US embassy cable - 05KUWAIT1913

C O N F I D E N T I A L KUWAIT 001913 
 
SIPDIS 
 
FOR NEA/ARPI - BERNS AND EB/ESC/IEC/EPC - DOWDY 
 
E.O. 12958: DECL: 05/08/2015 
TAGS: ENRG, EPET, ETTC, PREL, KU, IR, IZ, OIL SECTOR, KUWAIT-IRAN RELATIONS 
SUBJECT: KUWAIT GAS OPTIONS AND ILSA CONCERNS:  GOK SAYS 
IRAN IS A HEADACHE BUT IT'S DIFFICULT TO CLOSE ALL DOORS 
 
REF: A. KUWAIT 1884 
     B. STATE 83661 
     C. KUWAIT 1089 
     D. KUWAIT 943 
     E. DOWDY/MOORE/NEWSOME/WERBERG EMAILS 
 
Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d) 
 
1.  (C)  During a May 7 meeting with Ministry of Foreign 
Affairs Under Secretary Khaled Al-Jarallah, the Ambassador 
detailed U.S. concerns (ref B) about investment in Iran and 
advised that the proposed gas deal could trigger ILSA 
sanctions against companies involved in such investments.  He 
further cautioned that timing of the MOU was poor given 
Iran's position on the nuclear issue.  He said the U.S. was 
sympathetic to Kuwait's gas needs and suggested that Iran was 
not a reliable supplier for natural gas.  He added the U.S. 
was aware of the problem between Saudi Arabia and Qatar 
regarding a gas pipeline through Saudi waters, and while the 
U.S. did not want to be a party to this bilateral issue, we 
would raise the matter with the SAG and encourage a prompt 
settlement. 
 
2.  (C)  Al-Jarallah agreed that Iran was not a reliable 
partner, but said Kuwait's gas situation was critical.  The 
GOK had not abandoned the idea of receiving gas from Qatar 
and was working to resolve the territory issue with the SAG 
and GOQ.  Turning to the gas deal, Al-Jarallah described the 
negotiations as protracted, but said in the end, the deal was 
weighted towards Kuwait in terms of price and quantity. 
Still, Kuwait was not pleased with Iran, especially its views 
toward GCC countries.  Specifically, he accused the GOI of 
meddling in the UAE and Bahrain and encouraging Shi'a groups. 
 Kuwait also shared U.S. concerns about Iran's nuclear 
aspirations and Al-Jarallah was adamant "Iran should not be 
nuclear weapon state."  He noted the U.S. approach to 
"isolate" Iran.  Kuwait's approach, given its geographic 
position, was to attempt to create some mutual interests. 
Al-Jarallah further explained that the GCC's shared interests 
with Iran focused on trade -- he described the annual volume 
of trade between Iran and Dubai as $1 billion -- and 
security.  He said GCC relations with Iran have historically 
been negative, but the GCC recently decided to welcome a 
GCC-Iran dialog that would hopefully lead to better relations 
and regional security.  Despite Kuwait's decision to reach 
out to Iran, the GOK still lacks confidence in the GOI and 
described the relationship as a "headache." 
 
3. (C)  Commenting on Iranian elections, Al-Jarallah relayed 
reports that Khatemi supporters were promoting extremists 
with the notion that should they assume power, their views, 
combined with Iran's precarious regional and international 
situation and domestic security concerns, would combine to 
damage the extremists. 
 
4.  (C)  See ref A for an assessment that the Iran-Kuwait gas 
deal is unlikely to proceed quickly. 
 
 
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LEBARON