US embassy cable - 02AMMAN2725

C O N F I D E N T I A L AMMAN 002725 
 
SIPDIS 
 
E.O. 12958: DECL: 05/28/2012 
TAGS: EFIN, PREL, US, JO 
SUBJECT: FONMIN SAYS JORDAN TO PRESS PARIS CLUB FOR 
LONG-TERM DEBT RELIEF DESPITE OBSTACLES. 
 
 
Classified By: Amb. Edward W. Gnehm for reasons 1.5 (B) and 
(D) 
 
1.  (C)  During a May 27 meeting with the Ambassador and 
PolCouns on other topics (septel), Foreign Minister Marwan 
Muasher mentioned that he was leaving in twelve hours for 
Tokyo to talk about Jordan's need for debt relief.  Jordan, 
Muasher argued, needs "debt reprofiling on a long term 
basis" so Jordan can implement an "exit strategy for debt" 
and thereby graduate from its series of IMF arrangements. 
Muasher said that he would be carrying a letter from King 
Abdullah to Prime Minister Koizumi asking for "long term 
restructuring (of Jordan's debt), both pre- and post-cutoff 
date, with a 10 year grace period and 30 year repayment 
schedule."  The King, he continued, would send similar 
letters to G-8 heads of state. 
 
2.  (C)  Jordan is determined, Muasher continued, to press 
the Paris Club for long-term debt restructuring:  "We don't 
want a series of 2 year(Paris Club) arrangements."  He said 
Jordan has done all the right things in terms of economic 
policy for over a decade and only needs to have a permanent 
solution to its debt burden (i.e., reprofiting) to take off 
economically.  In addition, Muasher said there was a 
compelling "political argument" for such relief.  Jordan 
has and will continue to do "positive things" on the Middle 
East Peace Process, and needs to show its people that these 
politically unpopular moves are reflected in improved 
living standards and growth.  Furthermore, he argued that 
in addition to Pakistan's recent Paris Club deal, "you have 
done it before for Egypt" at a time (after the Gulf War) 
when Egypt's economic conditions were better than Jordan's 
are now.  "Don't penalize us for doing well," he said. 
 
3.  (C)  The Ambassador responded that the U.S. is 
sympathetic to Jordan's needs and that we support Jordan 
strongly both politically and economically.  But, he said, 
Jordan's economic situation simply does not put it in the 
same category as Pakistan.  The United States is doing its 
best to secure the best possible and most appropriate debt 
treatment for Jordan.  However, such a treatment would have 
to be based on Jordan's demonstrable economic and financial 
needs.  At the same time, the Ambassador noted, there does 
not appear to be support among Jordan's leading creditors, 
most importantly Japan, for the type of treatment Jordan 
continues to push for.  The Ambassador added that Jordan 
should be working hard to agree with the IMF on a new 
economic program, as only this could serve as a basis for 
Paris Club action.  Muasher dismissed these points, saying 
"the President told the King he supports this.  Please 
don't tell me I'm going halfway around the world for 
nothing." 
 
4.  (C)  COMMENT:  We have always advised the Jordanians 
that they need to make a convincing financial and economic 
argument for the type of debt treatment they will seek from 
the Paris Club.  What we continue to hear back are the 
political arguments advanced by Muasher and other senior 
officials, including Finance Minister Marto, who believe 
that the key to the Paris Club is a "political" decision by 
the United States.  We believe that this view extends to 
the King and that the Jordanians will (wrongly) view our 
position in the Paris Club as a commentary on our bilateral 
political relationship with Jordan.  The Jordanians will 
likely remain unconvinced by our financial points and to 
continue to press very hard for the long-term treatment 
they feel they need and deserve. 
GNEHM