TFIZ01: MORE ON CANADA'S FREEZE OF IRAQI

UNCLAS OTTAWA 001075 SIPDIS SENSITIVE DEPARTMENT FOR EB ACTION OFFICER AND WHA/CA TREASURY FOR U/S TAYLOR AND MATHIEU E.O. 12958: N/A TAGS: EFIN ECON ETTC PREL CA UN SUBJECT: TFIZ01: MORE ON CANADA'S FREEZE OF IRAQI GOVERNMENT ASSETS REF: A. OTTAWA 890 ¶B. STATE 74249 ¶1. (SBU) Ref A reported that the GOC froze Iraqi government assets in compliance with the 1990 UNSC resolutions. The Department of Finance clarified April 14 that the amount remaining is "insignificant" (estimated at under C$20,000). Most of the US$2.73 million notified to the UN in 1991 have been used for the Iraqi embassy's operational expenses or authorized for humanitarian use in Iraq before implementation of the Oil for Food program. ¶2. (SBU) Canadian banks are prohibited from transactions with Iraq, so the GOC does not expect an increase in the amount of Iraqi assets in Canada. Canadian financial institutions do not have a list of Iraqi individuals to consult in deciding on asset freezes, and Iraqi funds that come from a third country would not be captured in the data. There is no reporting requirement for Iraqi assets, and the GOC does not maintain an accounting of the total. ¶3. (SBU) As the assets were frozen in compliance with a UN directive, they could be unfrozen by a similar UN order for the benefit of a new Iraqi government. We do not believe the GOC will release the frozen assets absent international consensus. Although they would be most comfortable with UN authorization, a lawyer with the Department of Foreign Affairs and Trade recalled that release of Yugoslav assets had been the result of action in the G-7. CELLUCCI