US embassy cable - 04KUWAIT253

UNCLAS SECTION 01 OF 04 KUWAIT 000253 
 
SIPDIS 
 
STATE FOR INR/R/MR, NEA/ARP, NEA/PPD, PA, INR/NESA 
STATE FOR IIP/G/NEA-SA, INR/B 
WHITE HOUSE FOR PRESS OFFICE 
LONDON FOR GOLDRICH 
PARIS FOR OFRIEL 
USDOC FOR 4520/ANESA/ONE/FITZGERALD-WILKS 
USDOC FOR ITA AND PTO/OLIA 
 
E.O. 12958: N/A 
TAGS: OIIP, KU, KDMR 
SUBJECT: SPECIAL KUWAIT MEDIA REACTION, JANUARY 23: VISIT OF 
SPECIAL PRESIDENTIAL ENVOY JAMES BAKER TO KUWAIT 
 
1. SUMMARY:  Local media reports that the Kuwaiti government 
has agreed to "substantial reduction" of the debt owed by 
Iraq to Kuwait in response to the visit to Kuwait on January 
22 by Special Presidential Envoy James Baker provided 
Kuwait's National Assembly approves this policy. Prime 
Minister Sheikh Sabah Al-Ahmed and Foreign Minister Sheikh 
Mohammed Al-Sabah are reported in media as saying that the 
debt reduction is contingent upon establishment of an 
"internationally recognized Iraqi government" and approval 
of the action by Kuwait's National Assembly. Both the Prime 
Minister and Foreign Minister are reported as saying that 
the issue of Iraqi reparations owed to Kuwait for damages 
inflicted during the 1990-91 invasion and occupation were 
discussed with Baker, and that Baker was "cognizant of the 
difference" between the Kuwaiti position on reparations and 
on debt owed by Iraq. 
 
The tone of reported responses by members of Kuwait's 
National Assembly range from caution to outright rejection 
of debt reduction for Iraq. Several MPs state that debt 
reduction should not "be rushed into," with one stating that 
it should wait until a "fully elected (Iraqi) government 
with constitutional accountability" is in place. Another MP 
opposes "giving up even one penny" of the debt owed to 
Kuwait. 
 
Of the three editorial opinions that have appeared thus far, 
two support the conditions placed on debt reduction by the 
Kuwaiti government, emphasizing the responsibility to 
support "the friend and ally of Kuwait, the United States," 
on this issue. A third commentator ties debt reduction to 
the awarding of reconstruction contracts to regional 
companies. END SUMMARY. 
 
2. News stories:  On January 22, all newspapers dedicated 
front-page coverage and banner headlines to the January 21 
visit of Special Presidential Envoy James Baker to Kuwait: 
 
--Al-Watan:  "Sabah Al-Ahmed to Baker: The reparations are 
not to be touched and we are ready for a substantial 
reduction of debt with the approval of the National 
Assembly." 
 
--Al-Rai Al-Aam:  "Kuwait to Baker on debts: yes, but..." 
 
--Al-Seyassah:  "Kuwait heads towards writing off Iraqi debt 
and MPs warn: no relinquishing of the people's benefits." 
 
--Al-Qabas:  "Sabah Al-Ahmed to Baker: We seek a substantial 
reduction of debt but the decision is in the hands of the 
National Assembly." 
 
--Al-Anba:  "The ball of Iraqi debts is in the National 
Assembly's court." 
 
--Arab Times: "It's only money... Kuwait vows debt cut." 
 
--Kuwait Times:  "Iraq debt waiver awaits National Assembly 
nod." 
 
All newspapers published the full text of the statement 
issued by the Iraqi Minister of Finance and the governor of 
the Iraqi Central Bank following their meeting with SPE 
Baker and the American Embassy in Kuwait. 
 
Government response: 
 
3. All newspapers carried excerpts from a statement issued 
by the Prime Minister's office stating, "Kuwait, along with 
other countries, seeks to achieve a substantial reduction in 
Iraqi debts this year." All newspapers highlighted two 
conditions set forth by the government to this decision. 
First, debt reduction was contingent upon the "approval of 
constitutional institutions in the country"-- the National 
Assembly-- and second, that any agreement be "acceptable to 
an internationally recognized Iraqi government." 
 
4. All newspapers carried statements from the Foreign 
Minister, Dr. Sheikh Mohammed Al-Sabah, highlighting the 
terms of the agreement reached: 
 
--Al-Rai Al-Aam and Kuwait News Agency (KUNA): The Prime 
Minister and Foreign Minister both emphasized the importance 
working with other creditor nations and the importance of 
coming to "an international resolution from the Paris Club 
on the issue of Iraq's debt." He added that Kuwait is not 
the only nation concerned with the issue of debt. Dr. 
Mohammed explained: "Kuwait commits to the decisions made by 
the Paris Club concerning nations' debt and cannot bypass 
its resolutions, especially since a unanimous decision will 
be made for all Iraq creditor nations." 
 
--Al Watan quoted Dr. Mohammed as saying: " We have agreed 
to go to the Paris Club. When we reach an international 
decision on Iraqi debt, we will return to the National 
Assembly and explain exactly the position of the 
international community. The matter will then be in the 
hands of the legislative authority." 
 
--Al-Rai Al-Aam and Al-Qabas report Dr. Mohammed stated 
that, "regardless of all other matters, we must gain the 
approval of constitutional authorities in Kuwait, because as 
per the constitution, no one has the right to reduce any 
debt owed to the country except the Kuwait National 
Assembly. Therefore, we consider the matter to be 
premature." 
 
On the subject of reparations owed Kuwait by Iraq for damage 
during the 1990-91 invasion and occupation, Dr. Mohammed 
said, "The issue of Iraqi debt is fundamentally different 
from reparations. Kuwait has therefore absolutely rejected 
discussing the issue of reparations since there is a UN 
resolution issued in this regard, something which the 
American administration clearly understands." Prime Minister 
Sheikh Sabah Al-Ahmed told KUNA that this difference was 
stressed to Baker and that "Baker was cognizant of that 
difference." 
 
5. Al-Rai Al-Aam reported that according to "informed 
sources," "Baker expressed understanding of the Kuwait 
position and valued the Kuwait position. He also reassured 
Kuwait that Washington is taking Kuwaiti claims into 
consideration and realizes that Kuwait has a right it must 
take." 
 
6. Al-Rai Al-Aam editorialized that the GOK response can 
characterized as "yes, but.." The newspaper added that 
during the discussions, Kuwait never indicated there would 
be possibility the debt may be written off. According to Al- 
Rai Al-Aam, Kuwait clearly informed Baker that, "any 
procedure pertaining to debt must be linked in return to 
contracts to rebuild (Iraq), as a deserved entitlement and a 
form of compensation." 
 
Response from the National Assembly: 
 
7. MP Abdul-Wahab Al-Haroun, head of Parliament's Finance 
Committee, told Reuters that any talk about reducing debts 
or compensation is premature since Iraq is ruled by an 
interim council, not a fully elected government with 
constitutional accountability: "Such a matter should be done 
through negotiations between governments, not between a 
government and an interim council that can be changed at any 
minute." (Al Qabas, January 22) 
 
--MP Khalid Al-Adwa strongly rejected "giving up even a 
penny" of the debts or reparations owed to Kuwait by Iraq, 
stating that it is "a national duty" to reject calls to 
write off any Iraqi debts. He called on the National 
Assembly to stand up to attempts to relinquish the rights of 
Kuwaiti people, "especially since those who are in power in 
Iraq [on the Iraqi Governing Council] surprise us with 
statements that make Kuwaitis nervous and apprehensive, and 
which remind us of the aspirations of the former Iraqi 
tyrant and his cronies." (Al-Seyassah, January 22) 
 
--MP Hassan Al-Mezyed called for rejecting calls to write 
off the debts "which belong to the Kuwaiti people in favor 
of an Iraqi leadership that still abides by Saddam's 
ideology." (Al-Seyassah, January 22) 
 
--MP Basil Al-Rashid stressed the necessity of taking into 
consideration all security, economic, and political 
interests before thinking of writing off Iraqi debts. (Al- 
Seyassah, January 22) 
 
--MP Jamal Al-Omar said, "We must not rush into writing off 
the debts." (Al-Seyassah, January 22) 
 
--MP Dr. Nasser Al-Sanea said that the issue of Iraqi debts 
"requires consultations between the legislative and 
executive authorities to hear more details." He added that, 
"among the available alternatives is the reduction of the 
debts through a Paris Club agreement." 
 
Editorial Opinion: 
 
8. Lawyer Rashed Al-Radaan wrote in independent Al-Watan 
(1/22):  "Since we are a strategic ally of the United States 
and have the fortune to be treated with gratitude by this 
great country that is currently seeking to forgive debts 
owed by Iraq, we must therefore be clear and direct with the 
special presidential envoy. If the Kuwaiti government wants 
to write off the debts [owed by Iraq to Kuwait], the Kuwaiti 
citizens who suffered painfully as a result of Saddam's 
invasion cannot agree to give up their claim to reparations 
despite their respect for and knowledge that the brethren 
Iraqi people are not to blame for what happened." 
 
9. "What Did We Prepare for the Baker Visit?" 
Dr. Fahd Abdul Rahman Al-Nasser wrote in independent Al- 
Qabas (1/22):  "The people of the region are more worthy 
than Iraq of benefiting from these debts. If the Americans 
want to write off the Iraqi debts, they must treat the 
companies of the region in a special way. They must give 
[regional] governments and companies priority in rebuilding 
Iraq instead of ignoring them and writing off debts owed to 
their countries." 
 
10. "Leadership Fills the Vacuum." 
Lawyer Jamal Al-Kandari wrote in independent Al-Watan 
(1/23):  "The government said the truth when responding to a 
request made by the friend [Special Presidential Envoy 
James] Baker to write-off Iraqi debts. This was done by 
announcing the government's preliminary agreement, so as not 
to lose the friend and his government, while at the same 
time setting the condition of dealing and negotiating with 
an internationally recognized Iraqi government. The most 
important thing is the approval of the Kuwait parliament in 
order to show respect for the country's constitution. This 
is something that should not upset our allies, since it 
constitutes the heart of a democracy." 
 
 
URBANCIC