US embassy cable - 04KUWAIT3873

S E C R E T SECTION 01 OF 02 KUWAIT 003873 
 
SIPDIS 
 
E.O. 12958: DECL: 11/10/2014 
TAGS: MOPS, EWWT, PREL, KU, IZ 
SUBJECT: CONFUSION OVER PORT FEES FOR COALITION SHIPS 
DOCKING IN KUWAIT 
 
Classified By: Deputy Chief of Mission Matthew H. Tueller, Reasons 
1.4(a) and (b) 
 
1. (S) Summary and Comment.  The Kuwait Ports Authority (KPA) 
has intermittently charged US and coalition shipping agents 
various vessel and cargo-handling fees, in apparent 
contravention of the US-Kuwait Defense Cooperation Agreement 
(DCA).  Despite repeated MFA assurances that these vessels 
were exempt from all fees, shippers nevertheless have 
incurred charges.  Consequently, Maersk-Kuwait has declined 
to bring USNS Charlton into Kuwait's port of Shuaiba (aka Ash 
Shuaybah).  KPA Director of Finance Abdullah Al-Shamali 
(protect) provided minutes from his October 26 meeting with 
representatives from MFA and MOD, at which it was decided to 
recommend to the Council of Ministers that US vessels (but 
not other coalition countries) be exempt from fees and 
duties.  Al-Shamali declined to provide a letter saying that 
US vessels would be exempt until the Council of Ministers 
takes a decision.  Al-Shamali agreed, however, to schedule a 
meeting of all concerned parties before the January 2005 
scheduled rotation of coalition forces to minimize confusion 
during that operation. On November 9, MFA Americas Department 
Head Ambassador Khalid Al-Babtain said that he anticipated 
that the Council of Ministers would decide to exempt US 
vessels, but he would not speculate when that action might be 
taken. 
 
2. (C) Comment.  We are concerned about the delays that this 
confusion over port fees could cause, and the potential 
impact on operations in Iraq.  That concern has been 
expressed to KPA and MFA.  We also have pushed for the 
exemption of other coalition members from vessel and 
cargo-handling fees.  We find a reference to the DCA in the 
port fees committee's minutes as an agreement that applies 
only to "the American forces present in Kuwait" unsettling, 
as it leaves open the possibility of excluding support for 
operations in Iraq.  We have urged Al-Babtain to ensure that 
the fees exemption includes all US and coalition vessels, not 
just those supporting operations in Kuwait.  End Summary and 
Comment. 
 
(U) Port Fees Dispute Leaves USNS Charlton Stranded at Sea 
--------------------------------------------- ------------- 
 
3. (U) Over the past several months, the Kuwait Ports 
Authority (KPA) has now and then charged US and coalition 
military shipping agents various vessel and cargo-handling 
fees, in apparent contravention of the US-Kuwait Defense 
Cooperation Agreement (DCA).  Despite repeated assurances 
from the Ministry of Foreign Affairs that these vessels were 
exempt from all fees and that KPA had been instructed to 
cease and desist, shippers have continued to incur fees.  On 
November 5, post learned that the US Military Sealift 
Command's (MSC) shipping agent, Maersk-Kuwait, had declined 
to accept responsibility for bringing USNS Charlton into 
Kuwait's port of Shuaiba (aka Ash Shuaybah).  The firm 
asserted its concern that KPA might charge unauthorized fees 
and demanded a letter from its contracting officer, stating 
that the USG would reimburse Maersk-Kuwait for any 
unauthorized fees imposed by KPA.  On November 5, as a result 
of Maersk-Kuwait's decision, the USNS Charlton was unable to 
dock and unload equipment for the 42nd Infantry Division as 
scheduled.  Instead, the Charlton was forced to circle in the 
Arabian Gulf while waiting for permission to enter Shuaiba 
port. 
 
(S) USNS Charlton Fires on Approaching Dhow 
------------------------------------------- 
 
4. (S) In addition to the disruption in resupply that this 
dispute has caused, its force protection implications became 
quickly apparent when on November 7, a dhow approached the 
Charlton and failed to respond to warning whistles, flares or 
warning shots.  The dhow changed course only after the 
Charlton had fired M-16 and M-60 rounds into its hull and 
bow.  To prevent further such encounters, MSC and 
Transportation Command (TRANSCOM) at first ordered the 
Charlton into the Gulf of Oman pending resolution of the port 
fees issue.  However, on November 10 MSC headquarters 
instructed Maersk-Kuwait to facilitate the Charlton's arrival 
into Shuaiba port, guaranteeing that MSC would reimburse 
Maersk this time only for any improper fees that KPA might 
charge. 
 
(C) Council of Ministers Must Approve Fee Exemption 
--------------------------------------------- ------ 
 
5. (C) On November 8, EconCouns and EconOff met with KPA 
Director of Finance Abdullah Al-Shamali (protect) to seek 
KPA's justification for charging port fees.  Shamali said 
that he had met on October 26 with representatives from the 
Ministry of Foreign Affair's (MFA) legal department and the 
Ministry of Defense (MOD) to discuss port fees.  In 
confidence, Shamali provided a copy of the meeting minutes. 
According to the minutes, KPA complained that it was facing 
financial difficulties because some shipping companies, 
claiming that they had not been paid by the US military, were 
withholding payment for services rendered.  The committee 
then debated at MFA whether the US-Kuwait DCA offered them a 
legal basis for exempting US and coalition vessels from all 
fees and taxes.  The MFA representative argued that the DCA 
differed from other countries' status of forces agreements 
(SOFA) with Kuwait, and that only US -- and not other 
coalition countries' -- ships would be exempt under the DCA. 
The committee ultimately decided to recommend to the Council 
of Ministers that US vessels should be exempt from fees and 
duties but that other coalition countries should not be 
exempt. They also agreed that the Council of Ministers should 
establish a mechanism to compensate KPA for its DCA-related 
expenses. 
 
6. (C) EcounCouns urged Al-Shamali to exempt coalition ships 
as well, noting that US and coalition cargo could arrive 
mixed together on various countries' vessels.  Al-Shamali 
said that this should be raised with the MFA legal 
department.  EconCouns then asked Al-Shamali to provide a 
letter saying that US vessels would be exempt from all fees, 
explaining that vessels were waiting in the Gulf because the 
shippers did not want to incur more fees.  Al-Shamali 
declined, saying that no such guarantee could be made until 
the Council of Ministers takes a decision.  He could not 
provide a timeline for the decision but said that until then, 
shipping agents might be required to make advance payment on 
various but undefined cargo-related charges before they would 
be allowed to dock.  EconCouns noted that there would be a 
large troop and equipment rotation in January 2005, and 
stressed the need to find a durable solution in advance. 
Al-Shamali agreed to schedule a meeting of Ports Authority, 
military and concerned shipping agent representatives before 
then, to minimize confusion and misunderstanding ahead of 
this period of port congestion. 
 
(C) MFA Expects Approval but Doesn't Know When 
--------------------------------------------- - 
 
7. (C) In subsequent conversations on November 9, MFA 
Americas Department Head Ambassador Khalid Al-Babtain told 
EconCouns that he anticipated that the Council of Ministers 
would decide in favor of exempting USG military cargo from 
fees under authority of the DCA.  He would not hazard a guess 
on when that action might be taken, but noted the urgency in 
clarifying the fees issue. 
 
 
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