NEW IRAQI ECONOMIC PACKAGE AND DONORS' CONFERENCE

C O N F I D E N T I A L ABU DHABI 004508 SIPDIS DEPT FOR NEA/ARP, EB/IFD/ODF E.O. 12958: 9/28/08 TAGS: ECON EFIN PGOV IZ TC SUBJECT: NEW IRAQI ECONOMIC PACKAGE AND DONORS' CONFERENCE REF: A) STATE 280324, B) ABU DHABI 4372 ¶1. Classified by Ambassador Marcelle M. Wahba for reasons 1.5 (b and d). ¶2. (C) Econchief and econoff discussed Iraqi economic reforms and the Madrid donors' conference with Ministry of Finance Assistant Undersecretary for Revenue and Budget Khalid Al-Bustani (protect). Al-Bustani said that in his personal view, the best thing for Iraq to do would be to rebuild its system from the ground up, i.e., privatize services such as airports, seaports, and the railroads from the beginning and regulate them. This way the Iraqis would avoid recreating an inefficient bureaucracy and "get it right" the first time. (Note: Dubai Ports Authority is currently the subcontractor to manage the Iraqi port of Umm Qasr. End Note) ¶3. (C) Al-Bustani also said that he thought that there was a great deal of pent up demand in the UAE for investment opportunities in Iraq that would be realized when "the time was right." He noted that UAE businesses were concerned about both the security environment and the investment climate in Iraq. In his view, businesses were reluctant to invest in Iraq without some sort of guarantee (insurance) against wholesale nationalization by a future government. He welcomed hearing from Econchief that the new regulations resulted from discussions between the CPA and the IGC, saying that this helped indicate the view of the Iraqi people. He also welcomed the fact that the CPA published the orders on its website as a necessary transparency. 4) (SBU) Al-Bustani also suggested that the U.S., UAE, and Iraqis work together to facilitate private investment and business opportunities in Iraq by holding business development roundtables and, eventually, business tours or trade fairs. He stressed, however, the U.S. would need to determine the best time to start these exchanges, in order to avoid raising private sector expectations too early. 5) (C) Econchief asked about UAEG plans for the upcoming Madrid donors' conference. Al-Bustani said that the MFA has been taking the lead on preparations for the donors' conference, but that the Ministry of Finance was well aware of the meeting. He told Econchief that the UAE was discussing who would be the head of the UAE delegation and speculated that it might be MinState for Finance Khirbash. Al-Bustani also noted that the Abu Dhabi Fund for Development had been closely involved in all of the UAE's reconstruction efforts in Iraq and that it would likely be part of the delegation as would he. Al-Bustani also expressed concern about the lukewarm commitments that the EU had made. Although he did not discuss any potential UAE commitment, he did note that a stable and economically prosperous Iraq was in everyone's best interests. ¶6. (U) CPA minimize considered. Wahba