US embassy cable - 02AMMAN3640

C O N F I D E N T I A L AMMAN 003640 
 
SIPDIS 
 
TREASURY FOR A/S QUARLES, DAS RADELET, MICHAEL KAPLAN 
DEPT FOR E, NEA, EB 
NSC FOR CLAY LOWERY 
 
E.O. 12958: DECL: 07/03/2012 
TAGS: EFIN, JO 
SUBJECT: JORDAN: FS STRAW LETTER TO G7 ON JORDAN DEBT 
 
REF: AMMAN 03617 AND PREVIOUS 
 
Classified By: DCM Greg Berry, reasons 1.5(b,d) 
 
1. (c)  As reported reftel, the following is the text of the 
UK Foreign Secretary's June 14, 2002 letter to G7 colleagues. 
 This text was provided to us on July 3. 
 
2. (c)  Begin text: 
&I am writing to ask for your continuing support for Jordan 
their discussions with the IMF and Paris Club Creditors.  Now 
is an important time for us all to demonstrate our support 
for a key ally in the coalition against terrorism and a force 
for stability in an unstable region. 
 
Jordan,s economic performance remains blighted, and social 
problems exacerbated, but regional tensions which impede its 
trade with the West Bank and Israel on the one hand and Iraq 
on the other.  Recent events in the West Bank have not made 
things any easier. 
 
In these difficult circumstances I believe King Abdullah is 
continuing to show strong economic leadership.  His Plan for 
Social and Economic Transformation, announced last autumn, is 
a serious attempt to push forward with structural reforms ) 
building on Jordan,s already good record ) while finding 
some new resources to ease social problems.  It is clear that 
the Plan is not going to be allowed to compromise sound 
macroeconomic management: spending this year is being 
tailored to available resources while the authorities have 
announced new, politically sensitive, revenue raising 
measures.  I was struck by the warmth of the endorsement of 
Jordan,s policies given in discussion in the latest IMF 
report. 
 
Jordan,s good economic management will produce its own 
reward in the form of strong performance once normal 
relations with its neighbours are possible.  But in the 
meantime Jordan is labouring under difficulties which are not 
of its own making and I believe the King deserves our 
support.  As you know, discussions between the IMF and the 
Jordanian authorities on a new programme are advancing. 
Policy measures in the programme are likely to be consistent 
with the King,s Plan for Social and Economic Transformation, 
while extra resources from the Fund may have a role to play 
in allowing the Plan to go ahead, and social issues to be 
addressed, more rapidly.  This will be particularly important 
in the forthcoming election year.  If the IMF Staff make a 
good case for further IMF lending we will be favourably 
disposed to support; I hope you will also. 
 
If a new IMF programme is agreed Jordan may well seek a 
further rescheduling from the Paris Club.  If so, I believe 
creditors can and should help.  The British Government is 
willing to press for the most generous possible rescheduling. 
 We would hope that this would be the last time Jordan would 
need to come to the Paris Club.  We have an open mind on how 
this exit from the rescheduling cycle might be achieved, but 
for instance if Jordan, supported by the IMF, judged that a 
full stock rescheduling was in its long term interests we 
would be supportive.  Furthermore the UK has already been 
actively promoting conversion to equity of official Jordanian 
debt to the UK, within existing Paris Club rules; we would 
not only encourage others to do the same but would support 
any Jordanian request to raise the current threshold. 
 
I would welcome your views on this matter and how we can take 
it forward well in advance of any discussions in the Paris 
Club. 
 
I am copying this letter to G7 colleagues8. 
Gnehm