US embassy cable - 04AMMAN348

C O N F I D E N T I A L AMMAN 000348 
 
SIPDIS 
 
E.O. 12958: DECL: 1/15/2009 
TAGS: EFIN, PREL, EPET, KU, JO 
SUBJECT: JORDAN: KUWAITIS DO NOT PROMISE TO CONTINUE FREE 
OIL 
 
REF: AMMAN 72 
 
Classified By: Ambassador Edward W. Gnehm.  Reasons 1.5 (b) and (d). 
 
1.  (C)  On the margins of a separate meeting, Foreign 
Minister Muasher gave the Ambassador a readout of his 
recently concluded trip to Kuwait for a meeting of the 
bilateral Jordan-Kuwait Higher Committee.  Muasher said he 
had been very well received ("like royalty," in fact), 
including extensive time with the Foreign Minister, who 
hosted and a large banquet.  He also produced over 70 Kuwaiti 
agency heads to participate in the Committee sessions. 
 
2.  (C)  On the other hand, Muasher said he did not succeed 
in the main objective of his visit: securing Kuwaiti 
agreement to continue free oil deliveries.  He said Dr. 
Shaikh Muhammad explained that this was because of pressures 
from the Kuwaiti Parliament, which would not sanction even a 
smaller amount of free supplies than the equivalent of 25,000 
bpd of crude now being provided.  Shaikh Muhammad said he had 
heard from the UAE that the Emirates would also stop 
supplying their oil aid (in the form of the cash equivalent 
of 25,000 bpd).  This left only Saudi Arabia, whose 
leadership told the King on his January 10 visit that they 
would get back to Jordan within two weeks on the continuation 
of their 50,000 bdp donation.  No call has come yet. 
 
3.  (C)  Comment:  Prime Minister Fayez is also traveling to 
Kuwait on Saturday, February 17 for a two-day visit.  Muasher 
was not optimistic that the PM would be able to reverse the 
Kuwaiti decision.  If the Gulf countries stop their free oil 
supplies, this will put considerable pressure on the 2004 
budget, particularly given the current high market prices 
(about $35/barrel).  The budget draft assumes paying $26 per 
barrel on average over the year for crude.  Any savings as a 
result of oil deliveries below that price would likely be 
spent on social spending designed to blunt the negative 
political and social impact of tax and oil product price 
hikes also included in the budget.  The Foreign Minister 
reiterated Jordan's commitment to meet its goal of ending oil 
subsidies. 
GNEHM