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Cablegate: Consulting with Iraq's Non-Paris Club Creditors

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Diana T Fritz 02/05/2007 05:22:57 PM From DB/Inbox: Search Results

Cable
Text:


UNCLAS ABU DHABI 03484

SIPDIS
CXABU:
ACTION: ECON
INFO: FCS P/M AMB DCM POL

DISSEMINATION: ECON
CHARGE: PROG

APPROVED: AMB: MSISON
DRAFTED: ECON:OJOHN
CLEARED: DCM: RALBRIGHT

VZCZCADI598
PP RUEHC RUEATRS RHEHNSC
DE RUEHAD #3484 2781037
ZNR UUUUU ZZH
P 041037Z OCT 04
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC PRIORITY 6188
INFO RUEATRS/TREASURY DEPT WASHDC PRIORITY
RHEHNSC/NSC WASHDC

UNCLAS ABU DHABI 003484

SIPDIS

SENSITIVE

DEPARTMENT FOR NEA/ARP AND EB/IFD/OMA
TREASURY FOR DEBT POLICY

E.O. 12958: N/A
TAGS: EFIN ECON PREL IZ TC
SUBJECT: CONSULTING WITH IRAQ'S NON-PARIS CLUB CREDITORS

REF: A) STATE 206295

1. (SBU) Summary: MFA U/S Al-Noaimi told the Ambassador
that the UAE is not currently asking the Iraqis to repay
their debt and was not raising it with the IIG. He said
that the IIG had asked to send a team to the UAE to discuss
debt, but had not done so yet. Ministry of Finance
Assistant U/S Khalid Al-Bustani subsequently told Econchief
that he had discussed the IMF's request for financing
assurances with the UAE executive director to the IMF and
didn't see any problems with giving those assurances. He
emphasized, however, that he had not seen a formal request
from the IMF. Al-Noaimi stated that it was premature to
negotiate a debt restructuring/forgiveness deal with the
Iraqis before their election. End Summary.

2. (SBU) Ambassador raised Iraqi debt with MFA U/S Abdullah
Rashid Al-Noaimi while discussing Iraqi reconstruction and
other issues. Al-Noaimi said that the UAEG was not
currently asking the Iraqis to repay their debt and wasn't
raising it with the IIG. When Ambassador asked whether the
IIG had raised it with the UAEG, Al-Noaimi said that the
UAEG had responded positively to an IIG request to send a
team to the UAE to discuss debt issues. Al-Noaimi added
that he IIG team had not yet visited the UAE. He
emphasized that the Iraqis had higher priorities: obtaining
new assistance.

3. (SBU) Al-Noaimi said that it was premature to negotiate
with the Iraqis about debt forgiveness and rescheduling.
He explained that the IIG would be replaced shortly with an
elected government and asked, rhetorically, whether anyone
in the IIG could commit themselves to a debt agreement
before the election. He then reiterated that the UAEG was
not interested in debt repayment at this time and that the
priority for both the Iraqis and the UAEG was rebuilding
Iraq.

4. (SBU) Econchief followed-up on the Ambassador's
conversation and raised reftel demarche on Iraqi debt with
Ministry of Finance Assistant U/S Khalid Al-Bustani. Al-
Bustani said that the UAE's executive director at the IMF
had told him informally that the IMF was interested in
obtaining financing assurances from creditors. He said
that he didn't see any problem with the IMF's request,
since the UAEG was not looking for any near term debt
repayment from Iraq. He added, however, that he had not
yet seen a formal IMF request and that the MFA had the lead
on Iraqi issues. He suggested that econchief approach MFA
with the demarche. Econchief delivered the demarche to MFA
Assistant U/S Mohammed Abdul Jaleel on September 27.
Abudul Jaleel reiterated Al-Noaimi's remarks about Iraqi
debt. The UAEG was not interested in asking the Iraqis to
repay the debt in the near future, but stated that it was
premature to negotiate debt reduction with the Iraqis.
Abdul Jaleel emphasized that the UAEG had told the IIG that
they were welcome to visit the UAE to discuss debt, but
that the IIG had not yet done so.

5. (SBU) Comment: The clear message from the UAEG is that
they are not interested in obtaining any debt repayment
from the Iraqis in the near future (if ever). That being
the case, we believe that they intend to respond positively
to the IMF's request. On the issue of reducing Iraqi debt,
the UAEG has publicly agreed to forgive most Iraqi debt,
and it appears as if both the UAEG and the IIG have tacitly
decided to ignore or postpone any discussion on this issue.
Senior IIG officials have visited the UAE several times
over the last few months to discuss assistance. As far as
we have been able to tell, they have not discussed debt
repayments, rescheduling, or forgiveness with the UAEG.
From the UAEG's (and possibly the IIG's) point of view, the
UAE is a fairly minor creditor (USD 7-8 billion),
especially as compared with Saudi Arabia and Kuwait. Since
the UAEG is already providing the Iraqis with generous
assistance and is much less concerned about either
repayment or "balancing the books" on Iraqi debt than other
creditors, neither they nor the Iraqis seem to feel any
urgency to resolve this issue for the time being. Both
sides may decide to quietly ignore the whole debt question.
End Comment

Sison

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