US embassy cable - 05AMMAN1720

C O N F I D E N T I A L AMMAN 001720 
 
SIPDIS 
 
(CORRECTED COPY - TEXT DELETED FIRST PARAGRAPH) 
 
E.O. 12958: DECL: 02/28/2015 
TAGS: EAID, EFIN, PREL, JO 
SUBJECT: GOJ REOPENING PARIS CLUB DEBT FORGIVENESS REQUEST 
 
 
Classified By: Charge d'Affaires David Hale for reason 1.4 (b) and (d) 
 
1. (C) King Abdullah told Charge on February 
26 that during his recent visit to Europe he had heard 
positive responses from French, German, and British leaders 
to his request to revisit the question of debt forgiveness, 
collectively through the Paris Club and bilaterally.  Finance 
Minister  Abu Hammour elaborated when asked on March 1, 
telling Charge that the GOJ planned to once again push for 
the Paris Club to allow Jordan to use debt swaps for up to 
50% of its debt, rather than the 30% to which the Club 
generally limits swap levels.  Minister of the Royal Court 
Samir Rifai confirmed to Charge that Jordan will resubmit its 
request to the Paris Club, and pursue the King's request with 
individual G-8 members regarding bilateral debt relief - 
seeking total debt relief on 50% of outstanding debt. 
 
2. (C) Econoffs contacted other Paris Club missions in Amman, 
however, and found no change in their positions.  The UK 
mission in Amman was unaware of any shift in the British 
policy on the Paris Club debt swap ceiling.  They speculated 
that at most, PM Blair might have told King Abdullah in their 
meeting that the UK would support a decision to raise the 
limits if this was the consensus of the rest of the group - 
as has been the UK's position all along.  The French mission 
in Amman confirmed that there had been no change in France's 
position on Paris Club debt swap levels, and further 
indicated that it did not plan to agree to the full amount 
bilaterally requested by the GOJ for debt swaps.  The German 
mission stated that it had not received any word from Berlin 
to indicate that the German position had changed.  Econoff 
was unable to contact any knowledgeable source at the Embassy 
of Italy (King Abdullah told Charge he has previous 
assurances of Italian support).  The Embassy of Japan 
received the same GOJ readout as Charge: due to "positive 
responses" received by the King in his visit to Europe, the 
GOJ will be resubmitting its request to the Paris Club.  The 
Japanese government's position on the issue, however, remains 
the same, and the Embassy of Japan has requested that its 
Ministry of Foreign Affairs contact the Tokyo missions of 
Paris Club members to determine their position on the issue. 
 
3. (C) COMMENT AND ACTION REQUEST: Relief from Paris Club 
debt would be quite a boost to Jordan's macroeconomic 
fundamentals.  According to the Ministry of Finance, the fall 
of the value of the dollar (to which the Jordanian dinar is 
tied) has added over $822 million to the value of Jordan's 
outstanding external debt since the beginning of 2002, when 
other variables are factored out.  Reducing Euro-denominated 
debt would therefore be especially useful for Jordan's bottom 
line at a time when the deadline for reduction of public debt 
to 60% of GDP, mandated in Jordan's Public Debt Law, is 
rapidly approaching.  However, the Jordanians do not appear 
to have coordinated well internally or with donor states.  We 
understand Jordan is on the Club agenda for March, although 
not necessarily to discuss the debt swaps or other relief. 
In our effort to continue to give Jordan's leaders the tools 
they need to sustain their critical support for regional 
security policies, post recommends high-level engagement with 
G-8 debt holders and encouragement for efforts to provide 
help to Jordan.  END COMMENT. 
HALE