US embassy cable - 05KUWAIT2831

UNCLAS KUWAIT 002831 
 
SIPDIS 
 
SENSITIVE 
 
NEA/ARPI PLEASE PASS TO DICK JONES 
LONDON FOR GOLDRICH/TSOU 
 
E.O. 12958: N/A 
TAGS: ECON, EAID, KU, IZ, KUWAIT-IRAQ RELATIONS 
SUBJECT: GOK INCREASES IRAQI GRANTS TO $125 MILLION; PLANS 
FOR $440 MILLION IN SOFT LOANS 
 
REF: KUWAIT 2730 
 
This cable is sensitive but unclassified; please protect 
accordingly.  Not for Internet distribution. 
 
1.  (U) In a June 25 conversation with Econ Officer, Kuwait 
Fund for Arab Economic Development Deputy Director Hisham 
Al-Waqayan commented on Foreign Minister Shaykh Dr. Mohammad 
Al-Sabah's statements concerning additional aid for Iraq made 
at the Brussels Conference on June 22.  Local newspapers 
reported on June 23 that the FM announced at the conference 
that the GOK would provide a total of $565 million in 
reconstruction assistance to Iraq, and that $125 million of 
that amount would be provided as grants and the rest as 
long-term soft loans.  (Note: The Kuwaiti Council of 
Ministers on June 19 doubled the initial $60 million grant to 
$120 million, as reported reftel.) 
 
2.  (SBU)  Al-Waqayan explained that the GOK had pledged $500 
million in reconstruction assistance to Iraq in 2003, but 
that only $65 million was to be in grants and the rest would 
be in soft loans.  The Humanitarian Operations Center 
received $5 million, and $60 million was given to the Kuwait 
Fund to disburse for projects in the Iraqi health and 
education sectors, split equally between the two sectors. 
With the increase of the grant amount by the Council of 
Ministers, the total direct grants from the GOK to Iraq is 
$125 million.  According to Al-Waqayan, this additional $60 
million will likely be disbursed through the Kuwait Fund and 
may target additional projects in the education and health 
sectors.  He noted that the Kuwait Fund had just heard about 
this additional grant themselves and he could not provide a 
definite timeline or targeted sectors for this additional 
grant money.  The rest of the reconstruction assistance 
money, $440 million, will be provided in concessionary loans, 
managed by the Kuwait Fund. 
 
3.  (SBU) Regarding the initial $60 million grant, Al-Waqayan 
said that he had just met with the Iraqi Minister of 
Education and finalized plans for the Education Ministry's 
portion ($30 million) of the grant money, and that the two 
sides were looking at setting up a joint Iraqi-Kuwaiti 
venture to manage the projects in that sector.  He said that 
more information was needed from the Iraqi Ministry of Health 
to finalize the grants in that sector ($30 million), but that 
he expected that to be accomplished soon.  Regarding the $440 
in soft loans, he said that the GOK would like to target the 
energy sector and would look at providing $100 million a year 
for the next few years, rather than all at once.  He said 
that the Kuwait Fund has already spoken with officials from 
the Iraqi Oil Ministry and energy sector and would continue 
to do so to identify the best target projects for these 
loans.  Overall, Al-Waqayan characterized the relationship 
with the Kuwait Fund's Iraqi contacts as "good" and noted 
that the communication and organization on the Iraqi side had 
improved greatly in the past month. 
 
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LEBARON