VZCZCXRO3414
PP RUEHDE RUEHDH RUEHDIR
DE RUEHKU #0735 2031224
ZNR UUUUU ZZH
P 221224Z JUL 09
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 3716
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RUEHIL/AMEMBASSY ISLAMABAD PRIORITY 1065
RUEHBUL/AMEMBASSY KABUL PRIORITY 0408
RUEKJCS/SECDEF WASHINGTON DC PRIORITY

UNCLAS KUWAIT 000735 
 
SENSITIVE 
SIPDIS 
 
STATE FOR S/SRAP, NEA/ARP, SCA 
STATE PASS TO USAID 
DEFENSE FOR OSD, CENTCOM 
 
E.O. 12958: N/A 
TAGS: EAID PREL AF KU
SUBJECT: KUWAIT FUND SUPPORT TO AFGHANISTAN STALLED DUE TO 
FAILURE TO RESOLVE LOAN ISSUE 
 
REF: A. STATE 74362 
     ¶B. KUWAIT 639 
     ¶C. 08 KUWAIT 1190 
 
¶1. (U) Poloff and Econoff delivered reftel points to Ministry 
of Foreign Affairs Follow-up Department Counselor Abdulla 
Mehdi July 20.  Mehdi agreed to review the points with 
Ambassador Khalid Maqamis, Head of Follow-up and Coordination 
Department, Ministry of Foreign Affairs and provide a 
response shortly. 
 
¶2. (SBU) Econoffs delivered reftel points to Kuwait Fund for 
Arab Economic Development Deputy Director General Hesham I. 
Al-Waqayan July 21.  Al-Waqayan reiterated the Fund's keen 
interest in working with the international community to 
provide support to the Afghan people, in particular in the 
education and healthcare sectors.  Al-Wagayan stated that the 
Fund has plans for projects valued in excess of $50 million. 
 
1977 LOANS STYMIE PROJECTS 
 
¶3. (SBU) Al-Waqayan was quick to point out that the Fund is 
unable to initiate programming in Afghanistan until the issue 
of unpaid arrearages on the part of the GOA is resolved.  The 
arrearages stem from 1977 Kuwait Fund loans to the GOA and 
amount to KD 6.2 million (approximate $22 million).  National 
legislation pertaining to the Kuwait Fund prevents it from 
making loans or grants to countries owing the Fund 
unsatisfied obligations.  Al-Waqayan said that the Fund has 
attempted to resolve this issue in recent years, including 
offering a long-term repayment plan commencing in 2026.  He 
said that the GOA had been unwilling to sign a proposed 
agreement, despite several rounds of talks, including talks 
in Kuwait.  (Note: Kuwait Fund Director General Abdul Wahab 
Al-Bader relayed the same information to former USAID 
Administrator Henrietta Fore in December 2008 -- ref. C.  End 
Note).  Al-Waqayan said that a third party could satisfy the 
debt; in response to a query, he said that the GOK could 
assume responsibility for the obligation. 
 
PAKISTAN ASSISTANCE 
 
¶4. (SBU) Al-Waqayan also updated Econoffs on the Kuwait 
Fund's activities in Pakistan.  He said that he would be 
making a long-delayed trip to Islamabad at the end of August 
to sign a $50 million earthquake assistance package (ref. B). 
 He also described the Fund's $34 million contribution to the 
Neelum Jhelum hydroelectric project (ref. B).  Al-Waqayan 
also briefly described the Fund's support to a major water 
and sanitation project in the North Korean capital, 
Pyongyang. 
 
COMMENT 
 
¶5. (SBU) Ending the arrearages stalemate is critical to 
unlocking potential large-scale assistance to Afghanistan on 
the part of the Kuwait Fund.  Embassy will intensify 
engagement with the GOK with a view to securing de facto debt 
forgiveness.  However, if a long-term repayment plan could 
unlock substantial additional largess now, Embassy suggests 
there may be merit in the GOA taking another look at the 
terms being offered by the Fund, which senior Fund officers 
maintain matches terms available to countries qualifying for 
the Heavily Indebted Poor Countries (HIPC) initiative 
(Afghanistan has not yet fully qualified).  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