US embassy cable - 04AMMAN8905

S E C R E T SECTION 01 OF 02 AMMAN 008905 
 
SIPDIS 
 
E.O. 12958: DECL: 10/30/2019 
TAGS: EFIN, EAID, JO, IZ 
SUBJECT: JORDAN'S FINANCE MINISTER ON WASHINGTON VISIT, 
DEBT REDUCTION, CASH SMUGGLING, AND CABINET TURF BATTLES 
 
REF: AMMAN 8045 
 
Classified By: CDA DAVID HALE, REASONS 1.4 (A) & (D). 
 
1.  (S/NF)  SUMMARY:  Jordan's Finance Minister Mohammad Abu 
Hammour's main concerns remain high oil prices and hope for a 
debt swap increase under the Paris Club.  He raised the issue 
during his recent meetings in Washington on the margins of 
the IMF/World Bank meetings, and other senior Jordanian 
officials will press for the debt swap increase over the 
coming months.  On cash smuggling, he said he has asked the 
Central Bank Governor to discuss the issue with the head of 
Jordan National Bank and, more generally, not to let bank 
secrecy inhibit information sharing with the USG.  He plans 
to push strongly for swift passage of the draft Anti Money 
Laundering law. Abu Hammour also provided his views on 
control over the Social Economic Transformation Program 
funds.  He also reported that the settlement of commercial 
claims against Iraqi frozen assets was nearly complete and 
that the amount restored to Iraq 
remains at $250 million.  In a separate meeting, he provided 
some insights into his current priorities in financial 
management in the Ministry of Finance.  END SUMMARY. 
 
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Oil Prices and Debt 
------------------- 
 
2.   (C)  On October 17, Finance Minister Mohammad Abu 
Hammour told the Charge that his two main preoccupations were 
high oil prices and promoting his debt swap proposals.  He 
said he had raised both issues during his recent visit to 
Washington for the IMF/World Bank meetings.  On oil prices, 
he projects that oil could cost the Jordanian government as 
much as $450 million next year.  Jordan is continuing its 
discussions with Saudi Arabia to extend its 50,000 
barrels/day oil grant beyond April of next year.  Jordan is 
also holding similar discussions with the UAE and Kuwait. 
(NOTE: ECOUNS' subsequent conversation with IMF staff 
indicated that neither Kuwait nor UAE had provided 
oil-related grant assistance since April 2004.  END NOTE.) 
 
3.  (C)  Abu Hammour repeated his previously-stated desire to 
persuade the Paris Club to agree to let Jordan increase from 
30 to %50 pct the portion of Jordanian external debt that may 
be renegotiated by means of debt swaps, thereby allowing 
Jordan to reduce its overall debt burden and debt servicing 
payments.  Although he had been told by the Paris Club 
leadership this past summer that such a move would be against 
Paris Club rules, he intends to try again.  He mentioned that 
Under Secretary Larson had asked Abu Hammour for data and 
more information on the proposal, and Abu Hammour promised to 
provide it shortly.  (NOTE: This was faxed to U/S Larson on 
October 25.  END NOTE.) 
 
4.  (C)  Abu Hammour had met with the King on October 11 to 
discuss raising the debt swap limit.  They had agreed that 
Jordan needs to continue to push for support for this from 
Paris Club members.  Abu Hammour had also spoken with Royal 
Court Minister Samir Rifai to remind him that the King should 
regularly raise the issue in meetings with creditor countries. 
 
--------------------------------------------- ----------- 
Cash Smuggling; Arab Bank; the Anti Money Laundering Law 
--------------------------------------------- ----------- 
 
5.  (S)  With respect to the Iraq cash smuggling allegations 
(reftel), Abu Hammour said he had asked Central Bank of 
Jordan Governor Umayya Toukan to invite the head of Jordan 
National Bank in to discuss it.  He had also discussed the 
case with the visiting Iraqi Trade Minister and Deputy Bank 
Governor.  He said that he was told that the cash had been 
wrapped in Jordan National Bank wrappers because the CBI had 
had those available at the time.  (COMMENT: The issue remains 
the bills themselves, not the wrappers from JNB.  The serial 
numbers for a large portion of the cash indicated that the 
bills had been shipped to 
JNB at some point before reaching Baghdad.  END COMMENT.) 
 
6.  (S)  On our earlier requests for transaction information 
for certain Arab Bank accounts, Abu Hammour 
said that he had told Governor Toukan  he could provide us 
with the information.  He said he was confident that secrecy 
could be maintained on the U.S. side. 
 
7.  (S)  Abu Hammour said that he had briefed Prime Minister 
Fayez on his visit to Washington and in particular on 
Washington's interest in resolving the anti money laundering 
issue.  He said that the draft law on AML is still stuck in 
the Cabinet, with some members against it, claiming that it 
might dissuade foreign investors.  Abu Hammour said he has 
been arguing exactly the opposite, that a clear AML law will 
help attract foreign investment.  Fayez told Abu Hammour to 
raise the issue again after the Cabinet re-shuffle (Note: 
which occurred on Oct. 24.   End Note.)  Abu Hammour said the 
law must be approved and that it will provide a legal 
framework for the CBJ, including in the sharing of 
information.  Abu Hammour expects no problems in Parliament 
and said that he would tell Parliament that passage of the 
law would help increase donor support for Jordan. 
 
---------------------------------- 
The Planning Minister and the SETP 
---------------------------------- 
 
8.  (C)  Abu Hammour then raised the issue of the Social and 
Economic Transformation Program which is overseen by Planning 
Minister Bassem Awadallah and which has received the largest 
share of its funding from local currency associated with the 
USAID cash transfer.  He said the Cabinet had approved the 
SETP for 2005-2006 in May.  The government will approve the 
new plan out of the regular budget.  New projects would 
appear as line items in ministries other than the Ministry of 
Planning. 
9.  (C)  According to Abu Hammour, the IMF had insisted on 
carrying out an evaluation  of the SETP.  Based on this 
evaluation, the IMF concluded that the SETP's impact on 
Jordan's economy has been less than expected.  The IMF feels 
strongly that the SETP should not be spent on pork barrel 
projects and wants projects to be evaluated by an external 
auditor. 
 
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Iraqi Assets 
------------ 
 
10.  (C)  When asked about the closing out of the commercial 
claims against frozen Iraqi assets, Abu Hammour said he 
expected the process to be completed soon. 
 
-------------------------- 
Priorities in the Ministry 
-------------------------- 
 
11.  (C)  In a subsequent meeting on October 18,  Abu Hammour 
told the Charge that this year in the Ministry he had focused 
on tax administration.  He intends to move next to customs. 
He has approved a five-year financial management reform plan 
for the Ministry.  All government directorates in the country 
will soon be linked electronically with the Finance Ministry. 
 He had briefed the King on these plans the previous week. 
Abu Hammour believes these changes can increase tax revenues 
without the need to increase tax rates, particularly in 
increasing revenues from those currently avoiding paying 
taxes.  Now there is a single treasury account instead of the 
thousands previously; the Ministry can now carry out a daily 
financial position of the government. 
 
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COMMENT 
------- 
 
12.  (C)  On anti-money laundering, bank secrecy and cash 
smuggling, Abu Hammour is saying all the right things.  It 
remains to be seen whether this will translate into greater 
cooperation by the Central Bank Governor, who well remembers 
how the PM stood aside last year when the Governor was 
severely criticized in Parliament for sharing information on 
Hamas accounts with the USG.  Based on a follow-up meeting 
with Deputy Governor Faris Sharaf, there are signs for 
optimism. 
 
13.  (C)  We have heard previously from Abu Hammour about his 
struggles with the Planning Minister over controlling 
government spending and bringing all of the government's 
spending under the Finance Ministry.  Now that both have 
retained their positions in the new cabinet, we expect this 
tug-of-war to continue for the near future, with neither side 
gaining the advantage over the other for long.  Abu Hammour 
will wield his competence and successes against Awadallah's 
forceful personality and close ties to the King.  It should 
continue to be an interesting show. 
 
14. (U) Baghdad minimize considered. 
 
HALE