US embassy cable - 03AMMAN8162

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 008162 
 
SIPDIS 
 
TREASURY ALSO FOR JUAN ZARATE, ABIGAIL DEMOPULOS 
CPA FOR OLIN WETHINGTON 
 
E.O. 12958: DECL: 12/14/2008 
TAGS: EFIN, ETTC, PREL, IZ, JO 
SUBJECT: JORDAN: FROZEN IRAQI ASSETS, MEETING WITH FINANCE 
MINISTER 
 
REF: A. AMMAN 7830 
 
     B. AMMAN 7805 
     C. AMMAN 7691 
     D. STATE 341010 
 
Classified By: Ambassador Edward W. Gnehm.  Reasons 1.5 (b) and (d). 
 
1.  (SBU)  Summary.  Jordan's Finance Minister told a 
visiting CPA official that Jordan would accelerate transfer 
of Iraqi assets frozen in Jordan to the Development Fund for 
Iraq and agreed on a mechanism for joint Jordanian-Iraqi 
assessment of commercial claims against those assets. 
However, the Minister said he would need to check if he could 
stop paying individual claims not jointly agreed to be valid. 
 Abu Hammour also asked for instructions on how to deal with 
a $100 million account in the name of the Jordanian oil 
refinery that appeared to be used for the benefit of the 
Iraqi oil ministry.  End Summary. 
 
2.  (SBU)  Taking advantage of his presence in Amman to 
participate in meetings with the IMF, CPA advisor Haydar 
al-Uzri and ECON/C called on Jordanian Finance Minister Abu 
Hammour the evening of December 11 to discuss Iraqi 
participation in the evaluation of Jordanian claims against 
the $500 million in Iraqi assets frozen in Jordanian banks. 
The manager of the Amman branch of Rafidain Bank also joined 
the meeting. 
 
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ACCELERATED TRANSFERS TO DFI 
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3.  (SBU)  Abu Hammour confirmed Prime Minister Fayez' 
promise to A/S Burns (ref B) to accelerate transfer to the 
Development Fund for Iraq (DFI) of "the free balance" of 
frozen assets (i.e. the share of the $500 million not subject 
to claims by Jordanian banks and businesses).  Abu Hammour 
said that the next large payment would be made January 2 or 
3, with another one in early February. He didn't state an 
amount, but suggested that the payments would be more than 
the $35 million installments and the $150 million total 
previously discussed. 
 
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INVOLVING IRAQIS IN ASSESSING CLAIMS 
------------------------------------ 
 
4.  (SBU)  Regarding Iraqi participation in the process of 
assessing the validity of claims against the frozen assets, 
Abu Hammour committed to prepare a matrix of pending unpaid 
claims.  He said that there were about 250 such claims and 
that it would take up to a month to complete a matrix, which 
would identify the claim, the amount, and the Jordanian and 
Iraqi parties.  Using this information, al-Uzri believed the 
Iraqi side would be able to identify the right people and 
files on the Iraqi side who could come to Jordan to provide 
the relevant information to Jordanians for evaluating the 
claims. 
 
5.  (SBU) Pushed by al-Uzri and ECON/C for a speedy process 
that would involve Iraqis, Abu Hammour agreed to check with 
Prime Minister Fayez on two points: a) whether he could 
accept help from the Rafidain branch in lending staff members 
to help speed up preparation of the matrix; b) whether he 
could agree not to pay out further claims that have not been 
individually vetted with the Iraqi government.  Al-Uzri noted 
that the Rafidain branch could be very helpful in speeding up 
the claims checking process.  For example, in many cases, the 
branch had actual payment orders from Baghdad that it had not 
been able to execute because of the war. 
 
6.  (SBU)  As a second step, Abu Hammour said his staff would 
prepare a similar matrix of the about 170 already-paid claims 
that would be shared with the Iraqis.  He also said that $2-3 
million in claims had been paid since his November 17 
meetings with Juan Zarate in Amman (ref C), bringing the 
total already paid out to about $120 million. 
 
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NEED FOR "SOMETHING" ON $1.3 BILLION TRADE LEDGER 
--------------------------------------------- ---- 
 
7.  (C)  Saying the two issues were "not linked," Abu Hammour 
said that he hoped Iraq could be responsive to the Jordanian 
government's need to be able "to show something to parliament 
on the $1.3 billion."  One of two things could do this: a) a 
renewal of the annual trade protocol, or b) a letter from the 
Iraqi government recognizing that the $1.3 billion is not a 
debt but funds in a clearing account not subject to the Paris 
Club that would be dealt with "later."  Abu Hammour said 
"later" could be vague: it could be one, two, three or ten 
years; what he wants/needs is to show the Central Bank's 
external auditors that "this is not a bad debt."  He said he 
looked foward to discussing this subject with "a U.S. team." 
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OIL ACCOUNT 
----------- 
 
8.  (SBU)  Finally, Abu Hammour alerted al-Uzri to the 
existence of an account at the Jordan National Bank in the 
name of the Jordan Petroleum Refinery Company (JPRC) that 
contains JD 75 million ($106 million).  Drawings on the 
account require signatures of the JPRC and of the Iraqi 
Ministry of Oil.  The purpose of the account is to procure 
equipment for the Iraqi Oil Ministry with the source of the 
funds being oil sold to Jordan.  Abu Hammour said that this 
account had been frozen but that it was not part of the $500 
million (he said he was "99% sure" of the latter). 
 
9.  (SBU)  Abu Hammour said he had been approached the day 
before by a representative of the Iraqi Oil Ministry who said 
that the ministry wanted to use the account to purchase oil 
equipment.  The representative had a July letter to this 
effect from the Oil Ministry's Thamir Ghadhban and a CPA oil 
advisor.  Abu Hammour told al-Uzri that if he received a 
letter from the Iraqi Oil Ministry identifying persons 
authorized to sign on its behalf, he would have no legal 
choice but to allow use of the account.  On the other hand, 
if he were asked by the Iraqi Finance or Oil Minister to turn 
the funds over to the DFI, he would also be prepared to do 
so.  Al-Uzri said he would seek guidance. 
 
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COMMENT 
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10.  (C)  Agreement on a mechanism for jointly evaluating the 
claims with Iraqis in a position to know the details should 
expedite transfers to the DFI.  We will want to keep the 
pressure on to meet the discussed timeframe.  Abu Hammour's 
need to check on not paying claims that have not been agreed 
with Iraqis is troublesome given discussions in Washington 
the week before.  However, there is a distinct possibility 
that Abu Hammour was not fully briefed on those discussions. 
It is also possible that the additional $2-3 million in 
claims were paid in the two plus weeks between the Zarate and 
Washington meetings.  Per ref D, post will follow-up on this 
point with senior Jordanian officials, as well as on taking 
advantage of Rafidain's help from in preparing the matrices. 
GNEHM