Remarks with Kuwait Foreign Minister Muhammad al-Sabah al-Salim Al Sabah Following Meeting

We've had a very good discussion this morning following yesterday's discussion at the Pentagon. I was able to congratulate Dr. Muhammad on the designation of Kuwait by President Bush as a major non-NATO ally, something that means a great deal to us.

We had a good discussion of regional issues. We both agree that the struggle in Iraq will continue for some time, but we're determined that we're going to both stay the course.

And I was able to thank the distinguished Foreign Minister for the very strong stance of his government on the question of OPEC and oil production.

I'll ask my colleague if he'd like to make a few remarks, and then we'll stand by for questions.

FOREIGN MINISTER AL SABAH: Thank you, Mr. Secretary. It's always great being here in this great country of yours. Every time we come back, we are reminded of how deep and strong our relationship is. This is a relationship that was forged in wartime and peacetime.

We discussed various issues, bilateral and also regional issues, and we also discussed the economic issues, the impact on higher oil prices on the world economy. Kuwait has made a commitment not to take any decision that might harm world economic progress. This is something that we are very -- we stand by that decision.

We also discussed the establishment of a stronger economic relationship between the United States and Kuwait, and I look forward to discuss this issue further with our -- with my colleagues later on, especially the free trade area issue between Kuwait, GCC and the United States.

Thank you very much for your hospitality, Mr. Secretary.

DEPUTY SECRETARY ARMITAGE: Thank you, sir.

QUESTION: (In Arabic.)

FOREIGN MINISTER AL SABAH: (In Arabic.)

QUESTION: Mr. Foreign Minister, you said that Kuwait stood by its decision not to do things that would harm the world economy. Will Kuwait push to reverse the OPEC production cuts before the next OPEC meeting in June?

FOREIGN MINISTER AL SABAH: Well, Kuwait, in the deliberation that led to this decision, took the -- led the fight to postpone this decision. This is a decision that we argued would not be helpful to the world economy if it leads to an increase in oil prices.

What we witnessed is that the market did not react to this decision the way that one would expect, because I don't think that the market -- I think that the market realized that this is an irrational decision; no one would cut back production at a time when prices are much higher than the agreed upon price that OPEC set for itself, and that is between $22 and $28.

QUESTION: Mr. Secretary, the Saudi Ambassador, Prince Bandar bin Sultan, said last night after a meeting with Dr. Rice that his country will not allow any shortage in the oil market because it will hurt the world economy.

How do you interpret his statement?

(In Arabic.)

DEPUTY SECRETARY ARMITAGE: I think Prince Bandar bin Sultan's words can stand on their own. Clearly, he was desirous of calming the markets and making it very clear that notwithstanding what decision -- the decision that had been taken at OPEC, that the Saudis would not allow the price to rise. And I think we'll have to see as we go forward how they put that into effect.

But I think it had the proper effect: It calmed the markets. I'd defer to my distinguished colleague, who has a Doctorate in Economics, but it looked to me like the price of oil was down significantly today.

FOREIGN MINISTER AL SABAH: (In Arabic.)

QUESTION: I'd like to ask one more question about oil? Mr. Secretary, what concerns do you still have that, you know, based upon the assurances that Prince Bandar and the Kuwait Foreign Minister have provided, what concerns do you still have that the price of oil will, in fact, go up, that the market will react?

DEPUTY SECRETARY ARMITAGE: Well, look, oil prices are affected by many, many things: production is one; refining capacity is another; how much is at seed and storage, and all of these things. It's quite clear that our season of driving, et cetera, here will come this summer; however, since oil prices are several months ahead, it seems to me they're starting to take into effect a drop in demand which will take part in the fall. So my concerns are very much assuaged.

QUESTION: Mr. Secretary, on Iraq. It's been a horrible week for America in Iraq, and it seems also that, judging from the actions of the average person on the street in Fallujah, that things are not going well in terms of swaying their opinion toward the U.S. and the coalition.

Can you just reflect on the past week?

DEPUTY SECRETARY ARMITAGE: This has been a bad week in Fallujah for our service men and women. It has also been a bad week for Iraqi citizens.

What happened in Fallujah is not in keeping with any Koranic teachings or any of the tenets of Islam. And there will be a price extracted. There will be a response. And it will be obvious to all.

Thank you all very much.

(The Deputy Secretary escorts the Foreign Minister to his car.)

QUESTION: Mr. Secretary, did you see what Prime Minister Sharon is quoted as saying about Arafat in the papers this morning? It seems like, at least it's taken there, as kind of a veiled threat to him, saying insurance companies shouldn't write policies on him.

Is that helpful? And have you guys communicated with the Sharon government about that?

DEPUTY SECRETARY ARMITAGE: Our position on such questions, the exile or assassination of Yasser Arafat, is very well known. We're opposed and we've made that very clear to the Government of Israel.

QUESTION: Recently?

QUESTION: How recently?

QUESTION: After these remarks?

DEPUTY SECRETARY ARMITAGE: I've been in a meeting all morning so I didn't see these remarks until I was walking down.

QUESTION: But in the last few days?

DEPUTY SECRETARY ARMITAGE: Well, as a general matter, there's no question that the Government of Israel knows our view on this matter.

QUESTION: Thank you very much. Have a good weekend.