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RUEHPW/AMCONSUL PESHAWAR PRIORITY 0070
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C O N F I D E N T I A L SECTION 01 OF 04 JEDDAH 000149 
 
SIPDIS 
 
SIPDIS 
 
RIYADH, PLEASE PASS TO DHAHRAN; DEPARTMENT FOR NEA/ARPI; 
PARIS FOR ZEYA; LONDON FOR TSOU 
 
E.O. 12958: DECL: 02/12/2015 
TAGS: EAID IZ KISL KPAL PK PREL SA SOCI
SUBJECT: ACHIEVING DIALOGUE WITH ISLAMIC DEVELOPMENT BANK 
 
REF: A. SECSTATE 10623 
     ¶B. E-MAIL OF 7 FEBRUARY 2006 FROM ALEXI MONSARRAT 
 
JEDDAH 00000149  001.6 OF 004 
 
 
Classified By: Consul General Tatiana Gfoeller, for reasons 1.4 (b) 
and (d). 
 
¶1.  (C) SUMMARY.  On February 7, Consul General Gfoeller and 
Jeddah Pol/Econ Chief met with President of Islamic 
Development Bank (IDB) Al-Madani and senior staff members. 
CG delivered points in ref B.  Al-Madani and his associates 
were cordial and forthcoming.  In a wide ranging conversation 
Al-Madani outlined current IDB operations in Iraq, 
Afghanistan, and Pakistan.  He also described program 
selection, implementation and auditing procedures within the 
IDB.  The President welcomed the prospect of cooperation with 
USG aid organizations and immediately named a senior official 
of the Bank to act as point of contact with Consulate General 
Jeddah.  The President promised to supply reports on IDB 
activities to ACG Jeddah.  In a subsequent telephone 
conversation on February 12, an IDB official made preliminary 
plans for a meeting in March, during which Pol/Econ Chief 
would meet IDB Divisional Directors.  END SUMMARY. 
 
MEETING AND BIOGRAPHICAL NOTE 
 
¶2.  (C)  On February 7, 2006 Consul General Gfoeller and 
Jeddah Pol/Econ Chief met with Islamic Development Bank (IDB) 
President Al-Madani, Dr. Mohammed Hassan Salem, Head, Special 
Assistance Office and IDB official, Zaffar Saleem, at the 
richly-appointed headquarters of the IDB in Jeddah. The 
purpose of the meeting was to seek to develop a dialogue 
between the IDB and USG as directed in ref A. 
 
¶3.  (U) Biographical note:  Ahmad Mohamed Ali Al-Madani was 
born in Madinah, Saudi Arabia in 1928.  His primary and 
secondary education was obtained in Saudi Arabia.  He 
received a B.A. in Commerce from Cairo University in 1957 and 
a law degree from the same institution in 1959.  He later 
studied in the United States, obtaining an M.A. in Public 
Administration from the University of Michigan-Ann Arbor, in 
¶1962.  He then received a Ph.D in Public Administration in 
Fiscal Management from State University of New York, Albany 
in 1967.  Al-Madani held a variety of posts in the Saudi 
Ministry of Education between 1958 and 1967.  In that year, 
he became Acting Rector of King Abdulaziz University; a 
position he held until 1972.  From 1972 until 1975, Al-Madani 
was Deputy Minister of Education for Technical Matters.  In 
1975 he became the first Director of the newly founded 
Islamic Development Bank.  In 1993 Al-Madani left the IDB to 
become Secretary General of the Muslim World League.  He 
returned to the Directorship of the Islamic Development Bank 
in December 1995 and has held the position since that date. 
Al-Madani is a widely respected figure in Saudi Arabia.  He 
was a moderator at the Jeddah Economic Forum, held February 
11-13.  His appearance was met by an effusive introduction 
and a prolonged round of applause from the audience.  End 
Biographical note. 
 
CONSUL GENERAL RECEIVES CORDIAL AND CANDID MEETING 
 
¶4.  (C) Al-Madani's reception of Consulate officers was very 
cordial.  He welcomed USG interest in developing a routine 
procedure for maintaining contact between the IDB and USG 
through Consulate General Jeddah.  In the course of the 
meeting, he named Dr. Mohammad Hassan Salem as the primary 
point of contact for the Consulate General at the IDB. He 
promised to forward the name of another bank officer as an 
alternative contact.  The primary contact at Consulate 
General Jeddah will be the Pol/Econ Chief.  Al-Madani further 
directed that Bank reports be sent to U.S. Consulate General 
Jeddah. 
 
OPPORTUNITY FOR ADDITIONAL DIALOGUE IN MARCH 
 
¶5.  (C)  Since this meeting, ACG Jeddah has already received 
several notices of projects funded in part by IDB and 
operating in the United States over the past several years. 
The documents indicate that they had been furnished to 
 
JEDDAH 00000149  002.6 OF 004 
 
 
AmEmbassy Riyadh earlier.  In a telephone conversation on 
February 12, IDB official Zaffar Saleem and Pol/Econ Chief 
made preliminary arrangements for the latter to visit the IDB 
in March and meet IDB Divisional Directors in order to 
enhance future dialogue.  (Note:  Saleem is an American 
citizen, long associated with the Consulate General and other 
American organizations in the region.  He was instrumental in 
arranging the February 7 meeting and has been tireless in 
promoting American ties with Saudi Arabia and the IDB.  End 
note.) 
 
AID TO IRAQ 
 
¶6.  (C) In discussing IDB activities in Iraq and Afghanistan, 
Al-Madani pointed out that they are both members of the IDB. 
He assured CG that the IDB is engaged only in humanitarian 
projects in Iraq.  The IDB has recently concluded a 
Memorandum of Understanding with the Iraqi government to 
settle projects outstanding from the Saddam Regime.  He 
announced that approximately two weeks ago, IDB and Iraq 
agreed on a new project for the construction of schools 
throughout the country.  These projects are being constructed 
on the basis of loans. 
 
AID TO AFGHANISTAN 
 
¶7.  (C) Before the American invasion, Afghanistan was the 
recipient of IDB assistance operations.  They have 
resurrected this relationship with the Karzai government. 
The IDB now believes that its activities in Afghanistan have 
returned to normal, offering both grants and loans.  The 
primary objective of these projects is construction of roads 
and schools. 
 
AID TO PAKISTAN EARTHQUAKE VICTIMS 
 
¶8.  (C) In response to the rapidly deteriorating conditions 
among earthquake survivors in Pakistan, the IDB is making a 
concerted effort to supply tents for shelter, including tents 
specially designed to house schools and hospitals.   The 
President is taking a personal interest in this effort.  He 
related that while traveling a few weeks ago, he saw an 
article in the International Herald Tribune which showed 
Pakistani children attempting to study in the frigid weather. 
 Al-Madani thereupon personally directed the bank to hasten 
shipments of tents to the area, including to the village 
cited in the widely disseminated article.  He told the CG he 
hopes to visit the town himself in two weeks when he is in 
Pakistan to visit President Musharraf. 
 
AID TO PALESTINE AUTHORITY 
 
¶9.  (C) The Palestine Authority is also a member of the IDB. 
Al-Madani stated the Bank will continue to deal with the 
Palestinian Authority.  The CG assured the officials present 
that the USG wished to continue to assist Palestinians, 
working through President Abbas.  She then asked IDB how it 
planned to work with HAMAS, a group identified by the 
international community as terrorists.   Al-Madani's answer 
was circumspect.  He stated that the national government 
designates the authorities with which the IDB operates.  He 
was uncertain of the formula for dealing with outsiders.  He 
then changed the subject, relating that he was encouraged 
that Israel was continuing to transfer funds to the PA. 
 
¶10.  (C) COMMENT:  From the President's elusive statements 
(contrast information above with description of project 
management process in paragraph 12), it is clear that the IDB 
realizes the delicacy of the situation.  They do not want to 
transfer funds to proscribed groups, but they are also 
anxious to assist the Palestinians.  They appear to be 
casting about for a solution that is acceptable to the 
international community, but which allows the Bank to 
continue providing aid to the Palestinians.  If USG could 
suggest a formula, it is conceivable that the IDB would be 
willing to adopt those safeguards.  END COMMENT. 
 
MANAGEMENT, PROJECT SELECTION, AUDITS AND OTHER PRECAUTIONS 
 
JEDDAH 00000149  003.4 OF 004 
 
 
 
¶11.  (C) This introduced the subject of Bank membership, 
management, project selection and auditing standards adopted 
by the IDB to forestall the improper use of funds.  Al-Madani 
claimed that the Bank's operations are "completely 
transparent."  Membership in the IDB is predicated on 
membership in the Organization of the Islamic Conference 
(OIC).  All OIC members are presumed to be qualified for 
membership in the IDB.  Prospective members then must ratify 
the IDB agreement and make an investment in the capital of 
the Bank.  All member-states have a representative on the 
Board of Governors which meets annually (the next annual 
meeting will be in Kuwait about May 30, during which the 
latest annual report will be presented) and an Executive 
Board, responsible for day-to-day management, which meets at 
approximately 6 week intervals.  During either of these 
meetings any member may raise questions or request a review 
of a project.  The bank does not permit cash transactions. 
It makes payments directly to contractors, rather than 
supplying funds to the project beneficiary.  On some 
occasions, Al-Madani related, the IDB will reimburse a member 
government for project expenses already incurred by the local 
authorities. 
 
PROJECT SELECTION AND IMPLEMENTATION 
 
¶12.  (C) Most, but not all, projects occur within member 
states.  Potential projects may be proposed by a member 
country, be nominated by identification missions sent out by 
the IDB, or as a result of meetings with other aid agencies. 
The executive board debates prospective projects and then 
votes on selection.  Implementation is a joint undertaking 
between the bank and member states.  Members contribute to 
and monitor the projects.  All projects are undertaken with 
the knowledge and cooperation of the local, national 
government.  The national authorities must give a clearance 
for all projects before the Bank will grant its approval. 
IDB projects may be carried out with local partner 
organizations, but all internal activities are made known to 
and monitored by the host country authorities, which have a 
veto over organizations with which the IDB partners. 
 
¶13.  (C) COMMENT:  While the bank's operations generate a 
paper trail, this trail is only as good as the paper it is 
printed on.  Substantial autonomy appears to be accorded to 
member governments in designating the organizations with 
which the IDB may develop projects, and it is not yet clear 
who conducts the audits.  It may be that oversight is only as 
good as the host government is willing to enforce.  There was 
reluctance to question the actions of implementing partners 
and the contents of audits may be accepted at face value. 
END COMMENT. 
 
MADRASES AND HATE LITERATURE 
 
¶14.  (C) In reply to the CG's inquiry into the possibility 
that IDB funds could be used by mosques to propagate hate 
speech and literature, the President responded immediately 
that the IDB does not fund mosques.  However, after 
clarification, it transpires that IDB will not finance 
mosques, but it will finance madrases that are attached to 
mosques.  The IDB distances itself from this issue, which it 
professed to deplore, by pointing out that it only provides 
assistance in funding construction and does not support 
operations.  The curriculum, Al-Madani asserted, is dictated 
by local authorities.  However, he also noted that IDB funded 
schools must be formally non-sectarian.  The IDB insists that 
everyone be admitted to schools they finance, without regard 
to race, nationality, or religion; although, as a practical 
matter, in most regions in which the IDB operates, the 
population is virtually all Muslim.  COMMENT: Under these 
procedures, it would remain for the U.S. and others seeking 
to restrain hate speech to find ways to directly or 
indirectly pressure the local educational authorities.  END 
COMMENT. 
 
IDB RELATIONS WITH KINGDOM OF SAUDI ARABIA GOVERNMENT 
 
 
JEDDAH 00000149  004.4 OF 004 
 
 
¶15.  (C) The IDB was established in 1975 by 22 founding 
member states, including the Kingdom of Saudi Arabia.  The 
Saudi government is the largest contributor of the current 57 
member states, contributing approximately 25% of the Bank's 
capital and budget.  KSA is also the host country and 
operations are governed by a host country agreement.  There 
are 7 major shareholders including Saudi Arabia, Kuwait, 
Libya, Turkey, Iran, Egypt, and UAE. 
Gfoeller