DEPUTY SECRETARY KIMMITT MEETS WITH KING ABDULLAH

C O N F I D E N T I A L RIYADH 001607

SIPDIS

E.O. 12958: DECL: 10/26/2018
TAGS: EFIN ECON PREL SA
SUBJECT: DEPUTY SECRETARY KIMMITT MEETS WITH KING ABDULLAH

Classified By: The CDA for reasons 1.4 (b) and (d)



1. (C) Summary. Deputy Secretary Kimmitt and Ambassador
Fraker met with King Abdullah to discuss the upcoming G-20
summit, the global financial situation, and the impact on
other countries, particularly Pakistan. Deputy Secretary
Kimmitt also stressed that the United States is planning for
a smooth transition on financial issues as a new
administration takes over in January. End Summary.


2. (C) The King asked several questions about the goals of
the G-20 summit, in particular, whether the summit would lead
to a
change in the design of the international financial system.
(Note: The King appeared skeptical that the summit would
result in tangible steps forward to address the financial
crisis. End note.) Deputy Secretary Kimmitt noted that the
meeting would allow each country to describe its views on the
crisis and actions taken so far, establish principles
for future actions, and lay out specific action plans. Part
of the discussion could include whether the global financial
architecture would need to be modified, although that topic
would likely be pursued in subsequent meetings.


3. (C) The King suggested that if we know the reasons behind
the financial crisis, then we should know the solution.
He stated that the crisis is a disaster, and
catastrophe., The King proposed that those at fault
should be put on
trial. The King stressed that the government should not be
lenient with people who have been fraudulent or negligent.
In the end, however, he expressed confidence that the U.S. is
capable of overcoming the financial crisis. Deputy
Secretary Kimmitt described the various bold steps that the
U.S. has taken to address problems in the U.S. financial
system and the housing market. He expressed confidence in
the long-term fundamentals of the U.S. economy. Kimmitt
also noted that firms taking financial support from the
government will also face certain requirements, such as on
executive compensation.


4. (C) Deputy Secretary Kimmitt noted that while we are
taking steps to address the crisis in the U.S. and other major
economies, it is also affecting many other countries around
the world, particularly in emerging markets. He noted that
Pakistan appears close to agreeing to a program with the IMF,
which could then be supported by Pakistan,s friends,
including the U.S., Saudi Arabia, China and Europe. The King
said that he has no inside information on Pakistan, as many
people are now playing important roles there, some of them
uncontrolled by anyone., The King stressed that support
from
the IMF and World Bank must come first. If Pakistan does not
implement reforms, then it will impossible to help the
country. The King said that everyone wants to aid Pakistan,
but we need to be sure that the support will be effective.






FRAKER