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 -------------- ¶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. ********************************************* * 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