US embassy cable - 04AMMAN3801

S E C R E T SECTION 01 OF 02 AMMAN 003801 
 
SIPDIS 
 
CPA FOR WETHINGTON, VARDAMAN 
TREASURY FOR ZARATE, MILLS, DEMOPULOS 
 
E.O. 12958: DECL: 05/15/2014 
TAGS: EFIN, PREL, ECON, IZ, JO 
SUBJECT: U/S LARSON MEETING WITH JORDAN'S FINANCE MINISTER 
 
REF: A. 11 MAY 2004 MULENEX-DEUTSCH/POWELL/KHALILZAD 
 
        E-MAIL 
     B. STATE 55050 
     C. STATE 52681 
 
Classified By: DCM David M. Hale.  Reasons: 1.5(B, D) 
 
1. (S)  SUMMARY:  Under Secretary of State for Economic, 
Business, and Agricultural Affairs Alan Larson met May 15 
with Government of Jordan (GOJ) Finance Minister Mohammad Abu 
Hammour on the margins of the World Economic Forum (WEF) to 
seek comments on the G-8 draft plan of support (Ref A).  Abu 
Hammour agreed to review the paper and provide comments.  On 
Iraqi assets, Abu Hammour volunteered that the GOJ this week 
would be releasing a tranche of USD 15 million to the 
Development Fund for Iraq (DFI), bringing the total 
transferred to date to USD 250 million.  He indicated a final 
tranche of about USD 50-70 million would go to the DFI by the 
end of June.  He also indicated there were no accounts in 
Jordan related to  Hamas or the Saddam Hussein family (Refs 
B, C).  The finance minister proudly reviewed a record budget 
surplus in the first quarter of 2004 due to the fiscal 
discipline advocated by his ministry, which he said had won 
praise in an IMF report now in draft.  Abu Hammour also 
reviewed the effects on the budget of lagging foreign grants 
and oil price increases.  END SUMMARY. 
 
2.  (SBU)  Under Secretary Larson met with Abu Hammour on the 
margins of WEF to raise the draft G-8 Plan of Support (Ref 
A), asking him to review some of the ideas for meeting the 
needs of the region and saying the USG welcomed any feedback. 
The U.S. sought views widely on this "draft" so that any 
proposal would be derived from regional support, he said. 
Abu Hammour promised to review the draft plan and provide 
reactions. 
 
Iraqi Assets: Transfers By End of June 
-------------------------------------- 
 
3. (SBU)  On Iraqi assets, Abu Hammour volunteered that all 
Jordanian claims would be resolved by the end of June and 
that the GOJ would transfer the remaining amounts to the DFI 
by then.  Earlier in the week, the minister said, he had 
ordered the transfer of an additional USD 15 million, 
bringing the total transfer to date to the round figure of 
USD 250 million.  The balance of Iraqi accounts remaining in 
Jordan was about USD 120-130 million, he said, of which USD 
50 million was the Rafidain Bank's operating capital.  Abu 
Hammour said the GOJ would need about USD 10-20 million more 
to settle the final claims by Jordanian firms. 
 
4.  (SBU)  Larson thanked Abu Hammour for the GOJ's help on 
recovering Iraqi assets.  It was very important for the DFI 
to receive additional assets as events moved along.  He 
expressed the hope that the GOJ would help to rectify any 
claims paid to Jordanian firms that later proved to be 
incorrect.  Abu Hammour gave his assurance that the GOJ did 
not pay 100 percent of any Jordanian company's claim if the 
trader did not provide the full set of documents of the 
completed trade transaction.  The GOJ paid only 80 percent on 
largely complete claims missing any of the required 
documents, he said, and demanded complete documentation. 
 
5. (S)  On Hamas accounts and Saddam Hussein family and 
related accounts (Refs B, C), Abu Hammour indicated that the 
GOJ had not found any such accounts. 
 
Positive First-Quarter Economic Trends 
------------------------------------- 
 
6.  (SBU)  Abu Hammour gave an overview of Jordan's positive 
first-quarter economic trends.  Jordan had a record surplus 
for the period, registering a JD 154 million budget surplus. 
He later noted that the IMF had prepared a draft report 
commenting favorably on the performance.  He attributed the 
surplus to cuts in spending and the GOJ's ability to generate 
more revenues through better collection of income taxes and 
stronger customs receipts.  Customs receipts were up 15 
percent compared to the same period last year, he said, due 
to a 35 percent growth in imports. 
 
7.  (SBU)  The financial impact of the discretionary measures 
(rise in general sales tax rate) the GOJ took in April will 
start to appear in June and July.  To date, the impact of 
high world oil prices has cost the budget an additional JD 
160 million, he noted.  Fortunately, Saudi Arabia had offered 
Jordan 50,000 barrels of oil per day, which will help cover 
the remaining subsidy on petroleum products and cover the 
foreign grants shortfall in 2004.  The government had not yet 
received JD 50 million promised by the EU for the period, he 
noted. 
 
8.  (SBU)  Given the first-quarter budget surplus, Abu 
Hammour said he was confident that the GOJ would meet or even 
better its 3.9 percent budget deficit target of JD 293 
million. 
 
9.  (U)  This message was cleared by U/S Larson. 
 
10.  (U)  Baghdad minimize considered. 
GNEHM