VZCZCXRO2471
PP RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHKU #1190/01 3450557
ZNR UUUUU ZZH
P 100557Z DEC 08
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 2456
INFO RUEHEE/ARAB LEAGUE COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 KUWAIT 001190 
 
SIPDIS 
 
NEA/ARP SAWYER 
 
E.O. 12958: N/A 
TAGS: EAID PREL KU
SUBJECT: ARAB FUND AND KUWAIT FUND RECIPROCATE USAID 
INTEREST IN COLLABORATION 
 
¶1. (SBU) Summary. the Directors General of two of the major 
development funds in the Middle East, the Kuwait Fund for 
Arab Economic Development(KFAED) and the Arab Fund for 
Economic and Social Development(AFESD), met separately with 
U.S. Agency for International Development Administrator and 
U.S. Department of State Director of Foreign Assistance 
Henrietta Fore on December 2 and expressed interest in 
coordination and cooperation on future development projects 
both inside and outside the Middle East.  The two directors 
also discussed ongoing projects in a number of countries in 
the context of identifying the character that such 
cooperation might take. 
End summary. 
 
 
Kuwait Fund 
------------ 
 
¶2. (SBU) Director General of the Kuwait Fund Abdul Wahab 
Al-Bader opened the December 2 meeting with Administrator 
Fore by noting that U.S. AID and the Kuwait Fund had mutual 
interests in many countries and expressing a wish to discuss 
common interests and the possibility of cooperation.  In 
response to Ms. Fore's inquiry as to how AID might best 
cooperate on projects with the Kuwait Fund, Bader said the 
Kuwait Fund prefers funding infrastructure projects but also 
supports social, health and education projects in some 
countries.  Ms. Fore said that following the Monterey 
Consensus, AID tries to work with recipient countries' 
priorities and focuses its efforts on people-oriented 
programs such as skills building through training and 
exchange programs.  Ms. Fore noted that the Kuwait Fund focus 
on infrastructure and AID's focus on skills building might 
provide opportunities for cooperation.  Bader discussed Fund 
activities in several countries of mutual interest and three 
items were identified for follow-up. 
 
¶3. (SBU) Bader said the Kuwait Fund was interested in funding 
projects in Afghanistan but was barred by its charter from 
doing so because Afghanistan was in arrears on a project from 
many years earlier.  He said Kuwait Fund efforts to fund a 
project four years ago failed because the GOA refused to sign 
an agreement stating that some of the funding would be used 
to repay part of the arrearages.  Bader said the GOA refused 
despite assurances from the Fund that it would not insist on 
actual payment; that it simply needed the signed commitment 
to satisfy internal institutional demands.  He said he had 
sought,  unsuccessfully, to finalize the agreement with PM 
Karzai, as well as with the Afghan Minister of Finance.  Ms. 
Fore recommended Bader try to work with Afghan Foreign 
Minister Rangin Dadfar Spanta who she characterized as an 
Afghan official who "made decisions." 
 
¶4. (SBU) Bader said the Kuwait Fund had been very involved in 
education projects in Yemen from the 60's to the 80's but had 
stopped activities since 1990.  He said currently the highest 
priority for Yemen was social projects.  He said the Fund was 
taking a long view of Yemen's employment problems and had 
approved a project for the construction of a college.  Ms. 
Fore said that technical assistance was available for 
capacity building in universities and ASKED that Bader inform 
AID if he "saw and openings for us." 
 
¶5. (SBU) Bader said the Kuwait Fund had administered 50 
projects worth $185 million in Lebanon including a partially 
completed highway project in Lebanon and a project for 
replacing destroyed houses which had funded replacement of 
10,000 houses.  Bader and Fore agreed to put their respective 
Mission Directors in Lebanon in contact with each other to 
discuss possible areas of coordination and cooperation. 
 
¶6. (SBU) Bader said the Kuwait Fund could do 1-2 projects per 
year in Pakistan but its activities had been severely 
hampered by the many changes in government and further 
compromised by heightened concerns arising out of the attacks 
in Mumbai, which caused the Fund to delay a planned agreement 
in December.  He said health, education and social projects 
in Pakistan were of interest to the Fund but that the GOP had 
set a hydro-electric project as its priority.  Ms. Fore said 
that AID had many health and education projects in Pakistan 
and that it worked with the Aga Khan Foundation. 
 
 
Arab Fund 
---------- 
 
¶7. (SBU) Arab Fund Chairman and Director General Abdul Latif 
Yousef Al-Hamad noted in opening comments to Ms. Fore during 
their December 2 meeting that the Arab Fund had current 
funding of 683 million Kuwaiti Dinars(KD) ($2.5 billion) and 
 
KUWAIT 00001190  002 OF 002 
 
 
had administered a total of KD6.5 billion ($24 billion) worth 
of projects during its history.  He said that the Arab Fund 
used concessionary loans as its primary method of funding 
projects and highlighted its commitment to strict adherence 
to repayment obligations by recipients.  In response to Ms. 
Fore's question about the Fund's comparative advantages, 
Hamad said its strengths were its speed of action, knowledge 
of the region and its ability to speak bluntly to recipients 
when necessary.  He noted that the Fund's project priorities 
focused on infrastructure with its portfolio allocated as 
follows: 40% on energy, 30% on roads, 20% on water projects 
and 10% on health, rural development and social projects. 
 
¶8. (SBU) In discussing how AID and the Arab Fund might work 
together on development projects, he observed that the Fund 
had collaborated with the World Bank, the African Development 
Bank, the Islamic Development Bank and the European 
Development Bank.  He added that they had worked with AID in 
the 70's and that it was a relationship worth renewing.  With 
regard to how coordination could be fostered and what form 
the cooperation might take, Hamad said that contacts between 
the two agencies should be maintained and that he would love 
to collaborate "in the gaps" between what the Fund did and 
what AID did. 
 
¶9. (SBU) Hamad said the Arab Fund always voted 10% of its 
annual net income to go to NGOs in Gaza and the West Bank. 
He said that the Fund had avoided dealings with the 
governments of Yassir Arafat but that now it had to deal with 
the Palestinian government.  He said it was particularly 
difficult to work in Gaza and that great care had to be taken 
with the distribution of funding.  He said the Fund was now 
working effectively in the West Bank and described a project 
that had paid the tuition of 100,000 college students in the 
West Bank during a period of extreme economic hardship. 
Hamad said the problem with Palestine was that the Fund 
couldn't give more loans and must do grants.  He stressed 
that they did not do budget support.  Ms. Fore said that AID 
was focusing on starting public-private partnerships in the 
West Bank aimed at increasing funding and development of 
businesses. 
 
¶10. (SBU) Hamad gave a brief review of the Arab Fund's 
current projects by responding to Ms. Fore's question about 
Fund activities in Darfur.  He said that two years ago $10 
million had been committed toward the construction of wells. 
Re: Lebanon, Ms. Fore asked about Fund interest in 
U.S.-Kuwait collaboration.  Hamad responded "absolutely," 
citing current water and electricity generation projects. 
Ms. Fore said that, in Yemen, the U.S. would like to focus on 
education projects.  Mr. Hamad recommended that AID work with 
the Yemen Social Fund, which he described as the best run in 
the region, and the Fund for Social Works.  He said a main 
constraint for the Fund's activities in Yemen was it did only 
a limited amount of grant funding.  He said that the 
electricity grid in Yemen covers only 30% of the population 
and that if the U.S. could provide grants, the Fund might be 
able to co-finance a project to expand the electricity grid. 
 
 
¶11. (SBU) Concerning project assistance to Iraq, Hamad said 
that Iraq is technically a non-functioning member because it 
has been in default since 1990 over approximately USD 50 
million owed to the fund, and that it does not participate in 
meetings or activities.  He said though the amount owed is 
relatively small, the principle of all members adhering to 
the Arab Fund's standards is important. 
 
¶12. (U) This cable was cleared by U.S. AID Administrator 
Henrietta Fore. 
 
********************************************* * 
For more reporting from Embassy Kuwait, visit: 
http://www.state.sgov.gov/p/nea/kuwait/?cable s 
 
Visit Kuwait's Classified Website: 
http://www.state.sgov.gov/p/nea/kuwait/ 
********************************************* * 
MISENHEIMER