VZCZCXRO6518
RR RUEHDE RUEHDH RUEHDIR RUEHROV
DE RUEHKU #0230/01 0701441
ZNR UUUUU ZZH
R 111441Z MAR 09
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC 2990
INFO RUEHXK/ARAB ISRAELI COLLECTIVE
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHTV/AMEMBASSY TEL AVIV 1698
RUEHJM/AMCONSUL JERUSALEM 1378
RUEHBS/USEU BRUSSELS

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