US embassy cable - 03AMMAN7525

S E C R E T SECTION 01 OF 02 AMMAN 007525 
 
SIPDIS 
 
TREASURY FOR OASIA/MILLS-HUGENT AND DAS ZARATE 
 
E.O. 12958: DECL: 11/20/2013 
TAGS: PREL, ETTC, EFIN, IZ, JO 
SUBJECT: JORDAN READY TO ADDRESS FROZEN IRAQI ASSETS, BUT 
SEEKS TO ADDRESS CENTRAL BANK CLAIMS ON IRAQ AS WELL 
 
Classified By: Amb. Edward W. Gnehm for reasons 1.5 (b) (d) 
 
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SUMMARY 
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1.  (S)  In a meeting the day after separate Treasury-led 
discussions on frozen Iraqi assets with a Finance 
Ministry/Central Bank team ended inconclusively (septel), the 
GOJ on November 19 formally requested that the U.S. dispatch 
a team empowered to discuss both frozen Iraqi assets in 
Jordan and the Iraqi trade ledger.  Foreign Minister Muasher 
praised the work of the Treasury team and said it should be 
easy to reach agreement on return of frozen assets to Iraq -- 
if there is an accommodation on the Central Bank's USD 1.3 
billion in accumulated claims on the Iraqi Central Bank. 
Muasher acknowledged that Jordan may well only get the trade 
ledger money over the course of many years, but said that 
strong parliamentary and budgetary pressures required Jordan 
to reach agreement on this subject before it can return all 
of the frozen assets.  U.S. and Iraqi acknowledgment of the 
existence of the Central Bank claims and their unique 
character may suffice as an initial step.  END SUMMARY. 
 
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(ANOTHER) FORMAL REQUEST TO ADDRESS TRADE LEDGER DEBT 
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2.  (S)  Foreign Minister Marwan Muasher told the Ambassador 
November 19 that the Council of Ministers had instructed him 
to request formally that the U.S. send to Jordan a USG-Iraqi 
team empowered to address both Iraqi assets frozen in Jordan 
and the status of the Central Bank of Jordan's USD 1.3 
billion claims on Iraq.  Muasher said the "trade ledger" is 
"a fundamental issue for us" and must be addressed.  This 
amount is not from loans, he argued, but represents overdue 
payments for goods delivered to Iraq.  The previous Iraqi 
government had recognized this obligation, and the new 
government should honor that commitment.  Noting that he and 
other senior GOJ officials had first raised this issue in 
Washington in October 2002, he said the GOJ believes that it 
asked for and got from both U.S. and Iraqi officials earlier 
this year commitments to send a team empowered to address 
both issues. 
 
3.  (S)  Muasher said Jordan wants to solve this issue 
amicably, as a friend and ally.  As the GOJ had informed us, 
Jordan will continue to transfer USD 150 million of frozen 
assets to the Development Fund for Iraq (DFI) while working 
out an accommodation on the Central Bank claims.  Jordan 
realizes that it may well only get the money over a period of 
years.  Nevertheless, he argued, Jordan needs an arrangement 
for both political and economic reasons. 
 
4.  (S)  On the political side, Muasher said that the new 
Parliament will ask in December what has happened to the 
frozen Iraqi assets and the trade ledger.  "I cannot tell 
them that we have a commitment to give back the frozen assets 
without an agreement on the 1.3 billion dollars as well."  On 
the economic side, Muasher argued that 2004 will be a 
difficult budget year for Jordan, and having to write off a 
USD 1.3 billion asset is a cost that the GOJ cannot sustain 
under any circumstances. 
 
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TREASURY TEAM GOOD ON WHAT IT COULD DO 
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5.  (S)  Muasher thanked the Treasury Department for 
dispatching a team to discuss frozen assets, asserting that 
it will not be difficult to reach closure on a plan for 
transferring all remaining assets to Iraq -- as long as there 
is accommodation on the trade ledger.  However, he concluded, 
without an arrangement on that account, Jordan will be unable 
to move further on the frozen assets than has already been 
committed. 
 
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COMMENT 
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6.  (S)  Embassy believes that the Treasury team sent this 
week to Amman did an excellent job in the areas in which it 
was empowered to act.  However, it was unable to address 
Jordan's main concern, and, consequently, did not close a 
deal.  Senior Jordanian officials believe they got from 
Washington earlier this year a commitment to address their 
trade debt concerns.  We understand the manifold difficulties 
of addressing the issues at this time and our strong desire 
not to link the assets and trade ledger issues.  Nonetheless, 
as close allies with common interests, we should try to show 
the Jordanians that we understand and take very seriously 
their valid political and economic concerns.  As one of 
Jordan's key economic and political partners, we have a real 
stake in how these claims are disposed of.  It may be enough 
initially for the new Iraqi government and the United States 
to acknowledge clearly the existence of this obligation -- 
which was annually reconciled by the Jordanian and former 
Iraqi governments, most recently in December 2002 -- as well 
as its unique character. 
 
7.  (U)  CPA Baghdad minimize considered. 
 
Visit Embassy Amman's classified website at 
 
http://www.state.sgov.gov/p/nea/amman/ 
 
or access the site through the State Department's SIPRNET 
home page. 
GNEHM