TIME TO ACCELERATE KUWAITI FOREIGN ASSISTANCE TO

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000077 SIPDIS SIPDIS NEA/ARP, EB/IFD E.O. 12958: DECL: 01/14/2018 TAGS: EAID IZ KU SUBJECT: TIME TO ACCELERATE KUWAITI FOREIGN ASSISTANCE TO IRAQ REF: A. 06 KUWAIT 4464 ¶B. KUWAIT 71 Classified By: CDA Alan Misenheimer for reasons 1.4 (b) and (d). ¶1. (C) During his January 11 meeting with the President, Amir Shaykh Sabah Al-Ahmed Al-Jaber Al Sabah said the GOK has committed USD 500 million in financial assistance to Iraq, which it wants to invest in projects rather than providing direct cash assistance to the GOI. He said Kuwait is still awaiting project proposals from Iraq, and that it has pressed recent visitors - Talabani and Hashemi - to provide these. According to the Amir, the GOK has already allocated USD 120 million in grants for projects in Iraq but, again, has received no proposals from the Iraqi side. The President said USG would follow up on this. ¶2. (U) This cable updates previous reporting on foreign assistance to Iraq from Kuwait. While the cable provides clarification on the status of Kuwait's pledges, the figures below do not represent any new assistance to Iraq. ¶3. (C) Beginning with its 2003 Madrid Conference pledge, the total amount of new foreign assistance to Iraq pledged by the Government of Kuwait is USD 575 million, including grants, soft loans, and assistance-in-kind. A specific breakdown of these pledges is provided below. Out of the total aid pledge, USD 120 million in grants is to be expended through specific projects administered by the Kuwait Fund for Arab Economic Development (KFAED). This is the amount referred to by the Amir in his January 11 meeting with the President. USD 60 million of the 120 million has already been transferred from the GOK to KFAED to support the construction of schools in southern Iraq and the construction of a surgical unit at Basra General Hospital. Both of those projects have proceeded slowly, and less than 10 percent of the USD 60 million has been spent, according to KFAED Regional Manager for Arab Countries Marwan Al-Ghanem, with whom Econoff spoke on January 15. Al-Ghanim expressed frustration that Iraq's unique environment makes it exceptionally difficult for KFAED to operate there. He specifically cited security considerations which prevent Kuwait Fund staff and consultants from getting access to project sites. In previous conversations with emboffs, officials from the Kuwait Fund, Finance Ministry, and MFA have all complained about "musical chairs" and continually shifting plans and priorities within the Iraqi ministries, especially Planning, which make it difficult to negotiate terms of reference, carry out feasibility studies, and implement projects. Status of Funds Pledged -------------- ¶4. (U) The GOK pledged USD 1.5 billion at the 2003 Madrid Conference, only 500 million of which constituted new pledges. - According to the GOK, USD 1 billion had already disbursed prior to Madrid through assistance-in-kind and other assistance leading up to the liberation of Iraq (no further information). - USD 440 million is to be provided through KFAED-administered soft loans, none of which have been disbursed. KFAED says it is still awaiting feasibility studies on some of these projects and is negotiating terms of reference (TORs) for others. The USD 440 million consists of: -- USD 200 million for power stations (awaiting TORs; GOI reportedly undecided on locations) -- USD 100 million for schools (locations still undetermined) -- USD 100 million for sewage and/or desalination projects (locations still undetermined) -- USD 40 million for rehabilitation of railroad (no feasibility studies conducted) - USD 120 million is to be provided in grants for KFAED-administered projects. (USD 60 million transferred from GOK to KFAED for the first two projects listed below. Less than 10 percent of this has been spent.) -- USD 30 million for 17 schools in southern provinces (sites identified, consultants hired, feasibility studies conducted, plans drawn, construction beginning) -- USD 30 million for construction of a surgical unit at Basra General Hospital (consultant hired, still KUWAIT 00000077 002 OF 002 drawing up plans with client, construction expected to begin within six months) -- USD 36 million for water and sewage treatment projects in Sadr City (no progress) -- USD 24 million for schools in northern and central provinces (locations identified on paper) (Note: The USD 60 million pledged for these last two projects was announced in June 2006 and is in addition to the Madrid pledge. The GOK has not yet transferred this money to KFAED.) -USD 10 million fully disbursed to IRFFI (not included in Madrid pledge) -USD 5 million fully disbursed to Humanitarian Operations Center (HOC) (not included in Madrid pledge) ¶5. (U) Thus the figure of USD 575 million consists of: -- USD 500 million in new pledges in Madrid, 2003 -- USD 60 million in pledges announced in June 2006 -- USD 10 million to IRFFI -- USD 5 million to HOC Visit by Iraqi Minister of Planning? -------------- ¶6. (C) Al-Ghanem said he is arranging a visit to Kuwait by a delegation led by the Iraqi Ministry of Planning to work through the specific logistical, security, and contractual issues that have obstructed the progress of KFAED projects. He hopes this visit will take place in February. Post will work with GOK, KFAED, and Embassy Baghdad to facilitate coordination between the GOI and GOK to get these projects underway as quickly as possible. ********************************************* * 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/ ********************************************* * MISENHEIMER