VZCZCXRO3259
PP RUEHBC RUEHDE RUEHIHL RUEHKUK RUEHMOS
DE RUEHKU #2025/01 1511745
ZNY CCCCC ZZH
P 311745Z MAY 06
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 4844
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUEHBUL/AMEMBASSY KABUL PRIORITY 0246

C O N F I D E N T I A L SECTION 01 OF 04 KUWAIT 002025 
 
SIPDIS 
 
NOFORN 
SIPDIS 
 
STATE FOR COUNSELOR ZELIKOW, NEA/ARP, SCA/FO, SCA/A, EB FOR 
ALEXEI MONSARRAT, USAID FOR AMBASSADOR TOBIAS 
 
E.O. 12958: DECL: 05/30/2016 
TAGS: ECON EAID PGOV PREL IZ AF GZ WE XF KU
SUBJECT: ARAB AND KUWAIT FUND HEADS CALL FOR CLOSER 
COORDINATION WITH USG COUNTERPARTS ON DEVELOPMENT ASSISTANCE 
 
REF: A. SECSTATE 80842 
     ¶B. KUWAIT 890 
     ¶C. KUWAIT 399 
     ¶D. 05 KUWAIT 4624 
 
Classified By: Ambassador Richard LeBaron.  Reasons 1.4 (b) and (d) 
 
¶1.  (C/NF) Summary:  During separate meetings on May 29 and 
31 with the Ambassador, Abdulwahab Al-Bader, Director General 
of the Kuwait Fund for Arab Economic Development (KFAED) and 
Abdulatif Al-Hamad, Chairman of the Arab Fund for Economic 
and Social Development (AFESD) reaffirmed their 
organizations' commitments to the new Iraqi government, while 
calling for greater Iraqi unity and governance.  Both 
officials urged closer coordination with USG and Western 
counterparts and pointed to AFESD efforts to convene a 
meeting of Arab and Western donor organizations on aid 
coordination.  They also described a mixed record of 
efficiency among other Arab donor organizations; reviewed 
assistance priorities and modalities for the Palestinian 
Territories, including Al-Quds University; outlined AFESD 
projects in Lebanon; described GCC efforts to host a donor 
conference for Yemen later this year; and welcomed closer 
dialogue between KFAED and the Government of Afghanistan 
(GOA) to resolve the GOA's arrears.  End summary. 
 
¶2.  (C/NF) On May 29 and 31, the Ambassador met with KFAED 
Director General Abdulwahab Al-Bader and AFESD Chairman 
Abdulatif Al-Hamad, respectively, to urge timely GOK 
assistance to the new Iraqi government; encourage increased 
dialogue between Arab donor organizations and their USG 
counterparts; solicit an update on assistance to Afghanistan, 
Lebanon, and Yemen; encourage assistance to Al-Quds 
university in Jerusalem (per ref A); and provide an update on 
USG/Quartet efforts to establish a temporary international 
mechanism for assistance to Palestinians. 
 
Iraq Assistance:  Not a Penny Spent Yet 
--------------------------------------- 
 
¶3.  (C/NF)  On Iraq assistance, the Ambassador pointed to 
recent political progress in Iraq as an important opportunity 
for Arab donor organizations to demonstrate their support to 
the new Iraqi regime through timely development assistance. 
Both Al-Bader and Al-Hamad concurred with the Ambassador on 
the need to bolster the new Iraqi regime and the importance 
of Iraqi good governance and unity in helping to ensure the 
success of the political process. 
 
¶4.  (C/NF) Al-Bader voiced frustration at the lack of 
progress on KFAED aid disbursals, exclaiming that "not a 
single penny has been spent, except for some small amount on 
consulting fees."  He explained that efforts to form a new 
government in Baghdad had stalled bilateral talks on KFAED's 
$560M assistance package (see ref C para 4), quipping that 
the assistance funds, currently on deposit, were "generating 
good income" in anticipation of disbursal. 
 
¶5.  (C/NF)  Al-Hamad, commenting that near-term instability 
in Iraq is to be expected, added that the time had come for 
"Iraqi leaders to make up their minds" to overcome lingering 
political differences in order to focus on governing and 
resolving the country's social and economic woes.  As an 
example, Al-Hamad noted that electrical shortages in Iraq 
were now a direct result of sabotage and not military 
collateral damage, thereby placing an added burden on the new 
government "to get its act together" to address these and 
other problems. 
 
¶6.  (C/NF) Al-Hamad welcomed the Ambassador's recommendation 
for direct talks between AFESD and the new Iraqi Finance 
Minister.  AFESD was awaiting the formation of a permanent 
Iraqi government to begin formal dialogue to address Iraq's 
suspended AFESD membership resulting from arrears under the 
Saddam regime and the possibility of renewed AFESD 
assistance, he said.  He also pointed out that the 
Kuwait-based Multilateral Investment Guarantee Institution, 
an Arab institution somewhat similar to OPIC, had resumed 
ties with the Iraqi government after having addressed the 
institutions' debts with Baghdad dating to the Saddam regime. 
(NOTE: Al-Hamad welcomed the idea of contact by the new Iraqi 
Finance Minister.) 
 
Reviving Ties with USAID and Western Aid Organizations 
--------------------------------------------- --------- 
 
¶7.  (C/NF) The Ambassador pointed to recent USG restructuring 
 
KUWAIT 00002025  002 OF 004 
 
 
efforts aimed at consolidating development responsibilities 
under a single authority, evidenced by the recent appointment 
of Ambassador Randal Tobias as concurrent Director of Foreign 
Assistance and USAID Administrator.  He underscored the 
importance of closer engagement and coordination between the 
USG and development organizations in the Arab world to 
advance shared interests in the region. 
 
¶8.  (C/NF) Both Fund officials enthusiastically endorsed the 
idea of reviving dormant ties with USAID and other interested 
Western development organizations, including the OECD 
Development Assistance Committee and counterpart agencies in 
the UK, France and EU countries.  Al-Hamad's described plans 
(that he will oversee) to convene a meeting of Arab donor 
organizations in November with the USG, EU, UK, France, OECD 
and other interested Western aid organizations to foster 
dialogue and coordination on development priorities. 
Al-Hamad added that he proposed the idea at the April meeting 
of heads of Arab/Islamic aid and development finance 
organziations in Vienna and offered to host the event in 
Kuwait in November or December, subject to the Arab Fund 
Board's formal approval. 
 
¶9.  (C/NF)  According to Al-Hamad, participants at the 
proposed joint donor meeting would include any interested 
Western development agencies and members of Arab Aid, an 
umbrella donor organization headed by AFESD and comprised of 
KFAED, the Arab Monetary Fund, the Abu Dhabi Fund, the 
Islamic Development Bank, the Saudi Fund, the Arab Bank for 
Economic Development in Africa, the Arab Gulf Programme for 
United Nations Development Organizations, and the OPEC Fund 
for International Development.  Kuwait Fund DG Al-Bader told 
us he supported this initiative and looked forward to 
reinvigorating ties with USAID   that had essentially been 
dormant for at least a decade. 
 
Room for Improvement Among Other Arab Donor Organizations 
--------------------------------------------- ------------ 
 
¶10.  (C/NF) In response to the Ambassador's questions about 
the state of other GCC development organizations, Al-Bader 
pointed to "a mixed record" of effectiveness, noting that the 
Abu Dhabi Fund was "more a shell than a real fund" but that 
the Saudi Fund had improved its operations under new 
management.  Al-Hamad echoed Al-Bader's criticism of the Abu 
Dhabi fund, blaming the organization's ineffectiveness on 
poor management and the "absence of Shaykh Zayed's 
generosity"--referring to the late UAE ruler's renowned 
philanthropy.  He also pointed to increased frustration among 
some Arab countries with the Islamic Development Bank's 
inflexible loan repayment rules preventing early repayment of 
loans.  (Note: The IDB held its ministerial-level meeting at 
the Arab Fund building this week.  Al-Hamad was not impressed 
with the IDB's organiazational skills.) 
 
¶11.  (C/NF) The Ambassador also asked about the prospects of 
Qatar establishing its own development fund.  Al-Bader 
endorsed the idea and noted that the Qataris were testing the 
waters and that KFAED had been consulted by officials in Doha 
for recommendations.  Al-Hamad was dismissive of Qatar's 
efforts, exclaiming that the old Qatari regime "didn't do it 
out of meanness" and that the new regime was unlikely to 
establish a fund "out of arrogance."  "Qataris are still 
operating in an Al-Jazeera mentality," he added, noting that 
Doha is prepared "to give $50M to Hamas to embarrass everyone 
else, but not $20M to Yemen" for urgent development projects. 
 
 
Afghanistan:  Afghans Should Talk To Us 
--------------------------------------- 
 
¶12.  (C/NF)  On the pending Afghanistan arrears with KFAED 
(ref D), Al-Bader lamented the lack of GOA follow-up with 
KFAED in the aftermath of the London Afghanistan Compact 
conference where a new repayment schedule had been offered to 
the GOA (ref B).  Al-Bader explained that the GOK was eager 
to sit down and discuss the terms of the agreement with the 
GOA in order to justify resuming KFAED bilateral assistance. 
He welcomed the opportunity to meet with the visiting Afghan 
Finance Minister this week on the margins of an Islamic 
Development Bank conference in Kuwait.  The Ambassador 
offered to lend Embassy assistance in reaching out to the 
Afghan Embassy.  (Note:  Post conveyed Al-Bader's points to 
the Afghan Ambassador to Kuwait and visiting Afghan Finance 
Minister Ahady, who confirmed that he is scheduled to meet 
Al-Bader this week.  Ahady has also apparently proposed to 
his GOK counterpart, Finance Minister Al-Humaidhi, that the 
 
KUWAIT 00002025  003 OF 004 
 
 
Kuwait Finance Ministry buy out the GOA's arrears by paying 
KFAED the outstanding arrears. Post will follow-up with KFAED 
for a readout of Al-Bader's meeting with Ahady.  End note.) 
 
Assistance to Palestinians 
-------------------------- 
 
¶13.  (C/NF)  On assistance to Palestinians, the Ambassador 
pointed to ongoing Quartet efforts to establish an 
alternative temporary international mechanism for channeling 
assistance to Palestinians.  Al-Hamad welcomed the 
initiative, asserting that "there is a desperate need there, 
both humanitarian and political", while reaffirming AFESD's 
continued commitment to the Palestinian people.  AFESD 
assistance has always been channeled directly to Palestinian 
beneficiaries with effective safeguards, bypassing late 
President Arafat and the Palestinian Authority, to ensure 
transparency and accountability, Al-Hamad stressed.  He also 
explained that over the last four years, Arab donor 
organizations have provided 10 percent of their annual 
revenues as grants in support of Palestinian humanitarian 
needs. 
 
¶14.  (C/NF) Al-Hamad also described an AFESD scholarship fund 
established to fund university education for Palestinian 
students, in an effort to "create some hope in the next 
generation and keep them off the streets."   According to 
Al-Hamad, other projects under consideration include health 
and water resourcing projects. 
 
¶15.   (C/NF) The Ambassador encouraged increased assistance 
to Al-Quds University (AQU) in Jerusalem (per ref A). 
Al-Hamad, although critical of AQU officials as "too bloody 
aggressive" in demanding "more than their fair share" of 
assistance, explained that AQU, along with other needy 
academic institutions in the territories, would continue to 
receive AFESD assistance based on legitimate needs and not 
because of name recognition or political lobbying by 
sympathetic Arab officials.  (Note:  Al-Hamad revealed that 
AQU officials had apparently convinced Arab League Secretary 
General Amr Moussa to lobby him for additional AFESD 
assistance.  End note.)  Al-Bader pointed out that KFAED had 
provided $500,000 through the Arab Fund to support the 
university's study center as part of its commitment to the 
school, and had been instrumental in the establishment of the 
university. 
 
We Will Always Be There for Lebanon 
----------------------------------- 
 
¶16.  (C/NF)  Al-Hamad also described AFESD plans to fund 
administrative reform projects (IT resources, governance 
training) and other "loose end" projects in Lebanon in an 
effort to foster economic development and help promote 
political stability.  Some of these projects would include 
connecting treatment plants to idle networks; road projects, 
school construction, and river development projects intended 
to spur rural development.  Larger projects under review 
include power projects that would link Lebanon to a regional 
gas pipeline with Egypt, Jordan and Syria.  "The Arab Fund 
will always be there for Lebanon," Al-Hamad asserted. 
 
Yemen:  Not Right for GCC Membership 
------------------------------------ 
 
¶17.  (C/NF)  On assistance to Yemen, Al-Hamad (protect) 
scoffed at the Kingdom of Saudi Arabia's suggestion to GCC 
counterparts that Yemen join the regional organization. 
Al-Hamad commented that the KSA offer was proposed by King 
Abdullah, "a generous, frank, and open man--unlike his 
brothers" whose suggestion for Yemeni membership was 
unrealistic and rejected by other GCC countries, including 
Kuwait.  He added that as a compromise, GCC countries have 
agreed to channel increased assistance to their southern 
neighbor in an effort to address Yemen's dismal economic 
situation with plans underway to host a GCC-chaired donor 
conference for Yemen in London this fall, in coordination 
with the World Bank.  (Note: We have not seen other 
references to Al-Hamad's claim that King Abdullah proposed 
GCC membership for Yemen, Sanaa 01208 describes the donor 
effort.) 
 
 
******************************************** 
For more Embassy Kuwait reporting, see: 
http://www.state.sgov.gov/p/nea/kuwait/?cable s 
 
 
KUWAIT 00002025  004 OF 004 
 
 
Or Visit Embassy Kuwait's Classified Website: 
http://www.state.sgov.gov/p/nea/kuwait/ 
******************************************** 
LEBARON