US embassy cable - 03AMMAN8205

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 008205 
 
SIPDIS 
 
STATE ALSO FOR A/S WAYNE 
NSC FOR EDSON/KIFAYAT 
TREASURY FOR J. ZARATE, A. DEMOPULOS 
CPA FOR OLIN WETHINGTON, JOHN VARDOMON 
 
E.O. 12958: DECL: 12/15/2008 
TAGS: EFIN, ETTC, PREL, IZ, JO 
SUBJECT: JORDAN: TRANSFER OF FROZEN IRAQI ASSETS 
 
REF: A. AMMAN 8162 
     B. SECSTATE 341010 
 
Classified By: Ambassador Edward W. Gnehm.  Reasons 1.5 (b) and (d). 
 
1.  (C)  Summary:  During multiple conversations on December 
15, I obtained renewed assurances from the Prime Minister 
(and affirmed by the Finance Minister) that no further 
payments would be made against claims for a finite period of 
time.  The PM also affirmed that all Jordanian claim files 
would be open to Iraqi representatives to enable them to 
assist validation of claims.  The Finance Minister committed 
to transferring $100 m to the DFI at the beginning of 
January, with an additional amount before the end of the 
month.  He further pledged to expedite the review of claims 
to permit a full transfer of the balance of frozen Iraqi 
finds as rapidly as possible.  Both the PM and Finance 
Minister urged USG assistance in getting a designated group 
of Iraqis to Amman ASAP to launch the claims review.  To 
prepare for such a team, Abu Hammour agreed to begin working 
immediately with the local branch of Rafidain Bank.  End 
Summary 
 
2.  (C)  On December 15, following up on earlier 
conversations (ref A) and as instructed in ref B, I spoke 
with both Finance Minister Abu Hammour and the Prime Minister 
in an effort to clarify GOJ position on the entire issue of 
the transfer of frozen Iraqi assets in Jordan.  In our first 
conversation, I told the Finance Minister that Minister of 
Planning Awadallah in Washington had informed the USG at the 
White House and at Treasury that the GOJ agreed to the 
participation of representatives of Iraq in the review 
process of claims by Jordanians against Iraq.  Further, 
Awadallah had affirmed a GOJ decision to make no further 
payments to claimants until there was such Iraqi 
participation.  We could not therefore understand his remarks 
to USG and CPA officials (ref A) that payments had not been 
stopped. 
 
4.  (C)  Abu Hammour said he was not informed about 
Awadallah's conversations in Washington; neither Awadallah 
nor the Prime Minister had discussed those conversations with 
him.  This surprised him since he is the chair of the 
ministerial committee in charge of the issue and Awadallah is 
not a member of the committee.  He would go back to them 
immediately.  In the meantime, he told me he was ready to 
transfer $100 million to the DFI on the first working day of 
the new year.  When I told him this would fall short of the 
earlier $150 million commitment, he said he could make a 
further transfer of $50 million, or perhaps more, before the 
end of the month.  This would bring the total to at least 
$185 million.  (Abu Hammour seemed to be doing the sums in 
his head as we spoke.  He said he could not make another 
transfer before December 31 because he wanted to be able show 
credit rating agencies a high level of yearend foreign 
reserves, having spent $500 million in December to prepay 
Brady bonds and conclude a $70 million debt swap with the 
British.) 
 
5.  (C)  Abu Hammour also repeated his need to protect the 
$1.3 billion central bank claim.  He understood that this was 
not linked to the frozen assets and that the United States 
saw this as an issue for the Iraqis.  The Central Bank's 
auditors could be satisfied by either renewal of the annual 
trade protocol (which he recognized was unlikely) or a letter 
from the Iraqis stating that the claim was not a debt but a 
clearing account and would be settled "later."  He still 
hoped a U.S. mission could come soon to follow-up on this 
issue. 
 
6.  (C)  He also told me that he had received a letter from 
the Iraqi Oil Minister regarding its $100 million joint 
account with the Jordanian oil refinery that is not included 
in the $500 million in frozen accounts subject to claims. 
The letter (emailed to CPA, NEA and Treasury) identified 
Iraqis authorized to sign on behalf of the Oil Ministry.  As 
he said he had told CPA advisor Haydar al-Uzri on December 11 
(ref A), Abu Hammour said he had no legal choice but to 
proceed as requested by the Oil Minister.  To be absolutely 
certain that the U.S. is not going to make an issue of this, 
he would like to hear back from us as soon as possible. 
 
7.  (C)  Shortly after getting off the phone with Abu 
Hammour, I took a call from the Prime Minister, who had just 
spoken to Abu Hammour.  The PM told me he had reluctantly 
agreed not to pay any more claimants out of the frozen assets 
until an Iraqi team came to Amman to review the records.  He 
said this was not an indefinite pledge -- a team needed to 
get started "within a week."  He was ready to give the Iraqis 
full access to all Jordanian files and records on the claims, 
but the process had to be expedited, which would also speed 
up transfers to the DFI. 
 
8.  (C)  Abu Hammour called back to tell me that he had 
convinced the PM to involve the Iraqis in assessing the 
claims, starting with working with the Rafidain branch.  But, 
he said he was under constant, intense pressure from 
claimants.  Therefore, he said he needed an Iraqi team to 
come to Amman ASAP to look at the records.  Referring to the 
ref A conversation with al-Uzri, he said he couldn't wait 
more than two to three weeks for this to happen (a slightly 
longer timeframe than the PM's).  He said he had talked to 
Awadallah on the issue of not paying out more claims and that 
Awadallah confirmed my description of the Washington 
conversations.  Repeating what the Prime Minister had just 
told me, he said no more claims would be paid without Iraqi 
participation in the process, provided an Iraqi team could 
arrive soon.  In any case, he thought the amount of claims 
remaining would prove relatively small. 
 
9.  (C)  Comment.  Jordanian decision-makers are gaining a 
clearer picture of U.S. requirements, now that all the key 
Jordanian players are in the same city and are hearing 
directly from me our understandings, juxtaposed against 
Awadallah's accounts of Washington conversations.  All the 
key players now agree to work fully with the Iraqis and not 
pay out any more funds without their involvement for a finite 
period of time, as well as with relatively large transfers to 
the DFI (within the four month timeframe they have been 
using). 
 
10.  (C)  Involving the local Rafidain branch should 
jump-start the claims review.  The branch says it has key 
documents that will dispose of some claims quickly.  They 
should also be able to work with Baghdad to identify the 
right composition of an Iraqi team.  It is in our interest, 
as well as that of the Jordanians and Iraqis, to seize this 
moment and move forward quickly.  In particular, we need to 
work with CPA and the Iraqis to get a team here ASAP, using 
military air transport if necessary and understanding that 
more than one visit might be required. 
 
11.  (C)  Without delay, Rafidain should instruct its Amman 
branch to contact Abu Hammour immediately to begin working 
with his staff in cataloguing, categorizing, and disposing of 
claims as possible, preliminary to the arrival of a team from 
Baghdad before the end of the month at the latest.  We should 
also get back to Abu Hammour quickly about the $100 million 
joint oil account.  Finally, in order to deal with the $1.3 
billion issue, we need to encourage a separate Iraqi team to 
come to Amman, as we indicated to the Jordanians in 
Washington that we would do.  This remains their biggest 
economic and political interest in all of this. 
GNEHM