US embassy cable - 03ABUDHABI3995

C O N F I D E N T I A L ABU DHABI 003995 
 
SIPDIS 
 
DEPT FOR NEA, NEA/ARP 
TREASURY PASS TO IRAQ TASK FORCE 
 
E.O. 12958: DECL 09/02/08 
TAGS: EAID, ECIN, ECON, EFIN, PGOV, TC 
SUBJECT:  TRADE BANK OF IRAQ DEMARCHE DELIVERED TO THE UAEG 
AND ARAB MONETARY FUND 
 
REF: STATE 250386 
 
1.  (U) Classified by Charge D'Affaires, a.i. Richard A. 
Albright, for reasons 1.5 (B) and (D). 
 
2.  (C) Summary.  Charge D'Affaires passed reftel points 
and non-paper 8/31 to UAE Ministry of Foreign Affairs 
Assistant Undersecretary for Political Affairs Abdullah 
Rashid Al-Nuami, and Econoff separately discussed the Iraq 
Trade Bank with Ministry of Finance Assistant 
Undersecretary for Budget and Revenue Khalid Al-Bustani. 
Prior to Post's receiving the demarche, Treasury Department 
Senior International Advisors Teresa Rutledge and Rick 
Bloom visited the UAE 8/19-20 to discuss in depth the Trade 
Bank of Iraq with UAEG officials and the Arab Monetary Fund 
(AMF), headquartered in Abu Dhabi. Although the AMF's Arab 
Trade Financing Program (ATFP) provides financing 
facilities for trade transactions of goods of Arab origin, 
Iraq owes millions in arrears to the AMF and is not 
eligible to participate in the ATFP.  The UAE does not have 
its own export credit agency, but a Ministry of Finance 
official suggested that UAE commercial banks might be 
willing to take on the extra risks of shipping goods to 
Iraq in order to be one of the first international banks in 
what is expected to be a lucrative market.  End summary. 
 
3. (C) The Treasury officials explained the purpose of the 
newly established Trade Bank of Iraq 8/19 to AMF Director- 
General Dr. Jassim Al-Mannai.  He noted that the AMF's 
subsidiary, the Arab Trade Financing Program provides 
financing facilities for eligible trade transactions of 
goods of Arab origin and associated services. 
 
4.  (U) The Arab Trade Financing Program (ATFP) is a 
specialized multi Arab financial institution headquartered 
in Abu Dhabi.  ATFP was established in 1989 with a paid up 
capital of USD $50 million.  Forty-four shareholders, 
including Arab financial institutions, regional monetary 
funds, central banks and public and private banking 
institutions, contribute to the Program's capital. 
 
5.  (C) Al-Mannai admitted, however, that Iraq owes an 
approximate $189 million in principal debt and $179 million 
in unpaid interest to the AMF and therefore is not eligible 
to participate in the ATFP.  Al-Mannai earlier had told the 
Ambassador that the AMF would take its direction on 
multilateral Iraqi debt from the IMF -- i.e. that there 
would be rescheduling, but probably little or no 
forgiveness. 
 
6.  (C) The Treasury officials subsequently discussed the 
Iraq Trade Bank with UAE Central Bank Governor Sultan 
Nasser Al-Suweidi and Ministry of Finance Assistant 
Undersecretary Khalid Al-Bustani.  Although the UAE does 
not have its own export credit agency (both interlocutors 
suggested the Trade Bank of Iraq work with the AMF and 
AFTP), Al-Bustani intimated that UAE commercial banks might 
be willing to take on the extra risks involved in shipping 
goods to Iraq in order to get their foot in the door.  He 
undertook to broach the idea with some of his local banking 
contacts and relay their responses to Post. 
 
7.  (U) Ms. Rutledge and Mr. Bloom did not have the 
opportunity to clear on this cable. 
 
Albright