US embassy cable - 03AMMAN4416

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 004416 
 
SIPDIS 
 
SENSITIVE 
 
OPIC FOR WILLIAMS/KIWAN 
TREASURY FOR OASIA -- ABIGAIL DEMOPULOS 
 
E.O. 12958: DECL: 07/16/2013 
TAGS: EFIN, EINV, JO 
SUBJECT: GOJ RECEPTIVE TO OPIC SOVEREIGN DEBT FACILITY 
 
REF: A) AMMAN 3988 B) AMMAN 0332 
 
CLASSIFIED BY ECON IAN CAMPBELL EO 12959 REASONS 1.5 B AND D 
 
1.  (C) SUMMARY: OPIC Director for Insurance for Africa and 
the Middle East Jim Williams  and Citibank executives met 
with King Abdullah, GOJ officials, and representatives of 
Bechtel July 13 to discuss potential OPIC support for a 
variety of infrastructure projects in Jordan.  While a number 
of potential projects were discussed, a plan to enhance port 
and tourist facilities in the Aqaba Special Economic Zone 
(ASEZA) seemed to garner the most interest from the King and 
the GOJ in matching OPIC products to Jordan's current needs. 
Accordingly, a proposal from ASEZA project manager Bechtel 
that draws on OPIC's Nonhonoring of Sovereign Guarantee 
Insurance partnered with competitive financing offered by 
Citibank and assuages an impatient King eager to see progress 
in Aqaba should be before the Cabinet by the first week of 
August.  END SUMMARY 
 
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FINANCING NOT TIED TO U.S. PROCUREMENT 
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2.  (SBU) Following up on interest expressed by the GOJ 
during discussions held in January (REF B), Williams, 
Citigroup Vice Chairman for Corporate and Investment Bank 
Anthony Nelson, and Citibank Jordan CEO Suhair al-Ali held a 
series of meetings July 13 with various GOJ officials, 
including King Abdullah, Minister of Planning Awadallah, 
Minister of Water Nasser, and ASEZA Chief Biltaji.  The 
purpose of the meetings, which also included representatives 
of Bechtel, was to discuss possible OPIC support for a 
variety of projects in Jordan.  Along the lines of the 
January meetings, the talks focused on OPIC's political risk 
program, especially its "Nonhonoring of Sovereign Guarantee 
Insurance," a new OPIC product.  Eligibility for the 
insurance is predicated on the provision of at least 25% 
project financing by a U.S. bank, hence the participation of 
Citibank, the only U.S. bank in Jordan. 
 
3.  (SBU) While the facility could provide up to $400 million 
for infrastructure projects in the Kingdom, there is a per 
project limit of $250 million.  The package, jointly offered 
by Citibank and OPIC, would include up to fifteen year 
financing, low U.S. Treasury rates, and AAA pricing with 
narrow spreads (U.S. Treasury plus 100 basis points).  The 
package is not tied to U.S. procurement. 
 
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GET MOVING ON AQABA 
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4.  (C) Accompanied by Ambassador Gnehm, Williams and the 
Citigroup team met with King Abdullah, Royal Court Minster 
Faisal Fayez, and Minster Awadallah.  Williams said he 
thought the King was enthusiastic about the opportunity 
provided by the OPIC product.  He added that, during a 
discussion about possible applications of the financing for 
Aqaba development, the King registered his impatience with 
Bechtel, Master Developer and Contractor for the ASEZA, and 
said "they have to move things along". 
 
5.  (SBU) Williams said Awadallah was "championing", within 
the GOJ, Citibank project financing that made use of the OPIC 
sovereign debt insurance.  While a number of projects were 
discussed that were candidates for such an arrangement, Aqaba 
development emerged as a priority.  Williams said there were 
two pre-requisites for Citibank to get a mandate to go 
forward.  Bechtel has two weeks to provide the details 
(scope, financial projections, etc.) for whatever projects it 
is recommending for Aqaba.  In addition, the Cabinet needs to 
authorize the formation of the Aqaba Development Company, 
which would be the privatized entity responsible for the 
contracting of future development projects within the Zone. 
 
6.  (SBU) Williams noted that Minister of Finance Marto, who 
had previously expressed concern that the IMF might consider 
the OPIC insurance part of Jordan's sovereign debt (REF B), 
was not in attendance in any of the meetings, giving rise to 
disappointment and concern on the part of Citibank.  However, 
Ministry of Finance Secretary General Hammour attended a 
meeting with the team at the Ministry of Planning, and seemed 
"receptive and open" to the proposal. 
 
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COMMENT 
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7.  (C) While the GOJ will certainly give strong 
consideration to reservations held by the IMF and other 
like-minded institutions regarding Jordan's taking on 
something that may resemble additional sovereign debt, it 
appears as though momentum within the GOJ currently favors 
the Citibank facility insured by OPIC.  At the end of the 
day, the support of the King, impatient for discernible 
progress on the Aqaba development front and on financial 
terms some of his advisors see as favorable, may seal the 
deal. 
 
 
 
 
 
 
 
 
 
 
HALE