US embassy cable - 04KUWAIT127

S E C R E T SECTION 01 OF 02 KUWAIT 000127 
 
SIPDIS 
 
STATE FOR NEA/ARP 
 
E.O. 12958: DECL: 01/20/2014 
TAGS: PREL, MARR, MOPS, IZ, KU 
SUBJECT: (S) AIK FUEL:  GOK WANTS TO KNOW WHAT IT'S SIGNING 
UP FOR 
 
REF: STATE 4882 
 
Classified By: CDA FRANK URBANCIC; REASON:  1.4 (B, D) 
 
1.  (S)  SUMMARY:  Charge delivered copy of reftel dipnote to 
the FM January 10, asking that the GOK continue supplying 
fuel to US and coalition forces pending bilateral discussions 
to resolve who will pay for what.  He also asked for urgent 
approval for the deployment of twelve additional C-130s to 
Ali al-Salem airbase; this approval was on hold at MOD 
pending resolution of the fuel issue.  The FM promised to 
raise the matter with the Prime Minister immediately.  He 
explained that the Cabinet's decision to provide this support 
was only for "the actual war" in Iraq, which has "ended."  He 
urged the USG to send a delegation to clarify how much it is 
asking Kuwait to cover, and for how long, before the JMC in 
March.  Charge also called KPC chief Nader Sultan January 10 
to ensure continued supplies; and he met with a Finance 
Ministry official on the subject.  ECON Chief also spoke 
directly with the Kuwait Petroleum Corporation, which 
actually provides the fuel.  END SUMMARY. 
 
2.  (S) Charge met January 10 with Foreign Minister Shaykh 
Dr. Mohammed Sabah al-Salem al-Sabah, and raised the Finance 
Minister's letter billing the USG for nearly KD 25 million 
(nearly USD 85 million) worth of fuel provided to US and 
coalition forces, which we had understood was 
Assistance-In-Kind (AIK) based on the assurances of the Prime 
Minister (reftel refers).  Stressing the USG's appreciation 
for Kuwait's generous support to Operation Iraqi Freedom to 
date, the Charge asked for a commitment to maintain the flow 
of fuel for the coalition, sine die as had been the practice 
so far.  He also delivered a copy of the dipnote contained in 
reftel. 
 
3.  (S) The Charge also asked that the GOK approve the 
deployment to Ali Al-Salem airbase of twelve additional C-130 
aircraft, which are urgently needed for the massive troop 
rotation "OIF2" running from January through May/June.  This 
approval had been put on hold at MOD pending clarification of 
the fuel supply issue.  OMC-K Chief explained that this will 
be the largest troop movement of its kind since World War II: 
 approximately 120,000 personnel rotating out of Iraq and 
100,000 rotating in; 80 percent of those movements will be 
through Kuwait. 
 
4.  (S) The Minister replied that he was familiar with this 
issue.  He explained that the Finance Minister (Mahmoud 
al-Nouri, who faces the threat of parliamentary "grilling") 
was "being tough with all the ministries" in order to show 
that he was capable of "getting hold of loose ends."  The 
money allocated to pay for AIK fuel was appropriated with the 
understanding that it was "confined to the actual war," which 
has "ended."  Nouri therefore wants to clarify with the USG 
"how much, how long," because right now, it seems like an 
"open-ended commitment to provide fuel at no charge."  Dr. 
Mohammed recommended that a US delegation come to discuss the 
issue with Nouri before the March 30-31 Joint Military 
Commission (JMC).  When the Charge noted that the matter 
would ultimately require a political decision, Dr. Mohammed 
agreed that "maybe a committee of different ministries" could 
meet with the US delegation. 
 
5.  (S) The FM asked what MOD had to say.  The Charge replied 
that according to MOD, some of the KD500 million pledged for 
Iraq support is still available.  The Finance Ministry had 
given MOD a budget supplement to cover the cost of AIK fuel, 
and MOD had entered into an agreement with the Kuwait 
Petroleum Corporation (KPC).  Now, MOD had reportedly used up 
the supplement.  Perhaps a simple mechanism would be for 
Finance to grant MOD another supplement drawn from the KD500 
million. 
 
6.  (S) Dr. Mohammed said he understood the urgency and 
promised to raise the matter immediately with the Prime 
Minister.  (This even though the FM was in a hurry to get to 
the airport, as he needed to fly to Yemen that day for a 
democracy and human rights conference.) 
 
(U) FINANCE MINISTRY 
-------------------- 
 
7.  (S) Earlier in the day, Charge also delivered a copy of 
reftel dipnote to Mustafa Al-Shamali, Assistant 
Undersecretary at the Ministry of Finance, underscoring the 
critical need for fuel supplies to continue uninterrupted 
during the ongoing troop rotation.  Al-Shamali said that he 
would work with his contacts at KPC to ensure that the fuel 
would not be abruptly shut off.  Rather, he suggested that 
the GOK and KPC would like the USG to enter into some sort of 
formal contractual agreement with KPC on fuel supplies, to 
regularize the relationship now that major combat operations 
for the liberation of Iraq have been "completed."  This 
agreement would give KPC legal cover, he suggested, in case 
anyone should question the terms of the relationship. 
 
8. (S) Al-Shamali's assistant pointed out that the Council of 
Ministers had issued a declaration in August that the USG 
should be billed for fuel and other costs related to Iraq 
operations as of the beginning of May (presumably coinciding 
with the declared end of major combat operations).  As a 
result of that decision, the Ministry of Finance sent the 
December 1, 2003 diplomatic note seeking reimbursement for 
the approx. USD85 million in fuel expenditures.  He also 
noted that between March 1 and August 30, Kuwait spent 62 
million Kuwaiti Dinars, or about USD204 million, on fuel, 
food and other costs associated with Operation Iraqi Freedom. 
 While Kuwaiti law 12/2003 allowed the Ministry of Finance to 
pay charges through August, the Ministry has not been 
authorized to spend funds beyond September 1. 
 
9.  (S) COMMENT:  We understand that, in the GOK view, the 
Defense Cooperation Agreement obligates the GOK to provide 
AIK only for the direct defense of Kuwait, and OIF -- 
especially since the end of major combat operations -- is 
outside that scope.  The GOK would not accept the argument 
that it is legally bound to continue providing this 
assistance on an open-ended, unlimited basis, and we are 
taking care not to make that argument.  We believe the fuel 
will continue to flow for the near term pending resolution of 
who will pay for what.  The tab is running at about USD1.2 
million per day at the moment.  We recommend a visit soon by 
an appropriate inter-agency delegation, to try to reach an 
explicit understanding with the GOK on this and other longer 
term mil/mil strategic issues. 
 
11.  (S) COMMENT CONTINUED:  The first test of whether the 
GOK is comfortable with this approach will be whether -- and 
how quickly -- it approves the deployment of the additional 
C-130s.  OMC-K will raise this question again January 11 with 
the Chief of Staff of the Armed Forces. 
URBANCIC