US embassy cable - 05KUWAIT1631

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 001631 
 
SIPDIS 
 
EB/ESC/TFS MSIDDIQUI, S/CT TKUSHNER, NEA/ELA DBARON 
NEA/ARPI TWILLIAMS, NEA/I-ECON K. BRONSON, IO/PSC 
JSCHWEITZER 
NSC FOR JKEMERSON 
TREASURY FOR JZARATE, OFAC RWERNER 
USDOC FOR 4520/ITA/MAC/AME, 3131/USFCS/OIO 
 
E.O. 12958: DECL: 04/21/2015 
TAGS: ECON, EFIN, PINR, KU 
SUBJECT: NEW FINANCE MINISTER EMBRACES PORTFOLIO, PROMISES 
ACTION ON TAX LAWS AND MORE 
 
REF: A. KUWAIT 1373 
 
     B. KUWAIT 1557 
 
Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d) 
 
1.  (U) Summary: Ambassador met with newly appointed Minister 
of Finance Bader Al-Humaidhi on April 20 and raised a number 
of issues of concern, including: cracking down on terror 
financing and tightening up Kuwait's money-laundering laws; 
IPR enforcement; Iraqi debt; and a tax case involving a U.S. 
company.  The Minister said that Kuwait would follow 
international efforts to reduce Iraqi debt.  Al-Humaidhi was 
particularly forward looking on taxation issues, promising to 
make reform of the tax structure a priority of his office. 
End Summary. 
 
New Finance Minister Jumps in With Both Feet 
-------------------------------------------- 
 
2.  (C) Ambassador paid an introductory call on newly 
appointed Finance Minister Bader Al-Humaidhi (Ref A) on April 
20.  The Minister said that he is still trying to understand 
the Ministry and his portfolio, and that he plans to appoint 
a new undersecretary (from the Ministry's ranks) by the end 
of April.  Compared to the Kuwait Fund, Al-Humaidhi said, the 
Ministry had a lot more "red tape" and he said he would try 
to bring some management and leadership principles to the 
ministry. 
 
3.  (SBU) The Ambassador praised the Kuwaiti Customs Agency, 
(which falls under the Finance Ministry), for its leadership 
on IPR protection and enforcement, and informed the Minister 
about the consulting and advisory agreement between the U.S. 
and Kuwaiti Customs Agencies.  Al-Humaidhi said that he 
expected to see more actions from the Ministry of Information 
on IPR now that a new Minister had been appointed.    The 
Ambassador also asked that Kuwait transfer to the Development 
Fund for Iraq at the Federal Reserve Bank of New York the $78 
million in Iraqi assets seized under UNSCR 1483 (Ref B). 
 
Terror Finance 
-------------- 
 
4.  (C) The Ambassador raised the issue of currency controls 
and the Central Bank's Financial Intelligence Unit's 
inability to share information without prior, specific 
clearance from the office of the Public Prosecutor.  The 
Minister said that he was not that familiar with the outbound 
currency controls, noting that he was not aware of any 
outbound currency controls when departing from the U.S. 
either.  He noted the recent presence of the Treasury and 
OFAC teams in Kuwait, saying that it was his impression that 
they were impressed by the GOK's efforts against terror 
financing.  He agreed with the Ambassador, however, on the 
need to "plug all the holes" in Kuwait's money transfer 
regime. 
 
Iraq Debt 
--------- 
 
5.  (SBU) When asked about Iraqi debt reduction, Al-Humaidhi 
said that Kuwait "will be ready to consider what needs to be 
done to alleviate the situation for the Iraqis."  He added 
that, while the GOK has committed to comparable treatment to 
that agreed upon by Paris Club members, the Paris Club 
agreements had yet to be negotiated with the Iraqis.  He 
specifically mentioned the need to see action by the new 
Iraqi government on this issue. 
 
Taxation Case 
------------- 
 
6.  (C) When asked about the Pepsico tax case, Al-Humaidhi 
said that he had just met the day before with the Minister of 
Commerce and Industry and the Kuwait Chamber of Commerce and 
Industry to discuss the specifics of this case and reform of 
the tax code overall.  (Note: He did not specifically mention 
a visit by Pepsico's legal team on April 19 which we were 
aware of.)  He said that he understands the Pepsico problem 
and that he hopes to see resolution of that issue shortly. 
The bigger picture, he said, was reform of the tax code and 
creating a better environment to attract foreign investment. 
He added that the GOK is "working on this" and that he is 
"determined to do something about it." 
 
Bio Note 
-------- 
7.  (SBU) Al-Humaidhi is an early riser, getting to the 
office by 6:30 am each day.  He has been affiliated with the 
Carlyle Group in the past, and knows the first President Bush 
and former Secretary of State Baker.  He did not attend the 
April IMF meeting, but will attend the IMF/World Bank meeting 
in September. 
 
******************************************** 
Visit Embassy Kuwait's Classified Website: 
http://www.state.sgov.gov/p/nea/kuwait/ 
******************************************** 
LEBARON