ENGAGING GULF STATES ON FOREIGN ASSISTANCE

C O N F I D E N T I A L SECTION 01 OF 03 STATE 052635

SIPDIS

E.O. 12958: DECL: 05/16/2018
TAGS: PREL EAID ECIN ECON EFIN EINV PGOV AE KU SA QA
SUBJECT: ENGAGING GULF STATES ON FOREIGN ASSISTANCE

Classified By: NEA/ARP Director Andrew Steinfeld, reasons 1.4 (b),(d)


1. (C) This is an action request; please see paragraphs
four and five.

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Summary
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2. (C) Over the past several years, Saudi Arabia, Kuwait,
the UAE, and Qatar (hereafter referred to as the G-4) have
significantly increased foreign assistance to a wide range of
countries in the greater Middle East and beyond -- a trend
that likely will accelerate, given high oil prices, their
continuing accumulation of vast wealth, and their own
geo-strategic priorities. With rare exceptions, U.S.
discussions with the G-4 on foreign assistance have been ad
hoc, sporadic, and crisis-driven, rather than focused on
long-term, strategic objectives. The Department is assessing
the possibilities and prospects for organizing more strategic
and structured bilateral foreign assistance dialogues with
the G-4 states. Unlike previous initiatives in this area,
however, we are not contemplating a "tin cup" exercise that
would ask the Gulf states to help foot the bill for U.S.
priorities; instead, the purposes of this new set of
dialogues would be to: (1) identify a set of foreign
policy-priority countries where the U.S. and the G-4 have
common objectives in ensuring their long-term stability and
success; and (2) better align our current programs and
funding toward these objectives through more effective and
regular coordination. As a first step in determining the
value and feasibility of such a dialogue and how it might be
structured, the Department would appreciate Posts' assessment
of host government foreign aid policies, programs, and aid
flows from their respective vantage points. End summary.

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Background
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3. (C) The U.S. lacks comprehensive, accurate, and reliable
data on public aid flows from Saudi Arabia, UAE, Qatar, and
Kuwait. Based on the information we have available, in
2006-2007 Saudi Arabia, UAE, Qatar, and Kuwait pledged
approximately $5 billion in foreign aid to 25 or so
countries. The information is spotty on how much pledged aid
has been dispersed as well as on the form (budget support vs.
project-related),mix (loans vs. grants),and modalities
(bilateral versus multilateral) for the assistance that was
provided. According to a variety of press reports, during
this two-year period:

-- Saudi Arabia gave roughly $2 billion in aid and the
primary recipients were Lebanon, Jordan, the Palestinian
Authority, Afghanistan, Egypt, Yemen, Tanzania (Zanzibar),
and Sri Lanka. In addition, Saudi Arabia pledged $1.1
billion at the Paris III conference for Lebanon early last
year.

-- Kuwait committed close to $1 billion in bilateral loans
and grants to almost 20 countries, including Egypt, Lebanon,
Pakistan, Morocco, Tunisia, and 15 other countries in
sub-Saharan Africa and in south, central, and southeast Asia.

-- The UAE disbursed almost $1 billion and pledged another
$300 million for the Palestinians at the Paris conference.
In addition to the Palestinian Authority, the primary
recipients of UAE aid during this period were Yemen,
Afghanistan, Morocco, Syria, Djibouti, Jordan, and Lebanon.


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-- (U) Qatar since 2006 has pledged money to help the
Palestinian Authority (via the Arab League),Lebanon ($300
million from Stockholm reconstruction conference in 2006),
Yemen ($500 million from the Donors conference in November
2006),Sudan (at least $2 million in 2007). Press reporting
also indicates Qatar was planning to provide financial
assistance to Eritrea as well. In 2005 Qatar pledged $100
million in assistance to areas in the United States affected
by Hurricane Katrina. Approximately $70 million has already
been disbursed.

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Action request
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4. (C) Drawing on the information in paragraphs two and
three above and without approaching host governments and
institutions, Department requests that posts take stock of
the host country's foreign aid programs and multilateral
institutions (including Islamic Development Bank and Arab
Fund for Social and Economic Development) and assess its
willingness to collaborate more closely with the United
States to advance shared long-term priorities in countries of
mutual interest. Provided below are a number of questions
for which input would be useful in further developing the
Department's thinking:

-- What are the trends in government-to-government assistance
by the G-4 countries, and how have those trends changed with
the rise of oil prices and the corresponding infusion of
petrodollars? Do we have any discernible data we can analyze
over the last five years?

-- How does the host country prioritize among sectors and
regions in allocating development assistance, and what are
the main drivers of their respective assistance strategies?

-- What is the breakdown between aid allocated bilaterally
and through multilateral institutions, and what are the main
modalities for aid delivery (tied versus untied, budget
support versus project-related, loans versus grants, etc.)

-- Following up on recent statements by World Bank President
Robert Zoellick, is there any evidence to suggest that the
G-4 states have used or plan to use their sovereign wealth
funds to promote development in recipient states (for
instance through better delivery of social services or
strengthening of governing institutions)?

-- Are there other nontraditional forms of "aid" such as oil
subsidies or debt relief that predominate among the types of
foreign assistance provided by the G-4?

-- How much humanitarian assistance do the G-4 states
provide, what form does this aid take, and how is it
delivered?

-- To what extent are the G-4 states demanding
results/accountability from the main recipients of their aid?

-- How much of the aid tends to be pledged versus actually
disbursed? Through what mechanisms/agencies/ministries is it
commonly disbursed?

-- Is there any evidence of regional coordination among the
Gulf states on foreign aid issues?

-- Would the Gulf states have any interest in a closer
association with the DAC (OECD Development Assistance
Committee) or with any other major international fora for
discussion of foreign aid?

-- Would any of the G-4 states see value in improving foreign
aid coordination with the United States -- and possibly each

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other -- through intensified dialogue? If so, at what level,
in what format/venue, and on what timelines?

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Reporting deadline and points of contact
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5. (C) Department requests that embassies submit their
responses by June 9. Further guidance will follow once these
reactions have been evaluated and a specific road map for
engaging the Gulf states on foreign aid issues, if deemed
appropriate, has been charted. For additional information,
posts should contact Policy Planning Staff Mara Tchalakov
(202-647-3867, tchalakovdk@state.gov) or Richard Sokolsky
(202-647-2457, sokolskyrd2@state.gov).
RICE