US embassy cable - 05AMMAN8168

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 008168 
 
SIPDIS 
 
E.O. 12958: DECL: 10/13/2015 
TAGS: ECON, EFIN, IZ, JO, PGOV 
SUBJECT: CBJ MOVING FORWARD ON TREASURY AGENDA 
 
REF: AMMAN 08031 
 
Classified By: CDA DAVID HALE FOR REASONS 1.4 (B), (D) AND (E) 
 
1. (C) SUMMARY.  In a second follow-up meeting to Treasury 
DAS Glaser's recent visit to Amman (see ref), Central Bank of 
Jordan (CBJ) Deputy Governor Faris Sharaf was optimistic the 
Anti-Money Laundering (AML) bill might pass by December, and 
agreed tentatively to a December FIU study tour in Egypt. 
Sharaf 
failed to be persuaded on the desirability of a cash 
declaration policy at ports of entry and exit to stem the 
flow of illicit money, emphasizing that the "issue is not our 
exit borders but their (Iraq's) borders" and pointing to 
fears of a negative market reaction to such a move.  Sharaf 
ended the meeting with a sober assessment of Jordan's 
economy.  While strong monetary-influenced macroeconomic 
indicators are evident, the government,s poor fiscal 
policies and an anti-reform parliament continue to jeopardize 
Jordan's economic health in Sharaf's view.  END SUMMARY. 
 
An Action-Planned December 
-------------------------- 
 
2. (C) Deputy Governor Sharaf (protect) told emboffs Oct 11 
he did not think that technical changes to the AML law which 
may now be required  (given the time elapsed since its 
original drafting two years ago) would delay passage of the 
law.  Sharaf's hope that the AML bill would pass in the 
December session of Parliament was tempered with a personal 
belief that Parliament "represents a microcosm of corruption 
and inefficiency."  NOTE: Sharaf's remarks about Parliament 
underscore the CBJ's limited role in pushing the AML bill any 
further at this stage in the legislative process.  END NOTE. 
 
3. (C) Given the success of the visit to Treasury's FINCEN in 
August by a CBJ delegation, Sharaf agreed to send a follow-on 
delegation to Egypt to further study how a regional FIU 
operates.  Sharaf said he would contact his Egyptian 
counterpart to coordinate a December study tour. 
 
 
Cash Declaration Policy: A Hypothetical in the Short-Term 
--------------------------------------------- ------------ 
 
4. (C) Sharaf reiterated his opposition to a cash declaration 
policy at ports of entry and exit.  Philosophically, the 
problem of "cash transiting into Iraq is an Iraqi problem", 
he began.  Sharaf argued that expecting Jordan to create a 
law to control cash leaving its borders is not in line "with 
international standards."  When the discussion was narrowed 
to cash coming into Jordan, Sharaf voiced three arguments 
against CBJ action:  First, a cash declaration policy 
requires a legal framework (i.e., an AML law) that has yet to 
be established.  Second, the policy should be a Customs and 
law enforcement directive, not a CBJ one.  Third and most 
important for Sharaf was the fear the market would 
misinterpret a cash declaration policy as a central bank 
attempt to control cash flow, and put undue pressure on the 
Jordanian Dinar.  Despite these impediments, Sharaf did shed 
light on how a hypothetical policy might work.  Sharaf 
envisioned that the limit on undeclared transfers would be 
set in Dinars, and would be determined by a "Higher 
Council"-type body established by the AML law.  NOTE: 
Considering CBJ hesitation in creating a cash declaration 
policy and the other actors identified, Embassy will explore 
alternate options for progress on the issue.  END NOTE. 
 
Reform the Reformers 
-------------------- 
 
5. (C) The meeting concluded with Sharaf offering his 
assessment of Jordan's economic future.  Sharaf was confident 
in the CBJ's ability to manage inflation and promote economic 
growth, but showed little faith in the Ministry of Finance 
(MinFin) and Parliament.  An institution devoid of "even one 
economist worth his degree," Sharaf accused MinFin of having 
missed a number of opportunities to service debt efficiently, 
and of pursuing actions that were "penny wise, pound 
foolish."  On the Parliament, Sharaf described its members as 
"corrupt and inefficient" legislators who spent their annual 
$12 million budget "flying to Paris" and legislating the 
"purchase of expensive cars for themselves," rather then 
hiring staff and passing effective legislation.  COMMENT: 
Sharaf does not move in circles that would have first-hand 
knowledge of legislative lifestyles, but tales of high-living 
parliamentarians are common fodder for discussion among some 
circles in Jordanian society.  END COMMENT. 
 
HALE 
HALE