US embassy cable - 04AMMAN6249

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 006249 
 
SIPDIS 
 
STATE FOR NEA/ARN 
TREASURY FOR ZARATE, MILLS, DEMOPULOS 
 
E.O. 12958: DECL: 07/21/2014 
TAGS: EFIN, PREL, ETRD, IZ, JO 
SUBJECT: JORDAN'S FINANCE MINISTER ON IRAQI ASSETS, IRAQ 
OIL PIPELINE AND PROPOSED OIL-FOR-DEBT SWAP 
 
REF: A. AMMAN 6173 
     B. AMMAN 5726 
     C. AMMAN 5399 
     D. AMMAN 4670 
     E. AMMAN 3801 AND PREVIOUS 
 
Classified By: CDA DAVID HALE.  REASONS 1.5 (B, D) 
 
1.  (C)  SUMMARY:  Minister of Finance Mohammad Abu Hammour 
July 21 told the Charge that the final payment to DFI of 
Iraqi assets would be about USD 50 million, but averred he 
did not know the precise number.  He noted the cabinet had 
released the Rafidain Bank's USD 84 million in operating 
capital.  He also outlined new Jordanian-Iraqi aid, trade and 
investment initiatives, including a proposed crude oil 
pipeline from Iraq's north (ready 2007-2008 at the earliest) 
and an oil deal whereby a portion of Iraq's annual oil 
delivery would pay down the Central Bank of Jordan's USD 1.3. 
billion trade claim.  He said a new Iraq-Jordan Higher Joint 
Commission would be formed, and formally meet in three 
months.  Other projects noted include support for 
refurbishment of the Iraqi border station at Trebil, and 
financial training, all at the King's behest.  END SUMMARY. 
 
Iraqi Assets 
------------ 
 
2.  (C)  Charge called on Finance Minister to review the 
recent visit of Iraqi Prime Minister Allawi as well as the 
status of frozen Iraqi assets.  Abu Hammour volunteered that, 
in the wake of a recent visit from Iraq's Minister of 
Finance, the cabinet had approved his proposal to release 
Jordanian Dinar (JD) 60 million (USD 84 million) in operating 
capital to the Amman-based Rafidain Bank.  Abu Hammour then 
recited the familiar figure of total assets returned of USD 
250 million.  Charge asked about the amount remaining to be 
returned to Iraq.  Abu Hammour first said that it would not 
be more than USD 50 million, but quickly corrected himself to 
say that it could be plus or minus that amount, as best he 
thought.  It could be a little bit more (than USD 50 
million), he concluded.  (COMMENT:  Without account ledgers 
in front of him, including the latest tallies of amounts paid 
on approved Jordanian traders' claims, Abu Hammour is giving 
his best-guess estimates to our queries.  These are only 
rough estimates, and not precise calculations.  END COMMENT.) 
 
Pipeline and Oil-for-Debt Swap 
------------------------------ 
 
3.  (C)  Abu Hammour prefaced his comments on Iraqi 
initiatives by noting a meeting King Abdullah had called 
about two weeks ago in which the King asked relevant cabinet 
members to help their Iraqi counterparts.  In the context of 
Iraq's USD 1.3 billion trade ledger account with Jordan, Abu 
Hammour said that the two sides agreed first to talk about it 
more.  His suggestion to his counterpart was that, since 
Jordan needed oil and there was a pipeline project being 
proposed, perhaps they should think of a new "oil protocol". 
This would be a new arrangement, he said, not necessarily 
linked to the completion of the pipeline.  Each year, Jordan 
could use about USD 1 billion in crude oil from Iraq, he 
noted.  The proposal was that Jordan would receive that 
valued amount in crude oil -- about USD 900 million paid at 
prevailing market rates but with the remainder "paid" out of 
the trade ledger account.  The USD 1.3 billion would thus be 
eliminated after 13 years.  Abu Hammour said this proposal 
has been presented to the Jordanian and Iraqi Prime Ministers 
for consideration. 
 
4.  (C)  Charge called on Minister of Energy and Mineral 
Resources Azmi Khreishat the same day to inquire further into 
the new oil pipeline.  Khreishat noted that he and Iraqi Oil 
Minister Thamer Al-Ghadhban had begun planning for the 
construction of the crude pipeline from Haditha, in Iraq's 
north, to Zarka, where the Jordanian refinery is located. 
This proposal also is now before the two prime ministers. 
The proposed pipeline would be scheduled for a 2007-2008 
completion, which would allow time for the planned 
modernization and expansion of Jordan's refinery to create 
capacity large enough for the pipeline to make economic 
sense.  The feasibility studies for the line, completed prior 
to the war, had envisioned a pipeline of wider diameter than 
necessary to serve the refinery's needs, leaving space for 
possible additional throughput if the pipeline were 
eventually extended south to Aqaba.  Iraq's Oil Ministry will 
be sending technical experts in August to meet with the GOJ 
Energy Ministry on future implementation of plans for this 
pipeline. 
 
Assistance Projects 
------------------- 
 
5.  (C)  In addition to outlining the creation of a Public 
Free Zone at the Jordan-Iraq border, and seeking ways to 
expand exports to Iraq (Ref B), Abu Hammour noted the recent 
allocation of a half million JD (USD 700,000)  to the 
Minister of Public Works to help with the refurbishment of 
the Iraqi border station at Trebil, opposite Al Kerama.  The 
other side has nothing, he said, and Jordan wants to help the 
Iraqis with new border checkpoint booths, including the 
construction of a new lane for diplomats, VIPs, and 
businessmen.  He said that other proposals were being 
considered in both construction and trade arrangements to 
facilitate trade.  He stressed that trade would be under "new 
arrangements."  He also mentioned his own proposal to the 
Iraqi Minister of Finance to provide training to retail bank 
and foreign exchange outlet personnel in Iraq.  The banks 
were really suffering in Iraq, he said he was told.  The GOJ 
was willing to do all that it could to train banking staff, 
he noted.  He referred again to the reduction of border fees 
and taxes at the Jordan-Iraq border (Ref B). 
 
6.  (C)  Like other Jordanian officials (Ref A), Abu Hammour 
was upbeat in describing the PM Allawi visit, noting that a 
press release had publicized the creation of the bilateral 
Higher Joint Commission, headed by the two prime ministers 
and covering key subjects such as finance, trade, energy and 
other concerned ministries.  The two sides are now preparing 
the agenda for the first Higher Commission, he noted. 
 
A Notable Exchange 
------------------ 
 
7.  (C)  Abu Hammour said the highly cooperative and positive 
tone of the Iraqis' visit was marred only by a public (and 
entirely characteristic) power grab by Planning Minister 
Bassam Awadallah -- who announced in front of both 
delegations that Planning, not Trade, would be the focal 
point for supporting the new bilateral Higher Commission.  In 
the absence of Trade Minister Halaiqa (in Algeria), Abu 
Hammour as acting Trade Minister challenged this assertion. 
The usually mild mannered Abu Hammour said he launched into a 
five minute back-and-forth with Awadallah.  Prime Minister 
Faisal Fayez offered a classic (for him) Solomonic solution 
by saying Planning would lead for three months and then Trade 
would take over, when the formal Commission launch is to 
occur.  Abu Hammour told us this made no sense but with a 
room full of Iraqis watching, finally decided he had to stop 
arguing and acquiesced. 
BAGHDAD MINIMIZE CONSIDERED 
HALE