MARCH 2 CONFERENCE IN SHARM AL-SHEIKH: READ OUT

UNCLAS SECTION 01 OF 02 KUWAIT 000230 SENSITIVE SIPDIS STATE FOR NEA/ARP, NEA/IPA, NEA/RA E.O. 12958: N/A TAGS: EAID EFIN PGOV PHUM PTER KPAL KBWG KU SUBJECT: MARCH 2 CONFERENCE IN SHARM AL-SHEIKH: READ OUT AND ACTION REQEUST REF: A. SECSTATE 20388 ¶B. KUWAIT 54 ¶C. KUWAIT 22 ¶D. KUWAIT 215 ¶1. (SBU) Summary: Senior officials at the Kuwait Fund and the Foreign Ministry told EconCouns that the March 2 Sharm Al-Sheikh donors' conference for Gaza had been a great success financially and also politically as it strengthened the roles of the Palestinian Authority(PA) and moderate Arab states. The officials confirmed that Kuwait would provide $200 million in assistance which would be administered by the Kuwait fund for Arab Economic Development. The officials stressed that Kuwait did not intend to finance Hamas and that it was taking care that the aid distribution channels used in Gaza would ensure that Hamas did not receive any of the funding. They said that the GCC countries would likely set up a joint Gaza Fund administered by the Islamic Development Bank as a mechanism for members to distribute their assistance. End summary. ¶2. (SBU) On March 10, EconCouns and Econoff met with the director of the MFA's Arab World Department, Ambassador Jassim Al-Mubaraki, and with the regional manager for Arab Countries at the Kuwait Fund for Arab Economic Development, Marwan Al-Ghanem, in separate meetings to discuss the results of the March 2 Sharm Al-Sheikh donors' conference for Gaza and the modalities of the GCC assistance package. EconCouns also raised the issue with Sheikh Ali Khaled Al-Sabah, the director of the MFA's economic department the day before. Mubaraki opined that the conference had been a great success, not just for the pledges made, but for its role in strengthening Egypt, the Palestinian Authority, and the moderate states. (Further discussion septel.) Kuwait Fund to manage the $200 Million -------------- ¶3. (SBU) Both Mubaraki and Ghanem confirmed Kuwait's pledge of $200 million over a five year period. Mubaraki also confirmed his understanding that this pledge would be in addition to the $34 million Kuwait committed to the UNRWA emergency appeal during the Arab Economic Summit (ref b). According to Mubaraki, the Kuwaiti cabinet decided on March 5 that the Kuwait Fund would be responsible for administering the transfer of the money and monitoring the projects funded by it. He added that the Kuwait Fund would use one or all of the mechanisms that were being used to disburse Kuwait's Paris Donors' Conference pledge of $300 million: the World Bank Trust Fund for Palestine, the Arab Fund for Economic and Social Development, and the Islamic Development Bank (IDB). All three institutions had established infrastructures for providing assistance to Gaza. No Money to Hamas -------------- ¶4. (SBU) All of our interlocutors stressed that Kuwait did not intend to finance Hamas, with Mubaraki stressing that "Hamas will not receive a single penny from our support to Gaza." Both Mubaraki and Ghanem noted, however, that the Palestinian Authority had problems with corruption, and Kuwait was unwilling to provide assistance directly to it. He told EconCouns that Kuwait had instructed the three organizations above to coordinate assistance projects in the West Bank with the PA, but to provide no funds to Hamas. The Distribution Mechanism -------------- ¶5. (SBU) In response to EconCouns' question about the GCC distribution mechanism, Ghanem explained that all of the details had yet to be developed, but that the GCC would likely adopt a Saudi proposal to use a system similar to that used in administering the Al-Aqsa and Al-Quds funds which were established in 2000 at the Arab Emergency summit in Cairo. Under this proposal the IDB would serve as the secretariat and implementing entity and donor countries would sit on the board of the Gaza fund. Ghanem said that Qatar,s effort to have a new organization established to oversee GCC aid, since it does not have a national development fund of its own, had led to the Saudi proposal to use the Al Aqsa/Al-Quds fund approach. He said the IDB would likely establish a regional office in Gaza rather than continuing to serve it through periodic missions. Ghanem said that under KUWAIT 00000230 002 OF 002 the Saudi proposal each country could decide whether or not to participate in the new GCC funding entity or to distribute its assistance independently. He said a minimum $50 million contribution would be required in order to obtain a board seat. Ghanem speculated that Kuwait would not use the IDB mechanism exclusively. Rather, it would continue to use other distribution channels, the World Bank and the Arab Fund, in addition to the IDB. Other Contributions -------------- ¶6. (SBU) Ghanem asked whether the USG had received an official tally of individual contributions from Egypt, complaining that it had been difficult to put all the numbers together. He volunteered the GCC contributions: Saudi Arabia - $1 billion, Qatar - $250 million, Kuwait - $200 million, UAE - $174 million, Bahrain - $23 million. (Note: He was unable to explain the discrepancy between the informal USG figure of $400 million for the UAE. It does not appear to be an exchange rate issue, since AED 400 million would be around $108 million. End Note.) Comment -------------- ¶7. (SBU) Ghanem and Mubaraki's comments about both the success of the Sharm Al-Sheikh conference and the problems with corruption in the PA track with what we have heard from other GoK officials including MFA U/S Al-Jarallah (ref d). Although it appears as if the details of the GCC fund have yet to be finalized, they described it as being similar to the existing arrangements with the Islamic Developement Bank. Post finds it interesting that Kuwait and other countries may not direct all of their pledges via the GCC. Kuwait remains interested in bringing Qatar back into the fold, but not at the expense of giving up complete control over its aid contributions. End Comment. ********************************************* ********* For more reporting from Embassy Kuwait, visit: visit Kuwait's Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Kuwa it ********************************************* ********* JONES