JORDAN TRADE MINISTER'S IRAQ TRIP "ONLY FOR

C O N F I D E N T I A L AMMAN 004304

SIPDIS

TREASURY FOR OASIA -- MCDONALD, PIPATANGUL

E.O. 12958: DECL: 07/25/2007
TAGS: ETTC PREL IZ JO
SUBJECT: JORDAN TRADE MINISTER'S IRAQ TRIP "ONLY FOR
APPEARANCES"

Classified By: DCM Gregory L. Berry. Reasons 1.5 (b) and (d)

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SUMMARY
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1. (C) According to the number two Ministry official, Trade
Minister Salah al-Bashir's July 19-23 visit to Baghdad was
primarily for show, and added little to the bilateral
economic relationship. He noted that some adjustments had
been proposed to the bilateral oil and trade protocols to
offset prospective imbalances resulting from the increase in
global oil prices. There was discussion of a bilteral FTA,
but no progress toward that end. End Summary.

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IT'S ATMOSPHERICS
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2. (C) Trade Ministry Secretary General Samer Tawil told
Econoff July 25 that the July 19-23 trip to Baghdad on which
he accompanied Trade Minister Salah al-Bashir was little more
than damage control following Prince Hassan's recent surprise
appearance and comments at the meeting of exiled Iraqi
officers in London. Tawil said local publicity surrounding
the trip was a GOJ gesture to a peeved Iraqi leadership.
Tawil added that the political nature of the trip, and the
desire of the GOJ to steer clear of substantive negotiations
with Iraq on trade issues, mean that technical level people
on the GOJ side were not included on the trip.


3. (C) Tawil reported that the Iraqis asked that the
ceiling on 2002 Jordanian exports to Iraq be raised to
compensate for the increase in crude prices (now over $25/bbl
compared to about $19/bbl when the protocols were signed).
Tawil said he tentatively agreed, but said that Jordanian
suppliers of extra exports (above the previously agreed
ceiling) would be paid by the GOJ in 2003 (i.e., some letters
of credit to Jordanian suppliers approved in the fourth
quarter of 2002 would only be issued in 2003). Thus,
increased outlays to Jordanian suppliers would not impact
Jordan's 2002 budget.


4. (C) Tawil added that other "agreements" announced after
Bashir's visit, like the removal of 14 Jordanian companies
from Iraq's "black list" of normalizers, were either
overblown, were announcements of deals completed far in the
past, or both. Finally, he told Econoff that, while the
issue of a Jordan-Iraq FTA was raised by the Iraqis, no
progress was made or even seriously attempted.

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Comment
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5. (C) Through this sleight of hand, Tawil hopes that the
cost of greater Jordanian exports in 2002 will be postponed
until next year, to be paid for out of Iraqi oil shipped then
(using cash raised by the oil's sale by the GOJ to the
refinery company). Indeed he probably hopes to minimize the
impact by adjusting the still to be negotiated agreed level
of 2003 exports. In a way, however, Tawil's scheme could end
up backfiring if 2003 subsidized oil imports are interrupted
for any reason, including a U.S.-Iraq confrontation. In that
event, the GOJ would still owe suppliers, but not have the
income stream to provide the cash. Indeed, this could come
at just the time when extra funds are needed to buy oil on
the market.
Berry