VZCZCXYZ0008
PP RUEHWEB

DE RUEHKU #0185/01 0410603
ZNR UUUUU ZZH   (CCY AD7C1603 MSI2374 544)
P 100603Z FEB 07
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 8237
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHOT/AMEMBASSY OTTAWA 0267
RUEHRL/AMEMBASSY BERLIN 0232
RUEHTC/AMEMBASSY THE HAGUE 0253

UNCLAS KUWAIT 000185 
 
SIPDIS 
 
SENSITVE; SIPDIS 
 
STATE FOR NEA/ARP, EEB; STATE PASS TO USAID, MCC 
AMMAN PASS TO USAID DIRECTOR AARNES 
 
C O R R E C T E D  C O P Y 
 
E.O. 12958:  N/A 
TAGS: EAID EFIN ETRD PREL KU
SUBJECT:  ARAB FUND HOSTS RARE DONOR COORDINATION EVENT 
 
REF:  (A) 06 Kuwait 4489 (B) Kuwait 111 
 
¶1.  (SBU) On February 4, the Arab Fund for Social and 
Economic Development (Arab Fund) hosted a unique donor 
coordination event designed to promote dialogue and 
increased cooperation between leading Arab and 
international donors.  Nine Arab organizations that 
comprise the Arab FundQs joint secretariat attended (and 
which together represent more than USD 80 billion in annual 
expenditures), along with twenty international 
organizations, including the World Bank and Japanese, 
Canadian, and European development and lending agencies 
(see the complete list in para 16).  The U.S. was 
represented by USAID/Jordan Director and Embassy Kuwait's 
Economic Counselor. 
 
 
Outcomes 
-------- 
 
¶2.  (SBU) As the goals of the event were modest, with no 
pretense of formulating a joint action plan or communiqui, 
much was achieved simply by gathering twenty-nine leading 
donor organizations together under one roof.  Seeking to 
build upon statements professed throughout the day on the 
utility of better coordination among donors, the Arab 
Fund's Director General Abdulatif Hamad, who hosted the 
event, urged participants to end the day with something 
concrete.  While during open discussion in the afternoon 
there was talk of forming a joint secretariat and creating 
a donor website, in the end the primary take-away was 
agreement on the utility of meeting annually, with the Arab 
Fund, the World Bank, and the OECD's Development Assistant 
Committee (DAC) agreeing to serve as shepherds of the 
process, as a "troika of three equals" (see also para 11). 
 
Format 
------ 
 
¶3.  (SBU) The format of the one-day event consisted of a 
series of brief presentations (7-10 minutes) by each of the 
participating organizations.  Most described the mission 
statement of their organizations and highlighted a few key 
activities.  Remarkably, every presenter kept to the time 
limit, and the event was able to conclude on time with a 
forty-five minute open discussion late in the afternoon. 
Presentations were technical with a focus on development 
activities, priorities, and challenges.  There was an 
absence of pontificating, no comment on U.S. policy in the 
region, and almost no mention of Iraq. 
 
Highlights 
---------- 
 
¶4.  (SBU) Highlights from some of the presentations 
included: 
 
- Yemen and Lebanon were cited as important countries for 
more coordination in several of the presentations. 
 
- The Arab Monetary Fund speaker chided the IMF for not 
sending a representative despite being invited. 
 
- The Canadian CIDA representative was one of the few 
participants to highlight the importance of international 
cooperation on development for Iraq and noted the urgency 
of moving forward on the Iraq Compact. 
 
- The Arab Gulf Program for United Nations Development 
Organization was one of the only Arab donor organizations 
to note the importance of women's empowerment and to 
highlight the critical role of civil society in 
development. 
 
-  The German Federal Ministry for Economic Cooperation and 
Development called on Arab donors to prioritize efforts to 
promote sound water conservation practices in the Middle 
East. 
 
-  The IDB emphasized the power of investment to increase 
private sector engagement as well as to promote poverty 
alleviation. 
 
-  The Dutch fielded the largest delegation, with four 
representatives including the Dutch Ambassador to Kuwait. 
 
- It was apparent from the presentations that the Arab core 
group already does a significant amount of coordination 
 
through regular meetings.  The level of mutual knowledge 
between the Arab and international side, however, was not 
particularly high, and a number of participants remarked on 
how little they knew about each otherQs activities, even 
while engaged in some of the same countries. 
 
USAID Intervention 
------------------ 
 
¶5.  (SBU) In her remarks, USAID/Jordan Director Anne Aarnes 
highlighted USAIDQs partnership with host governments, 
civil society, and the private sector in development 
activities.  She stressed the U.S. administration's 
continued commitment to foreign assistance, as well as its 
renewed focus on performance, results, and accountability. 
She explained the principles that underlie U.S. assistance, 
described region-wide emphases on youth, water and good 
governance, and offered concrete examples of U.S. programs 
making a difference in Lebanon, Jordan, Egypt and elsewhere 
in the region. 
 
Positive Reactions 
------------------ 
 
¶6.  (SBU)  During the closing dinner hosted by the Arab 
Fund, both the host of the Donors Coordination Event and 
attendees seemed equally pleased at the outcome of the 
first joint forum.  Arab Fund representative Ali Thunyan 
Al-Ghanim noted to Econoff that last year, after repeated 
requests for meetings, the Arab donors agreed for the first 
time to invite international aid organizations to 
participate in their annual discussions.  Other 
participants seemed pleased with the scope of the day's 
discussion and eager to continue the dialogue. Richard 
Manning, OECD Chairman of the Development Assistance 
Committee and a co-moderator for the event, was initially 
surprised when asked to co-moderate the event but noted 
that the initial foray into an expanded forum went well. 
Arab Fund indicated it would publish minutes of the 
discussion in the near future. 
 
Meetings with Arab Fund and Kuwait Fund 
--------------------------------------- 
 
¶7.  (U) On February 5, USAID Aarnes met separately with 
Arab Fund Director-General Abdulatif Al-Hamad to discuss 
impressions of the event and next steps.  Al-Hamad, who has 
46 years of experience in development work, described the 
Donors Coordination Event as very useful and very 
valuable.Q  He reiterated that it was important to renew 
the links between Arab aid organizations and international 
organizations, noting that these relationships had been 
neglected since the mid 1980s.  Al-Hamad emphasized that 
all of the present leaders of Arab aid organizations are 
professionals with long years of experience and deep 
expertise in regional development issues.  He added that 
major institutions such as the Arab Fund, the Kuwait Fund, 
the Saudi Arabia Fund, and the Islamic Development Bank are 
all well established, sufficiently capitalized, and 
professionally managed organizations, capable of 
maintaining robust programs regardless of shifting 
politics.  Additionally, these institutions serve as a 
source of not only finance but also expertise and 
management, frequently executing grants and loans on behalf 
of donor governments.  He highlighted that the Arab Fund 
was fully self-sustaining through disciplined management of 
its endowment and that the Fund has never had to turn down 
a project due to a lack of funding.  He added that it was 
in the self-interest of aid recipients to make payments on- 
time since a delay in payment of greater than 90 days would 
result in suspension and denial of access to future 
support. 
 
¶8.  (U) Al-Hamad said the Arab Fund would earn 122 million 
Kuwaiti Dinars (427 million USD) this year and expend 5 
million Kuwaiti Dinars (17.5 million USD) in operating 
costs.  The Fund manages approximately 5.5 billion USD in 
annual commitments.  Al-Hamad proudly stated that the 
Fund's average project cycle, the time between receiving a 
formal proposal and granting approval, was only 90 days. 
Referring to the Fund's unique expertise and deep 
experience in development projects in the region, he said, 
The World Bank is a supermarket; the Arab Fund is a 
boutique. Al-Hamad also touted the Arab Fund's 
flexibility in combining long-term planning and short-term 
response to ad hoc requests.  He said the Fund is also 
willing and able to complement the work done by other 
 
organizations and to fill in the funding gaps that other 
organizations are unable to cover. 
 
¶9.  (U) Regarding the FundQs operating philosophy, Al-Hamad 
noted that the organization generally does not maintain a 
physical presence in recipient countries, preferring to 
monitor projects remotely and allow the recipient 
governments to directly manage day-to-day operations.  He 
admitted that a scarcity of human resources the Fund has 
only 180 permanent staff is another reason for this 
hands-off approach.  With regard to implementation, Al- 
Hamad also feels strongly that development organizations 
should respect the local expertise of the host government 
rather than impose rigid practices which may be not be 
appropriate for the local operating environment. 
 
¶10.  (SBU) On next steps, Al-Hamad said coordination should 
be led by a troika of three equals: the Arab Fund, the 
World Bank, and the OECD Development Assistance Committee. 
These three organizations will next meet at the World Bank 
in April.  He then envisions an annual get-together of all 
of the Arab donor organizations, at which the make-up of 
the attendees (senior management, country management, or 
field operators) would be tailored to a pre-selected theme 
and agenda which could focus on a country, a sector, or a 
functional area.  He emphasized that he expects this 
coordination to remain an informal process, without the 
creation of special staffs or institutions. 
 
¶11.  (SBU) Following her meeting with Al-Hamad, Aarnes met 
with Director-General of the Kuwait Fund Abdulwahab Al- 
Bader.  Al-Bader shared Al-HamadQs view that the Donor 
Event had been an excellent opportunity for the different 
organizations to get to know one another.  He said that 
although many of the organizations had worked together to 
co-finance projects, there were still many things they did 
not know about one another.  Furthermore, he said, some of 
the organizations have had coordination problems which 
could perhaps be overcome by building closer institutional 
and personal relationships.  He felt that the event had 
been an excellent first step which he hoped would evolve 
into more regular meetings which could focus more on 
substantive issues. 
 
¶12.  (SBU) Al-Bader explained that the Kuwait Fund, with a 
staff of 400, operates based on a 5-year plan with a cap on 
annual commitments of 200 million KD (700 million USD). 
Fifty percent of its commitments must go to Arab countries. 
Like the Arab Fund, the Kuwait Fund does not maintain a 
permanent presence in recipient countries.  Al-Hamad 
expressed interest in learning more about how USAID 
operates and in receiving more visits from USAID 
representatives passing through the region.  He also 
requested more information about the Millennium Challenge 
Corporation following Aarnes explanation of the MCCs 
background and objectives. 
 
¶13. (SBU) Regarding aid to Iraq, Al-Hamad expressed 
frustration at the Government of Iraq's shifting 
priorities for reconstruction and lack of focus. He 
said that in Iraq, it was impossible to manage projects by 
remote control because of corruption, but also impossible 
to send staff from the fund to oversee projects due to the 
security situation on the ground. 
 
Comment 
------- 
 
¶14.  (SBU) This donor coordination event, while modest, was 
a positive beginning.  The Arab Fund drew kudos throughout 
the day for initiating the event, hosting it in resplendent 
surroundings in the magnificent Arab Fund building in 
downtown Kuwait.  With continued commitment from the 
organizations involved, this forum could evolve into a 
significant coordination mechanism. 
 
¶15.  (SBU) Embassy Kuwait greatly appreciates the support 
and interest of USAID and wishes to thank in particular 
USAID/Jordan Director Aarnes for her participation and 
contribution to the success of the event. 
 
Participants 
------------ 
 
¶16.  (U) Following is a list of organizations that 
attended: 
 
a) Arab Core Group 
 
-  Abu Dhabi Fund for Development 
-  Arab Bank for Economic Development in Africa (BADEA) 
-  Arab Fund for Economic and Social Development 
-  Arab Gulf Program for United Nations Development 
Organizations 
-  Arab Monetary Fund 
-  Islamic Development Bank (IDB) 
-  Kuwait Fund for Arab Economic Development 
-  Opec Fund for International Development 
-  Saudi Fund for Development 
 
b) International Donors 
 
-  Agence Francaise de Developpement (AFD) 
-  Asian Development Bank (ADB) 
-  Canadian International Development Agency (CIDA) 
-  Department for International Development (DFID UK) 
-  Deutsche Gesellschaft fur Technische Zusammenarbeit 
(GTZ) 
-  European Commission External Relations 
-  European Investment Bank 
-  German Federal Ministry for Economic Cooperation & 
Development 
-  International Development Research Center (IDRC) 
-  International Fund for Agricultural Development (IFAD) 
-  Japan Bank for International Cooperation (JBIC) 
-  Japan International Cooperation Agency (JICA) 
-  KFW Entwicklungsbank (German Reconstruction Bank) 
-  Ministry of Foreign Affairs of the Kingdom of the 
Netherlands 
-  Organization for Economic Cooperation and Development 
(OECD) 
-  Organization for Economic Cooperation and Development, 
Development Assistance Committee (OECD-DAC) 
-  Swiss Agency for Development and Cooperation (SDC) 
-  The World Bank 
-  United Nations Development Program (UNDP) 
-  United States Agency for International Development 
(USAID) 
 
¶17. (U) USAID/Jordan Director Anne Aarnes has cleared this 
cable. 
Tueller