US embassy cable - 05AMMAN5737

UNCLAS SECTION 01 OF 02 AMMAN 005737 
 
SIPDIS 
 
SENSITIVE 
 
PLEASE PASS TO MILLENIUM CHALLENGE CORPORATION AND AID 
 
E.O. 12958: N/A 
TAGS: PREL, ECON, EFIN, EAID, JO 
SUBJECT: SUPPORTING REFORM - JORDANIAN PLANNING MINISTER'S 
WASHINGTON VISIT 
 
 
1.  (SBU)  New Jordanian Planning Minister Suhair al-Ali will 
visit Washington the week of August 1.  The articulate, 
Georgetown-educated Citibanker is on the frontlines of 
Jordan,s reform program, and was handpicked by the King. 
Her intention is to brief on Jordan,s economic and fiscal 
situation, and recent steps to impose austerity while moving 
forward on comprehensive reforms, and to seek help to sustain 
that difficult process.  This trip comes at a time when King 
Abdullah,s reform efforts are arguably at a make-or-break 
point.  Reformers throughout the region will watch Jordan 
closely in the coming months, as they calculate whether or 
not to take the risks that come with reform.  Because of the 
importance of King Abdullah,s agenda to the prospects for 
regional reform, we urge al-Ali,s Washington interlocutors 
to look carefully at our options for supporting reform in 
Jordan through what promises to be a difficult stretch. 
 
2.  (SBU) King Abdullah,s reform agenda has just come 
through a bruising encounter with the largely anti-reform 
parliament.  This cabinet team is both the most 
reform-oriented and the most unpopular one in Jordan,s 
parliamentary history ) which is no coincidence.  We are 
approaching the September rollout of the report of the royal 
commissions charged with setting a reformist "national 
agenda" and a regionalization program.  It is likely that the 
reports' prospects for a positive reception are already being 
undermined by a worsening fiscal crisis and attendant, 
belt-tightening measures that are highly unpopular. 
Jordanian officials believe it will be hard to maintain, much 
less advance, reforms given their fiscal situation. 
Aggressive plans for tax reform, privatization, and 
elimination of subsidies are proceeding, but are likely only 
to close the government,s budget deficit.  For capital 
expenditures, Jordan remains dependent on external support. 
Deputy Prime Minister al-Muasher expressed to us his concern 
that if the unbudgeted National Agenda fails to deliver 
rapidly on its promise of better, more representative, more 
responsive government, the reform initiative and this 
government will be permanently discredited.  That outcome 
would present the King with unpalatable choices: allow 
formation of the conservative, backward looking sort of 
cabinet that could gain parliamentary support, or dissolve 
parliament and call for early elections.  That second course 
will create a political crisis and further confuse a public 
that as yet is not fully committed to a reform program it 
does not fully understand.  Muasher puts the initial bill for 
National Agenda implementation at 315 million Jordanian 
dinars. 
 
3.  (SBU) Jordanian officials are grateful for the 
exceptional support the U.S. continues to offer.  Al-Ali will 
arrive in Washington with plans to strategize on how Jordan 
can gain the continued financial backing needed to see it and 
its reform program through a challenging fiscal and political 
environment.  She will make the point that all other donors 
look to the U.S. for leadership; if the U.S. is not 
championing Jordan,s cause, the others turn a deaf ear. 
Specifically, she will explore receptivity to additional U.S. 
assistance in the following ways: 
 
--Higher regular ESF assistance in the FY 2006 budget. 
 
--Eligibility for assistance through the Millennium Challenge 
Account; if Jordan is found eligible, al-Ali will develop a 
proposal which advances the National Agenda.  She has 
mentioned a figure as high as $500 million, over two to three 
years.  A proposal can be assembled by October 2005. 
Jordan,s case will include their demonstrated track record 
on implementation of U.S. foreign assistance.  As the Queen 
told Secretary Rice in June, nowhere is the U.S. getting a 
better return on its investment in reform than in Jordan. 
 
--U.S. support for debt cancellation from the G-7. 
Subsequent to her meeting with the Deputy Secretary, al-Ali 
informed us that she will not seek U.S. debt cancellation, 
but would like to focus on cancellation of Japan,s $1.6 
billion debt.  This alone would reduce the annual budget 
deficit by about $70 million a year in debt service. 
 
4.  (SBU) The timetable for additional support will also be a 
focus.  For reasons cited, the government seeks additional 
support in calendar year 2005, either through additional ESF 
in U.S. fiscal year 2006 or through the MCA.  We have made 
very clear the obstacles in meeting such a timetable, but 
al-Ali will begin that discussion during her Washington 
visit, likely to continue in late September if the King 
receives a favorable reply to his request for a Washington 
visit. 
HALE