US embassy cable - 05KUWAIT4483

UNCLAS KUWAIT 004483 
 
SIPDIS 
 
STATE FOR NEA/ARPI SWALKER, LONDON FOR LTSOU 
 
E.O. 12958: N/A 
TAGS: PGOV, PREL, KU, KUWAIT-IRAQ RELATIONS 
SUBJECT: KUWAITI PERSONAL DEBT FORGIVENESS VERSUS IRAQ DEBT 
AND FOREIGN AID 
 
1. (U)  Kuwaiti opposition groups in the National Assembly 
opposed to debt relief for Iraq and assistance to the U.S., 
Pakistan and other countries have renewed their call for the 
cancellation of Kuwait citizens' personal debt.  They see 
that as the preferred accompaniment or alternative to 
cancellation of Iraqi debt and continued GOK aid abroad. The 
GOK claims there to be as much as $12-14B in Iraqi debt and 
press reports have cited a figure as high as $17 billion. 
The GOK has pledged $500M to the U.S. for Hurricane Katrina 
assistance and $100M to Pakistan for earthquake assistance. 
 
 
2. (U) The renewed debate, spurred by GOK considerations of 
debt relief for Iraq and the government's large budget 
surplus (estimated by private financial services as exceeding 
$24B for Kuwaiti FY05-06), is spearheaded by Islamists, the 
Popular Action Bloc headed by Ahmed Al-Saadoun, and other 
members of parliament (MPs), including Dr. Awad Barad 
Al-Enezi, presumably seeking to score political points with 
relevant constituents in preparation for the 2007 
parliamentary elections. 
 
3. (U) Press reports cite some MPs calling on the GOK to 
cancel private Kuwaiti consumer loans (estimated by the 
Central Bank at $5.4B), including real estate loans and phone 
bills.  Others have suggested awarding each Kuwaiti household 
10,000 Kuwaiti Dinars ($34,000) to cover living expenses. The 
Prime Minister has dismissed the proposals as politically and 
economically unfeasible.  Liberal MPs are also opposed to 
such measures and would like to see increased fiscal 
discipline imposed on Kuwaiti citizens, including the 
adoption of a national income tax to cover expats as well as 
citizens of Kuwait.  (Note: Kuwaiti citizens today are exempt 
from paying any personal taxes.) 
 
4. (U) Comment: The issue of debt relief for Kuwaiti citizens 
will complicate the GOK's efforts to cancel Iraqi debt when 
this matter reaches the National Assembly. 
 
 
LEBARON