US embassy cable - 05KUWAIT797

S E C R E T SECTION 01 OF 04 KUWAIT 000797 
 
SIPDIS 
 
NOFORN 
 
FOR S, D, P, NEA, AND NEA/ARPI 
 
E.O. 12958: DECL: 02/22/2015 
TAGS: OVIP, PREL, PGOV, PHUM, ECON, EFIN, EAID, MARR, KU 
SUBJECT: SCENESETTER FOR SECRETARY RICE'S MARCH 3-4, 2005 
VISIT TO KUWAIT 
 
 
Classified By: CDA Matthew H. Tueller for reasons 1.4 (b) and (d) 
 
1.  (SBU)  Welcome to Kuwait Madame Secretary.  You will meet 
with Prime Minister Shaykh Sabah Al-Ahmad Al-Jaber Al-Sabah 
and Foreign Minister Shaykh Dr. Mohammed Sabah Al-Salem 
Al-Sabah.  We are also making arrangements for you to sign 
the condolence book at the headquarters of the National 
Committee for Missing and POW Affairs to honor the memory of 
the many Kuwaitis killed by the brutal regime of Saddam 
Hussein.  Your visit to the National Committee in particular 
will underscore the special relationship forged in 1990-91. 
You will arrive just after the 14th anniversary of 
"liberation Day,"  an annual outpouring of gratitude towards 
the United Sates and former President Bush. 
 
2.  (C)  Your visit comes at an opportune moment in the 
bilateral relationship:  there is increased cooperation on 
counterterrorism matters; the Government of Kuwait (GOK) has 
been supportive of the political transition and economic 
reconstruction in Iraq; and Kuwait welcomed the election of 
Mahmoud Abbas and said it will resume bilateral relations 
with and financial assistance to the Palestinian Authority. 
Your acknowledgment of the GOK's role should help to assuage 
a sentiment shared by senior leaders that the U.S. takes 
Kuwaiti support for granted.  Your visit will also reinforce 
other ways in which the relationship can flourish:  we seek 
progress in moving toward conclusion of a Free Trade 
Agreement and are actively encouraging more Kuwaitis to study 
in the U.S.  The relationship is strong but of course there 
are areas for disagreement:  conclusion of an agreement on 
fuel for coalition forces in Iraq; detention of Kuwaiti 
nationals in Guantanamo Bay and Iraq; and approval of the 
Article 98 Agreement. 
 
Security and Counterterrorism 
----------------------------- 
 
3.  (S/NF)  In the past 30 months, Kuwait has experienced 
four terrorist attacks against U.S. citizens, primarily U.S. 
military personnel or contractors.  During the summer of 
2004, Kuwait State Security (KSS) arrested several Kuwaiti 
males for traveling to Iraq to fight against coalition 
forces.  During subsequent searches, KSS learned they were 
planning to attack U.S. military convoys and possibly take 
hostages for propaganda purposes.  All of the arrestees have 
been released on bail and are awaiting trial.  More recently, 
in January, KSS uncovered an extremist cell planning for 
attacks against U.S. military convoys, residential complexes 
occupied by westerners, and key GOK facilities.  Security 
services launched an extensive search for cell members which 
resulted in four significant shootouts and the deaths of four 
police officers and nine cell members.  This was the first 
incident of Kuwaiti-on-Kuwaiti terrorism and served as a 
wake-up call for GOK leaders who previously were adamant that 
leveraging family or tribal ties, or co-opting would-be 
militants, were successful tactics in the Global War on 
Terror.  In response to these home-grown threats, the GOK 
passed a new arms law, launched a weapons collection program, 
began enforcing existing laws forbidding veiled women to 
drive and requiring military staff to seek approval for 
foreign travel, and initiated a discussion on educational 
reform.  While this particular extremist cell has been 
disrupted, there is still the possibility of other cells 
planning operations in Kuwait.  Embassy Kuwait maintains an 
active CT dialog at the political, intelligence, and security 
levels and encourages the GOK to take advantage of training 
offered. 
 
OIF/AIK Fuels 
------------- 
 
4.  (C)  From December 2002 - December 2004, Kuwait provided 
nearly USD 2 billion in free fuel for U.S. and Coalition 
Force use in Operation Iraqi Freedom (OIF) and as Assistance 
in Kind (AIK) for Kuwait-specific activities under the 
Defense Cooperation Agreement (DCA).  Through March 2004 this 
assistance was permitted by GOK wartime appropriations. 
Since April 1, 2004 the Kuwait Petroleum Corporation (KPC) 
has covered the fuel deliveries with a no-cost contract 
retroactively signed in December 2004.  The GOK is requesting 
payment for OIF fuel deliveries (approximately 800,000 
gallons per day) made since January 1, 2005.  The GOK affirms 
its obligation to absorb the cost of AIK fuel (used in Kuwait 
by U.S. forces) as provided for in the DCA, but has withheld 
deliveries since January 1 pending a clear statement from 
CENTCOM of its use as DCA-related.  That supply interruption 
has had significant logistical consequences for U.S. and 
Coalition Forces which juggle their existing supplies among 
competing needs.  In response to Secretary of Defense 
Rumsfeld's February 15 request, the GOK is sending in March 
an inter-agency team (Foreign Affairs, Defense, Finance, 
Energy, and Transportation) to Washington to discuss "all 
issues," including fuel prices involving GOK assistance for 
OIF and Kuwait-specific AIK operations. 
 
GOK Assistance in Kind to the U.S. 
---------------------------------- 
 
5.  (U)  Under the provisions of the 1991 DCA, the Kuwait 
Ministry of Defense (KMOD) provides host nation AIK support 
budgeted by the GOK at USD 50 million annually.  Intangible 
costs are the imbedded costs in the value of land/facility 
use, services, manpower, equipment use, and the unrealized 
costs from support from KMOD and other GOK organizations. 
These costs are not covered under the DCA and they include: 
 
--  free jet fuel for use in OIF, an issue currently subject 
to bilateral negotiations; 
--  a waiver for port fees and the loading/unloading for 
vessels carrying military supplies at Shuwaikh and Shuaiba 
ports and Kuwait Navy Base; 
--  free ground support and loading/unloading for U.S. 
military aircraft; 
--  U.S. occupation of roughly 9,000 acres of land in 
northern, central, and southern Kuwait; 
--  provision of fire and rescue services at Camp Doha and 
fire, rescue, and ambulance emergency services at 7 local 
military installations; 
--  a waiver for military cargo imported/exported; and 
--  deferred liability involving claims from traffic 
accidents, court procedures, and damage to property. 
 
TIFA and Free Trade Agreement 
----------------------------- 
 
6.  (U) The U.S. and Kuwait signed a Trade and Investment 
Framework Agreement (TIFA) in Washington on February 6, 2004, 
and held the first TIFA council meeting in May 2004.  The 
U.S. has identified two primary areas in which the GOK must 
show significant progress before the TIFA process can move 
forward:  (1) protection of intellectual property rights 
(IPR); and (2) elimination of the International Conformity 
Certification Program (ICCP), a technical barrier to trade. 
A second TIFA council meeting has not yet been scheduled, 
although a USTR representative will visit in March for a 
series of "mini-TIFA" talks.  The lack of progress toward a 
free trade agreement (TFA) is a source of some discomfort for 
the GOK, and several officials have told us that they are 
embarrassed that Oman and the UAE, both of which signed TIFAs 
after Kuwait, are both negotiating FTAs.  Nevertheless, since 
the GOK's IPR enforcement regime is still one of the worst in 
the region and the ICCP remains in place, movement toward an 
FTA is stalled.  It is likely that Kuwait will remain on the 
Special 301 Priority Watch List for the coming year. 
 
Energy Projects 
--------------- 
 
7.  (C)  Al-Zour North (AZN) is a proposed USD 2 billion, 
2500-megawatt electricity plant, currently in the bidding 
phase.  In 1996, the Amir pledged the AZN contract would go 
to an American firm following the cancellation of a previous 
project that had been won by an American company.  Recently, 
the GOK has backed away from the Amir's promise, saying the 
contract will go to the best-qualified firm internationally. 
Nevertheless, the Minister of Energy told the Ambassador 
February 7 that he anticipated the project management portion 
of the contract (22-28 percent of total value) would go to an 
American firm.  The final selection will be made by PM Shaykh 
Sabah upon the Cabinet's recommendation. 
 
8.  (U)  The GOK wants to bring in outside investment from 
international oil companies (IOCs) in order to develop its 
northern oilfields and increase production in four specific 
fields from 450,000 bpd to 900,000 bpd.  Pending National 
Assembly approval, KPC will award the development project to 
one of three oil company consortia.  ChevronTexaco and 
ExxonMobil lead two of the consortia, while Occidental 
Petroleum is an investor in the third.  The GOK hopes to have 
the winning bid approved by summer of 2005.  This USD 7 
billion project, known as "Kuwait Project," has been in the 
works for over ten years and oil companies are growing 
increasingly impatient with the numerous delays.  The IOCs 
are also concerned about conditions set out in the final 
tender documents and whether the package will have a large 
enough profit margin to merit their participation. 
 
Promoting Study in the U.S. 
--------------------------- 
 
9.  (U)  Kuwait has seen the largest percentage drop in the 
number of students studying in the U.S. of all the Middle 
Eastern countries.  From a pre-9/11 average of 2,800 Kuwaitis 
studying in the U.S., there were only 1,846 during the 
2003-2004 academic year.  If this trend continues, in less 
than 15 years, there will be fewer Kuwaiti elite in academia 
and business, cultural, and political life who are intimately 
familiar with America and sympathetic to our values.  The 
reasons for the sharp drop in the number of Kuwaitis pursuing 
advanced degrees in the U.S. are diverse:  the misperceptions 
that visas are difficult to obtain and America does not 
welcome Muslims or Arabs, a growing preference to attend 
"American" Universities in the region, and the GOK award of 
more scholarships for study in Australia, Canada, and the UK. 
 Embassy Kuwait has made increasing the number of Kuwaitis 
studying in the U.S. a Mission priority and is using 
Ambassadorial speeches, media interviews, the internet, and 
information fairs to promote the value and benefits of a U.S. 
education. 
 
Iraq and Regional Issues 
------------------------ 
 
10.  (C)  The GOK is a strong supporter of Iraq's political 
transformation and made encouraging statements prior to and 
after elections.  Stability in Iraq is of vital interest to 
Kuwait and the GOK regularly seeks affirmation that the U.S. 
will stay the course.  For its part, the GOK has already 
committed USD 60 million for the construction of schools and 
hospitals in southern Iraq, promised debt reduction in line 
with the Paris Club agreement, and is poised to invest in 
Iraq with an eye toward creating an IT city.  Looking at 
region-wide stability, the GOK warmly welcomed Mahmoud Abbas 
and said it looks forward to the formation of his cabinet and 
resumption of diplomatic relations so that financial 
assistance to the Palestinian people can flow. 
 
Political Reform 
---------------- 
 
11.  (U)  Embassy Kuwait is an active participant in the 
Middle East Partnership Initiative (MEPI).  Several 
region-wide organizations are already operating in or 
considering Kuwait as an operating base, including the 
National Democratic Institute's (NDI) political training for 
women, the Institute for the Study and Development of Legal 
Systems and SUNY-Albany/Center for International 
Development's legislative resource center.  One on-going 
small grants project, the Kuwait Economic Society's study on 
gender budgeting, received USD 34,000 in funding.  Post is 
currently evaluating projects in entrepreneurship and female 
media training related to the democracy, economic, and women 
pillars. 
 
12.  (U)  The GOK is supportive of Broader Middle East and 
North Africa (BMENA) initiatives and FM Shaykh Dr. Mohammed 
attended the December 2004 "Forum for the Future" gathering 
in Morocco.  Domestically, on February 20, the Council of 
Ministers called for immediate action by Parliament to 
approve legislation granting women the right to vote and run 
for office.  Such legislation was introduced in 1999 and 
failed; the GOK resubmitted legislation to Parliament last 
May where it has since languished. 
 
Overview of Embassy Kuwait 
-------------------------- 
 
13.  (U)  Embassy Kuwait staff consist of 71 State Department 
American employees, 126 other agency Americans, and 350 
local-hire staff.  Other agencies at post include Department 
of Homeland Security (Customs), Foreign Commercial Service, 
and nine Department of Defense agencies.  The State component 
of the Embassy has grown almost 70% in the last five years, 
with most of the growth coming from Washington complement 
positions.  Local staff has increased 30% in the same time 
period.  This growth is a direct result of the increased role 
for the bilateral mission due to Kuwait's strategic location 
and support of U.S. efforts in Iraq. 
 
14.  (U)  The major management issue facing post is 
infrastructure strain due to the rapid growth of the post. 
Space issues are most severe in our classified areas; an OBO 
space planing team confirmed the problem, noting some offices 
occupy less than 50% of the space allocated in OBO's standard 
embassy design.  The OBO team also confirmed that resolution 
would involve significant resources, which are unlikely to 
materialize in the near future.  Post recently had to deny a 
Department of Justice request to establish an FBI office in 
Kuwait due to the lack of appropriate classified work space. 
Post is developing a plan to alleviate crowding in 
unclassified areas and will work with OBO to obtain funding. 
 
SIPDIS 
Post will also work with OBO to be included in the long range 
planning required to resolve the classified space issues. 
 
15.  (U)  Embassy Kuwait is often called upon to support 
Embassy Baghdad due to the high frequency of U.S. military 
flights into Iraq.  To better support this effort, in January 
2004, Embassy Kuwait established a small Iraq Support Unit. 
The unit also provides support for all VIP travel to Baghdad 
and in CY2004, supported four Secretarial-level visits, 47 
CODELs, 50 VIP travelers, and handled more than 1,000 
requests for miscellaneous travel assistance.  Embassy Kuwait 
also provides logistical support to Embassy Baghdad, most 
recently acting as the staging area for the shipment of the 
communications packages to all regional offices. 
TUELLER