US embassy cable - 03AMMAN4725

C O N F I D E N T I A L AMMAN 004725 
 
SIPDIS 
 
E.O. 12958: DECL: 07/28/2013 
TAGS: EAID, EFIN, PREL, IZ, JO 
SUBJECT: JORDAN ASSISTANCE TO IRAQ:  ASSET FREEZES 
 
REF: A. STATE 214593 
     B. USUN NY 1718 
 
Classified By: Ambassador Edward W. Gnehm, reasons 1.5 (b,d) 
 
1.  (u)  As noted SEPTEL, Jordan has been extremely 
forthcoming with material assistance for aid and 
reconstruction efforts in Iraq.  SEPTEL outlines Jordanian 
assistance in this regard, as requested ref (a).  Ref (a) 
also requested information regarding frozen Iraqi assets. 
Unfortunately, the news on this front is not as positive. 
 
2.  (c)  On the positive side, the GOJ has been forthcoming 
in its cooperation with USG forensic accounting teams who 
have been in Amman on several occasions to identify 
actionable Iraqi assets held in Jordanian banks.  Working 
with these teams, the GOJ says it has identified and frozen 
approximately $500 million in actionable assets.  Once 
identified, though, the disposition of these assets has 
become unclear. 
 
3.  (c)  CPA advisor George Wolfe had two meetings at the 
Ministry of Finance with Minister Marto and Sec'y General 
Hammour in mid-July, during which he requested that the GOJ 
transfer actionable accounts to the Development Fund for Iraq 
(DFI), in accordance with UN SC Resolution 1483.  In response 
to Marto's rejoinder that Iraq's debt of $1.3 billion to the 
Central Bank of Jordan needed to be addressed, Wolfe replied 
that it would be more appropriate to consider the debt when 
the general topic of Iraqi sovereign debt is discussed on a 
wider scale, not in the context of funds that should be part 
of the DFI. 
 
4.  (c)  Wolfe suggested "circular treatment" as one way to 
protect the liquidity of the Jordanian banks while at the 
same time fulfilling 1483 and the DFI mandate.  The assets 
would be transferred to DFI and the DFI would in turn 
redeposit the funds in Jordanian banks.    Echoing CBJ 
Chairman Toukan's earlier comments, Marto cited the April 
24th law that protects frozen assets and sets up a committee, 
of which Marto is chairman, to consider all claims and decide 
their validity, a process that has not yet been completed. 
 
5.  (c)  Marto told Wolfe that the total amount of frozen 
funds was JD 356 million ($498.4 million).  From those funds, 
Marto said that JD 30 million ($42 million) had already been 
paid against some claims.  He said there were another JD 170 
million ($238) in claims yet to be addressed, leaving about 
JD156 million ($218.4 million) free and clear.  Marto 
estimated that at least 90% of the claims had been submitted, 
with the remainder facing a September deadline at which time 
the Jordanians would know the total number and amount of 
claims.  In addition, Marto said there was an additional JD 
55 million ($77 million) frozen in an oil trading account. 
Responding to Marto's allusion to a Free Trade Area between 
Iraq and Jordan and trade (and thus possible additional, but 
undocumented, claims) that occurred before the first Gulf War 
in 1991, Wolfe said that such claims would not be appropriate 
and could not be honored. 
 
6.  (c)  Wolfe later told econoff that he was pessimistic of 
any assets transfer to DFI by the GOJ, unless we could work 
something out along the lines of his circular treatment 
proposal, as any movement of the assets outside of Jordan 
while claims are pending would be politically very difficult 
for the GOJ.  Indeed, shortly after Wolfe's visit, Marto 
announced in the local press that frozen Iraqi assets would 
first be used to settle outstanding Jordanian commercial 
claims, and the remainder would be transferred to the DFI. 
(Note: During a courtesy call by the Ambassador on July 28, 
recently-appointed Minister of Industry and Trade (and former 
Ministry of Finance Secretary General) Mohammad Abu Hammour 
reaffirmed the political difficulties the GOJ faced regarding 
the Iraqi assets, but acknowledged that the GOJ "would have 
to comply with the UN resolution."  Whether Marto and the GOJ 
come around to this view is yet to be determined.  End Note.) 
GNEHM