mohammed Sabah al-Salem Al Sabah at the
Conference, and also have a separate call on Amir Shaykh
Sabah al-Ahmed Al Sabah.


2. (C/NF) The GOK hopes to boost its regional prestige by
playing the role of a generous and well-prepared host.
PM Maliki,s attendance will be a positive factor, even if
he comes with a "blunt message" to the neighbors that
they must do much more. Maliki last visited Kuwait in
April 2007. The Kuwaitis believe that security gains in
Iraq over past months, and also Maliki,s initiative in
Basrah, have boosted prospects for concrete, positive
steps by the neighbors. The recent fighting in southern
Iraq was unnerving for Kuwait, rekindling fears of a
refugee influx. It has prompted the Kuwaitis to
intensify security planning, but not to accelerate their
own bilateral engagement in advance of the Conference.

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Kuwait-Iraq Relations: Slow Progress, Stubborn Constraints
-------------- --------------


3. (C/NF) Kuwait and Iraq are slowly building a
diplomatic and economic relationship. Long-interrupted
diesel deliveries for Iraqi generators resumed several
months ago. Kuwait has hosted a series of senior
Iraqis in recent months, including President
Talabani, VP Hashimi and FM Zebari and others. Long
critical of PM Maliki as weak and biased, senior GOK
leaders (quietly) welcomed his Basrah initiative and
acknowledged to us (privately) that it substantially
raised his credibility with Gulf Sunnis. Nonetheless,
stubborn constraints remain on key bilateral issues.

Aid/Debt/UNCC: The GOK has pledged USD 575 million in
-------------- aid for reconstruction/development, but
disbursed only USD 21 million to date. The Kuwaitis say
they are awaiting project/sector proposals from the Iraqi
side. On debt, the GOK agreed in principle to meet the
Paris Club commitment of 80% debt reduction, but has been
loathe to seek needed approval from a parliament dead-set
against any easing of Iraqi debt. On compensation, the
GOK opposes reducing the current five percent level until
Kuwait's environmental claims are funded (likely in
2010),and resents repeated Iraqi attempts to woo the UN
for a reduction to one percent.

Trade: The Amir told President Bush in January that
-------------- Kuwait's borders are open to Iraqi goods, but the
opposite remains true. Kuwait hosted a modest Basrah
Economic Development Conference last month, but continues
to refuse Iraqi imports and restricts visas for Iraqi
businessmen.

Maritime Salvage: Khor Abdullah clearance stopped cold
-------------- in December 2007, when Kuwait realized
the process had entered Kuwaiti waters. Kuwaiti
authorities, from the Navy Commander to the Amir, support
the effort to find a mutually coordinated way forward,
but the effort to coordinate between GOI and GOK has
lagged. The Conference may provide a stage for progress.

Exchange of Ambassadors: The Kuwaitis have been allocated
-------------- secure space for their embassy-
in-waiting in Baghdad. Instead of security, the GOK now
cites the need for GOI appointment of an ambassador here
before Kuwait's ambassador-designate can go to Iraq.

--------------
Lebanon and Syria
--------------


4. (C/NF) The GOK maintains a relatively positive line on
Lebanon, although senior figures are quietly sympathetic

KUWAIT 00000435 002 OF 002


to Berri,s &national dialogue8 tour of the region.
Senior GOK interlocutors acknowledge that the Amir,s
decision to attend last month's Damascus Arab League
summit did not advance the avowed aim of nudging Bashar
toward responsible policies. Kuwait contributed USD 5
million to the UN Special Tribunal, but has not used its
recent contacts with Damascus to press the SARG to stem
the flow of foreign fighters into Iraq.

--------------
Support for the Palestinians
--------------


5. (C/NF) Following its ill-considered decision to skip
Annapolis, the GOK pledged USD 300 million at the Paris
Donor's Conference, and remains supportive of PA
President Abbas and PM Fayyad. Kuwaitis are deeply
concerned over miserable conditions in Gaza, but the GOK
has condemned Hamas rocket attacks against Israel.
Kuwaiti charities, notably the Kuwait Red Crescent
Society and the Social Reform Society (affiliated with
the Kuwait Muslim Brotherhood) are active in Gaza.
Despite favorable noises from senior officials upon
receiving our pitch for the OPIC loan guarantee program
for West Bank housing, the GOK has yet to allocate any of
its Paris pledge for this purpose.

-------------- --------------
Kuwait's Parliamentary Elections: Breathing Space
-------------- --------------


6. (C/NF) On March 19 an Amiri decree dissolving the
National Assembly relieved the protracted gridlock
between government and parliament. New elections are set
for May 17. The current "crisis" is similar to several
others during Kuwait,s 47 years of independence, and will
have negligible impact on domestic stability or foreign
and security policies.


7. (C/NF) The vote may boost the number of Islamists in
parliament. The February assassination of Imad Mughniyah
in Damascus elicited sympathy from a narrow slice of
Kuwait,s 30 percent Shia minority, and a tough GOK
response has brought unprecedented sectarian friction
into the electoral debate. There are 14 female
candidates among the 240 registered candidates,
although none appears likely to win. At least one of
whom you have met, Dr. Rola Dashti, has thrown her hat
into the ring. Overall, Kuwaiti voters are pessimistic
and expect a resumption of the train wreck that passes
for Kuwait's domestic politics once this two-month
electoral breathing space ends.


8. (C/NF) There is speculation that the Amir may soon
replace PM Shaykh Nasser Mohammad al-Ahmed Al Sabah,
although the smart money is on continuity in key
leadership portfolios. Whatever the course of domestic
events, Kuwait will remain a solid partner, first and
foremost in support of U.S. and coalition military
operations in Iraq. The April 21-22 Iraq Neighbors
Conference offers an opportunity to broaden that
cooperation to other aspects of our Iraq reconstruction
agenda.

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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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Misenheimer