US embassy cable - 04AMMAN8714

S E C R E T SECTION 01 OF 02 AMMAN 008714 
 
SIPDIS 
 
E.O. 12958: DECL: 10/20/2014 
TAGS: MARR, MASS, PREL, IZ, JO 
SUBJECT: JORDANIAN REQUEST FOR INTEREST BEARING ACCOUNT 
 
 
Classified By: CDA David Hale for reasons 1.4 (b), (d). 
 
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SUMMARY 
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1. (C) The Jordanian Armed Forces (JAF) have requested the 
disbursement of unexpended Foreign Military Financing (FMF) 
funds into an interest bearing account (IBA).  The JAF 
believes an IBA would help long-range planning, ease the debt 
burden caused by delays in Coalition Support Fund (CSF) 
payments, and provide additional funds needed to maintain 
operational readiness.  END SUMMARY. 
 
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JORDANIAN RATIONALE 
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2. (S) In an August 24 letter to Embassy Defense Attache 
(text provided in paragraph 4 below), the JAF Director of 
Planning and Organization, Brigadier General Mohammad 
Farghal, formally requested the creation of an IBA for 
unexpended FMF funds.  JAF Head of Finance/Comptroller at the 
Directorate of Planning and Organization, COL Abdul Majed 
Abadi, told PolOff and MAP officer October 5 that disbursing 
unexpended FMF funds into an IBA would help the JAF's 
long-range planning, ease the debt burden incurred by delays 
in CSF payments for day-to-day operations, and provide 
additional funds to purchase US-origin spare parts needed to 
maintain operational readiness.  Abadi claimed the JAF's 
long-range planning was hindered by an outstanding balance of 
approximately USD 195 million in CSF payments.  The JAF has 
been reimbursed to date only USD 52 million for expenditures 
in support of Jordanian field hospitals in Afghanistan and 
Iraq, Royal Jordan Air Force (RJAF) repairs to airbases 
attributable to operations in support of the coalition, 
border security, and task forces in Afghanistan. 
 
3. (C) Abadi said this shortfall in CSF reimbursement 
hampered JAF day-to-day operations; it posed significant 
challenges in maintaining JAF operational readiness as the 
maintenance and spare parts needed to upkeep forces has to be 
paid out of readily available funds.  Being able to draw upon 
interest earned in an IBA to help finance operational 
readiness would free up funds and provide flexibility to 
better plan for future JAF needs. 
 
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POST COMMENT 
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4. (C) The GOJ regards itself as the most steadfast Arab ally 
of the U.S. in the region, and thus understandably wants to 
join Egypt in accruing interest on its unexpended FMF funds. 
Approval for an IBA would be a strong gesture of our 
appreciation for Jordan's resolute and important support of 
our efforts in the global war on terrorism.  It would also 
contribute to Jordanian military modernization and readiness 
(a key post goal), and encourage continued and strengthened 
support for the coalition in the face of debt burdens caused 
by delayed CSF reimbursement.  At an interest rate of 1%, 
Jordan would receive nearly USD 2.5 million annually based on 
an estimated sum of USD 240 million in the account.  The 
additional funds would be more than symbolic; they would give 
Jordan the flexibility either to sustain its force or to 
strengthen other needed programs in compliance with the 
criteria of the IBA.  Post will work with the GOJ to manage 
its financial expectations and anticipated use of interest 
funds. 
 
5. (U) Text of BG Farghal's letter: 
 
24 August, 2004 
Colonel David MacLean 
Chief, Military Assistance Program and Defense Attache 
Embassy of the United States 
Amman 
 
Subject:  Interest Bearing Account (IBA) request 
 
Dear David, 
 
1.  I would like to seize this opportunity to express our 
profound and sincere appreciation for your continuing 
support of JAF, and to emphasize our pride in the level of 
cooperation and friendship that we both have reached over 
the years. 
 
2.  In our continuing endeavor to answer JAF's defense 
needs, we are trying to spare no efforts in managing the 
military assistance funds efficiently and professionally. 
Also, as you are well aware, our FMF program doesn't 
incorporate or enjoy Cash Flow Financing facilities (multi 
year commitment) unlike other U.S. allies in this region 
(FMF recipients).  This consequently makes it very 
difficult for JAF to make any long range planning for FMF. 
 
3.  In view of the above, you are kindly requested to 
assist in enabling JAF to deposit the unexpended balance of 
FMF into an Interest Bearing Account (IBA) in the US 
Federal Reserve Bank in an endeavor to utilize the earned 
interest to finance some of JAF's additional programs. 
 
4. While anticipating your assistance, as always, please 
accept my highest regards and best wishes. 
Yours, 
 
Brigadier General 
Director of Planning and Organization 
Mohammad Farghal 
 
6. (U) Baghdad minimize considered. 
 
Visit Embassy Amman's classified website at 
 
http://www.state.sgov.gov/p/nea/amman/ 
 
or access the site through the State Department's SIPRNET 
home page. 
HALE