INITIAL KUWAIT REACTIONS TO UAE ANNOUNCEMENT OF

C O N F I D E N T I A L KUWAIT 000777

SIPDIS

NEA/ARP, NEA/I

E.O. 12958: DECL: 2018
TAGS: PTER PGOV PREL KUNC KU
SUBJECT: INITIAL KUWAIT REACTIONS TO UAE ANNOUNCEMENT OF
IRAQ DEBT FORGIVENESS: DIFFERENT CIRCUMSTANCES

REF: KUWAIT 669

Classified By: Ambassador Deborah K. Jones for reasons 1.4 b and d

Kuwaiti Response to UAE on Debt Forgiveness
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1. (U) The UAE's July 6 decision to cancel its Iraqi debt
garnered front page headlines in Kuwait, and prompted
commentaries that indicated that Kuwait will not follow suit.
Kuwaiti daily, Al Watan reported, "Fearing that the Kuwaiti
government may take advantage of the Parliament's summer
recess and follow in the UAE's footsteps, several Kuwaiti MPs
announced their strong rejection of any such move."

Role of the National Assembly
--------------


2. (U) Kuwaitis are quick to point out that Iraq's debt
($29 billion) to them is a public debt held by the people of
Kuwait and not the ruling family, as in the UAE. Thus,
canceling said debt would require National Assembly approval.
To date, neither MP's nor cabinet officials have initiated
moves in that direction.


3. (U) The National Assembly adjourned on June 26, and
fearing the unlikely scenario of the GOK taking advantage of
this recess to move on this issue, several MPs took steps to
clarify their positions of opposition to debt cancellation
with comments ranging from threats to grill the PM if the GOK
canceled the debt, to a statement that Iraq was "one of the
richest countries" and did not need this relief, while others
prioritized the forgiveness of Kuwaiti consumer debt.

Neither Forgiveness, nor Collection
--------------


4. (C) Of course, the unspoken but understood subtext for
Kuwaitis' distinguishing between their debt forgiveness and
that of the UAE's, apart from the dimensions ($29 billion vs
$7 billion) and public vs private ownership, is the fact that
Iraq never invaded the UAE, burned its oil wells and
pillaged, raped and murdered its citizenry. Much as we may
wish to minimalize this stubborn fact, it still looms large
in the Kuwait psyche. Saddam may be gone but prejudice and
fears about Iraqi aggression toward its tiny neighbor
remains. Debt forgiveness remains a non-starter but it
remains to be seen whether Kuwait will seek to actively
collect following Iraq's return to economic solvency. The
two sides have demonstrated flexibility and creativity in
resolving their Kuwaiti Airways claims, with Open Skies and
airport access agreements, and hopefully will do the same
with outstanding claims, which we should encourage.
Meanwhile, $500 million in project assistance grants still
await project proposals from the Iraqi side.


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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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JONES