US embassy cable - 05KUWAIT3977

UNCLAS SECTION 01 OF 02 KUWAIT 003977 
 
SIPDIS 
 
STATE PLEASE PASS TO USAID JON BRAUSE AND TOM MARCHIONE 
 
E.O. 12958: N/A 
TAGS: EFIN, EAID, EINV, ETRD, KU, XA 
SUBJECT: POINTS DELIVERED ON PRESIDENT'S G-8 AFRICAN 
HUMANITARIAN EMERGENCIES INITIATIVE 
 
REF: STATE 162169 
 
1.  (U) Begin Summary:  On September 4, Econoff delivered 
reftel points to representatives from the Kuwait Fund For 
Arab Economic Development (a government entity) and the Arab 
Fund for Economic and Social Development.  While neither 
organization deals strictly in humanitarian projects 
associated with the President's G8 Africa initiative, they do 
fund a broad spectrum of development projects in over a dozen 
African countries through concessionary loans and grants. 
Both reps were appreciative of the reftel points.  The Kuwait 
Fund representative noted the likelihood of discussions on 
aid to Africa at the upcoming World Bank/IMF meetings in 
Washington.  End Summary 
 
2. (U) Econoff delivered reftel points orally and in the form 
of a "non-paper" to Mr. Emad Al-Majed, Regional Manager for 
Central, East and South African Countries at the Kuwait Fund 
for Arab Economic Development (KFAED) and Mr. Abdul-Hamid 
Zigalaie, Economic Advisor at the Arab Fund for Economic and 
Social Development (AFESD).  Both Al-Majed and Zigalaie found 
the statistics in the non-paper useful and underscored their 
respective organization's continued commitment to providing 
assistance through concessionary loans and grants to Africa. 
Al-Majed explained that the Government of Kuwait (GOK) is 
anticipating discussions about aid to Africa on the margins 
of the upcoming World Bank/IMF meetings in Washington. 
 
3.  (U)  Zigalaie clarified that AFESD was restricted to 
providing assistance only to Arab countries in Africa, 
therefore limiting its assistance to Djibouti, Mauritania, 
Sudan, and Somalia (Note: assistance to Somalia has been 
on-hold given the country's political situation. End Note). 
Both KFAED and AFESD fund a wide range of development 
projects including infrastructure projects, water sanitation, 
agricultural development, and social services 
(schools/hospitals). 
 
Kuwait Fund Active in Forty African States 
------------------------------------------ 
 
4.  (U) Al-Majed explained that the KFAED, headed by the 
Kuwaiti Foreign Minister, is required to allocate half its 
annual development funds to Arab countries with the remainder 
dispersed to Africa (18%), East Asia (21%), Central Asia and 
Eastern Europe (7%), South America and the Caribbean (3%). 
According to its March 2005 report, KFAED has dispersed, to 
date, approximately 3.5 billion USD in concessionary loans to 
40 African countries (see KFAED website www.kuwait-fund.org 
for full listing).  Approximately 56 percent of these loans 
have been for transportation development. 
 
5.  (U) Al-Majed lamented that African counterparts were slow 
to submit proposals for KFAED funding and that the biggest 
challenge was determining "who to contact" in the African 
governments.  He pointed out that competing 
intra-governmental priorities prevented many African states 
from drafting viable funding proposals reflecting legitimate 
national priorities vice parochial interests.  Al-Majed 
admitted that despite such procedural challenges, KFAED was 
committed to pursuing new development opportunities in Africa 
by working closely with African government interlocutors, at 
times informally, to improve their respective proposals to 
help ensure funding.  He cautioned that KFAED regulations 
prohibited funding new projects in countries with outstanding 
arrears with KFAED, but noted that the organization remained 
flexible in resolving arrears in the interest of ensuring 
development progress. 
 
 
Arab Fund Limited to "Arab-African" Countries 
------------------------------------------- 
 
6.  (U) Zigalaie reaffirmed AFESD's continued support to 
development in Sudan, Djibouti, and Mauritania.  He said that 
assistance to those and other countries is determined in 
direct coordination with AFESD member-state representatives 
and not at the request of the UN or other international 
organizations and NGOs.  He added that AFESD's flexibility 
allowed it to review and approve funding requests within a 
broad framework of economic development projects, including 
even the construction of luxury hotels if such construction 
was deemed beneficial to a country's economic growth and 
stability. 
 
 
Background Info on Kuwait and Arab Funds 
---------------------------------------- 
 
7.  (U) The Kuwait Fund for Arab Economic Development (KFAED) 
is the GOK's primary vehicle for providing assistance and aid 
to other countries.  It was founded the same year that Kuwait 
gained its independence, 1961, and was originally intended to 
assist Kuwait's Arab neighbors.  In 1974 its mandate was 
expanded to include all developing countries.  To date, KFAED 
has committed over 11.5 billion USD (17 percent to African 
countries) in low interest loans to 101 countries through 650 
separate projects, has provided over 323 million USD in 
grants and technical assistance, and has contributed 1.15 
billion USD to other development institutions.  Interest 
rates on loans range from as little as 1 percent to 3.2 
percent with a 23 year maturity period and a 3 year grace 
period. Additional information on KFAED's programs is 
available at its official website: www.kuwait-fund.org. 
 
8.  (U) The Arab Fund for Economic and Social Development, 
aka "The Arab Fund" was established in 1972 and became 
operational in 1974.  It is an autonomous "Pan-Arab" 
development finance organization providing concessionary 
loans to governments, public enterprises and corporations, 
giving preference to projects deemed vital to the Arab world 
and to inter-Arab projects.  The Arab Fund is comprised of 21 
Arab member states, each with a "governor" serving as the 
country representative to the organization.  Since its 
inception, 63 percent of its loan commitments have been to 
infrastructure development, the remainder was provided to 
"productive sector" programs (industry, mining, agriculture, 
rural development), comprising approximately 27 percent, and 
"social service" (health, education, housing and social 
development), comprising approximately 9 percent. Additional 
information on The Arab Fund's programs is available at its 
official website: www.arabfund.org 
 
LEBARON