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UNCLAS SECTION 01 OF 05 NAIROBI 000553 
 
STATE ALSO FOR AF/E AND AF/EPS 
 
STATE PASS USTR PATRICK DEAN COLEMAN AND WILLIAM JACKSON 
 
TREASURY FOR REBECCA N. KLEIN 
 
COMMERCE FOR BECKY ERKUL AND ANDREA CORNWELL 
 
STATE PLEASE PASS USITC FOR ALAN TREAT, ERLAND HERFINDAHL, AND 
PHILIP STONE 
 
ENERGY FOR TOM SPERL 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ETRD EPET PREL ENRG ECON EINV PINR IR KE
SUBJECT: IRAN TRADE MISSION TO KENYA STRICTLY BUSINESS; AHMADINEJAD 
NIXES KENYA'S CONCESSIONARY OIL REQUEST 
 
REFS: (A) NAIROBI 342  (B) 08 NAIROBI 2137 
 
This cable is not/not for internet distribution. 
 
------- 
SUMMARY 
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¶1. (SBU) Summary: According to the Ministry of Foreign Affairs 
Middle East Division director Ken Vitisia, the recent visit of 
Iranian President Mahjmoud Ahmadinejad, accompanied by 200 
businessmen and Iranian government officials, among them Foreign 
Minister Manoucher Mottaki, was principally a trade mission that did 
not involve political discussions on Iran's nuclear ambitions, the 
Arab-Israeli conflict, Palestinian grievances, or the presence of 
American troops in Iraq.  Rather, the Iranians and Kenyans sought 
common ground on mutually beneficial commercial relations in tea, 
coffee, red meat, nuts, pharmaceuticals, fertilizers, dam and road 
construction, drip agriculture, and the manufacture of tractors and 
other farming equipment.  Ahmadinejad flatly refused the Kenyans' 
request for oil at concessionary rates, explaining Iranian law 
prohibits such transactions.  The Iranians did agree to provide oil 
on a 90-day credit basis and said they would help Kenya increase its 
strategic oil reserve to a six months' supply and assist in the 
expansion of Kenya's oil storage facilities.  End Summary. 
 
----------------------------- 
Political Jacket Left in Iran 
----------------------------- 
 
¶2.  (U) At the invitation of Kenyan President Mwai Kibaki, Iranian 
President Mahmoud Ahmadinejad and Foreign Minister Manoucher Mottaki 
led a 200-member business and government delegation to Kenya, 
 
NAIROBI 00000553  002 OF 005 
 
 
February 24-26, 2009.  According to Ken Vitisia, Director of the 
Kenyan Ministry of Foreign Affairs Middle East Division, the visit 
was principally a trade mission that did not involve political 
discussions on Iran's nuclear ambitions, the Arab-Israeli conflict, 
Palestinian grievances, or the presence of American troops in Iraq. 
Rather, the Iranians and Kenyans sought common ground on mutually 
beneficial commercial relations, which Vitisia said had been 
well-defined and investigated by a series of earlier trade missions 
under the rubric of the "Kenya-Iran Joint Commission on 
Cooperation."  "The Iranians," Vitisia maintained, "left their 
political jacket at home." 
 
-------------------------- 
Kenya's Iranian Attraction 
-------------------------- 
 
¶3.  (SBU) When asked about Kenyan interests in Iran, Vitisia 
responded that Kenyan entrepreneurs of coffee, black tea, nuts 
(cashews and macadamia), red meat, cut flowers, fruits, and 
vegetables see Iran as a promising market.  In addition, they 
believe that by partnering with reputable Iranian packaging 
companies and wholesalers, they can transship their products from 
Tehran's Chahabar Free Trade Zone to Muslim nations in the 
Commonwealth of Independent States, Afghanistan, and Pakistan. 
Iran, Vitisia ackowledged, is seen as a "launching pad" to these 
countries where halal meat and tea are essential components of daily 
dining. 
 
¶4.  (SBU) Aside from selling Kenyan products to Iran and its 
southwest Asia neighbors, Kenya is also keen on attracting Iranian 
investment in infrastructure.  Vitisia said the Kenyans are 
impressed by Iranian know-how in road and dam construction and 
renovation.  The Iranians hinted they might offer Kenya a long-term 
 
NAIROBI 00000553  003 OF 005 
 
 
credit facility for road and bridge construction.  The Kenyan 
government has already signed several road and dam deals involving 
Iranian firms (see reftels).  Similarly, the Kenyans have invited 
Iranian investors to build plants in Kenya to manufacture tractors, 
other farm and irrigation equipment, and motorcycles.  Iran is 
already involved in Kenya's energy sector.  Iranian firm Farab has 
begun construction work on a hydroelectric power plant along the 
Thika-Sagana road, north of Nairobi, and on a gas power plant near 
Mombasa. 
 
-------------------------------- 
Iranian Interests in East Africa 
-------------------------------- 
 
¶5.  (SBU) As for Iranian interests in Kenya, Vitisia said Iran sees 
Kenya as a gateway into Eastern and Central Africa.  Iran aims to 
sell fertilizers and pharmaceuticals in Kenya and the region. 
Questioned about the quality of Iranian drugs, Vitisia responded 
confidently that after conducting their own independent 
investigations Kenyan officials are convinced that Iranian 
pharmaceuticals, notably antibiotics, are cheaper and surpass in 
quality medications already imported from India and China.  Iran's 
Zynmat Healthcare has already established retail outlets in major 
Kenyan cities and Iranian doctors staff two clinics in Nairobi which 
are stocked with Iranian-made medications.  The Kenyans hope that 
the Iranians might even open pharmaceutical and fertilizer plants in 
their country.  To facilitate these commercial ventures, the Iranian 
Development Bank agreed to provide a credit line of $400 million. 
 
---------------------------------- 
Ahmadinejad Axes Cheap Oil Request 
---------------------------------- 
 
 
NAIROBI 00000553  004 OF 005 
 
 
¶6.  (SBU) Vitisia confirmed press reports that Ahmadinejad dismissed 
a Kenyan request for oil at concessionary rates.  The Iranian 
president explained to Kibaki that Iranian law prevents him from 
selling crude oil below market rates.  The Kenyans had futilely 
sought a 10% discount.  The Iranians did agree to provide oil on a 
90-day credit facility (the Kenyans had appealed for a 120-day 
extended credit arrangement).  Iran agreed to increase its oil 
exports to four million metric tons of oil annually.  (At present 
Iran supplies about 30% of Kenya's oil needs, second only to the 
UAE.)  In addition, Iran agreed to help boost Kenya's strategic oil 
reserve to a six months' level and, according to Vitisia, will 
assist Kenya in expanding its oil storage capacity. 
 
¶7.  (U) To soften the disappointment among his hosts, Ahmadinejad 
offered 20 scholarships for Kenyans to study medicine and 
engineering in Iran.  His delegation also agreed to help the Kenyans 
set up a surveillance system 200 kilometers offshore to monitor 
shipping, deep sea fishing, and piracy.  A new shipping line between 
Mombasa and Bandar Abbas is to be established.  Several memorandums 
of understanding were signed, including one on bilateral air 
services, thus allowing Kenya Airways to fly directly to Tehran. 
Among other pacts signed was a KSh2.48 billion grant ($31 million) 
to tarmac the Rumuruti-Maralal and Nanyuki-Nyahururu roads.  Iran 
also agreed to build two dams - Ngaa in Ukambani and Nyakoncho in 
western Kenya costing KSh480 million ($6 million) and KSh2.4 billion 
($30 million) respectively. 
 
¶8.  (SBU) Comment: The Kenyan outreach to Iran parallels similar 
courting of other countries (China, Libya, Qatar, the United Arab 
Emirates, and Kuwait) seen as flush with money and eager to invest 
in Kenya.  Whenever asked about these budding relationships, the 
Kenyans are quick to say they are strictly business ventures with no 
political strings attached.  Vitisia stressed that he makes the same 
 
NAIROBI 00000553  005 OF 005 
 
 
argument to the resident Israeli ambassador, emphasizing that Kenya 
remains committed to having warm relations with both Israel and the 
West and Iran and the (well-to-do) Arab nations.  The Kenyan 
government is broke and scrambling to find partners to finance its 
infrastructure goals (such as the creation of a second deep water 
port in Lamu) while coming up with the money to cover its KSh127 
billion ($1.6 billion) budget deficit.  End Comment. 
 
Minimize considered. 
 
Ranneberger