US embassy cable - 02AMMAN2892

C O N F I D E N T I A L AMMAN 002892 
 
SIPDIS 
 
E.O. 12958: DECL: 06/03/2012 
TAGS: EFIN, PREL, JA, US, JO 
SUBJECT: KING, PM AND FONMIN PITCH A/S BURNS ON DEBT RELIEF 
 
REF: AMMAN 2725 
 
Classified By: Amb. Edward W. Gnehm for reasons 1.5 (B) and (D) 
 
1.  (C)  Prime Minister Ali Abul Ragheb and Foreign 
Minister Marwan Muasher asked A/S Burns and the Ambassador 
June 2 for greater U.S. support for Jordan's request for a 
reprofiling of its debt.  Abul Ragheb said that Muasher's 
just-concluded meetings in Japan on debt had not gone well, 
with the Japanese arguing that Jordan's economic situation 
does not justify this type of treatment.  The Japanese 
told Muasher that they will support a two-year rescheduling 
of pre-cutoff debt and will provide USD 16 million in grant 
assistance and financing for a wastewater treatment plant 
in Zarqa this year, but will not support long-term debt 
rescheduling or reprofiling. 
 
2.  (C)  In the ensuing discussion, the Foreign Minister 
and Prime Minister debated the most effective way to 
clarify and press Jordan's argument.  Muasher emphasized 
the "political argument" -- the importance of the 
commitment of U.S. leaders to helping Jordan economically. 
Abul Ragheb stressed instead the economic value of 
reprofiling, saying that Jordan's budgetary dependence 
on foreign grant assistance should be taken into account 
and should strengthen the economic rationale for 
reprofiling.  A generous debt relief package would set 
the stage for stronger growth and get Jordan out of the 
trap of having to return to the IMF and Paris Club 
every few years.  Abul Ragheb said King Abdullah would 
be traveling to the UK, Spain, Italy, Germany, and 
Austria in June and would raise debt issues. 
 
3.  (C)  In a later meeting June 2 with A/S Burns and the 
Ambassador, King Abdullah said that all of the social 
liberalization and economic programs he is trying to 
implement risk being trapped under Jordan's debt burden. 
He urged the U.S. to work with other Paris Club nations 
for more generous rescheduling terms for Jordan. 
 
4.  (C)  A/S Burns responded that the President wants to 
be helpful on this issue.  The U.S. understands Jordan's 
needs, but we see no meaningful support for debt 
reprofiling.  Washington is prepared right now to 
support a generous two-year Paris Club rescheduling. 
Although there is a political argument for debt relief, 
Jordan needs also to make a strong economic case and 
should work with the IMF to complete its report on 
Jordan. 
 
5.  (C)  COMMENT:  The Jordanians are clearly very 
committed to obtaining something more from the Paris Club 
than a two to three year flow rescheduling.  They are 
working with the IMF to develop the economic arguments 
that will supplement Jordan's political case for a 
"reprofiling" of its stock of debt (including the large 
post-cutoff date debts mainly owed to Japan).  It plans 
to present these arguments to Paris Club creditors over 
the next month.  Given the interest that we and other 
Paris Club members share in Jordan's success in the 
region as a model of good economic policy, we believe 
that it will be important for our partners to hear 
Jordan's case and treat it seriously before coming to 
definitive decisions on positions in Paris Club 
negotiations. 
 
6.  (U)  A/S Burns has cleared this message. 
Gnehm