BAGHDAD INTERNATIONAL AIRPORT GETS A 24-HOUR

UNCLAS SECTION 01 OF 02 BAGHDAD 002822 SIPDIS SENSITIVE NEA/I PASS GRAMAGLIA, SILVERMAN, EB/TRA TAGS: EAIR PREL PGOV ECON IZ BAGHDAD SUBJECT: BAGHDAD INTERNATIONAL AIRPORT GETS A 24-HOUR REPRIEVE, BUT OUTLOOK STILL NEGATIVE SENSITIVE BUT UNCLASSIFIED USG DIST ONLY NOT FOR INTERNET DISTRIBUTION REF: BAGHDAD 2804 AND PREVIOUS ¶1. (SBU) SUMMARY: The July 3 anticipated closure of Baghdad International Airport (BIAP) was delayed for one day as representatives from the Prime Minister's office, Ministry of Transportation (MOT) and security contractor Global Risk Strategies ("Global") agreed to meet on July 4 to attempt to negotiate an alternative that would prevent BIAP's s closure. In a meeting of all sides today, the PM pledged to support any agreement between the MOT and Global. The ITG and Global moved further apart in their negotiating positions, however, and agreement tomorrow is very unlikely. END SUMMARY ¶2. (SBU) On the morning of July 3, Transitional Prime Minister al-Ja'afari hosted a meeting to discuss Global's security contract at BIAP (REFTELS) Global country directors Messrs. O'Brien and Mann, the Ministers of the Interior (MOI) and Transportation, the PM's Legal Counsel (Dr. Fadel),the PM's Chief of Staff, and Embassy/IRMO Transportation representatives were present. The PM pledged that all of Global's "rights" would be respected, however, the Iraqi Transitional Government (ITG) representatives also made clear that they did not recognize the 12-month contract award Global claims it received in April. This position represents a complete policy reversal from last week's meeting held with the PM's representatives (REFTELS) Rather than acknowledge the disputed contract and renegotiate its terms, as agreed to last week, the ITG now seeks to negotiate a 3-month phase-out contract instead. ¶3. (SBU) The ITG also claims that Global did not have a valid contract from January through March 2005. In a change from its position on June 25 and June 27, the ITG now says that it will not honor Global's unpaid invoices for March, April and May. Instead, the MOT wants to negotiate a substantially reduced rate ($1-2 million per month) rather than the $3.7-4.8 million Global invoiced. ¶4. (SBU) As the discussion became increasingly hostile, the parties moved away from agreement. PM Ja'afari urged Global to meet directly with the Minister of Transportation and promised to honor any agreement they would make. Apparently, because the MOT is pushing the hardest line, he declared that his Deputy Minister and staff had exceeded their authority when they agreed to pay Global's invoices on June 27. It is very unlikely that discussions to be held today, July 4, will lead to a negotiated solution. ¶5. (SBU) The MOI claims their forces could be trained to take over airport security in one month. The PM's position however is that a three-month transition would be better. The MOI and MOT said they had received other bids to take over airport security (NOTE: We understand that these were solicited rather than merely "received". END NOTE) They specifically cited a bid from the firm protecting the Palestine Hotel, for less than $2 million per month. ¶6. (SBU) After the meeting, Dr. Fadel, the PM's Legal Counsel, admitted that he had deliberately avoided returning Global's calls to set up contract negotiations last week (REFTEL),after it became clear that the ITG would not support the approach agreed upon between Global and the Deputy Minister of Transportation, with the concurrence of PM representatives Said Hakki and Dr. Fadel, on June 27. ¶7. (SBU) Global plans to meet with the MOT and Dr. Fadel tomorrow, but sees no chance for resolution. Embassy representatives will also attend. Global representative Tim O'Brien believes that on July 3 the PM repudiated commitments that his own staff made on his behalf in the June 25 and June 27 meetings and expressed his "contempt" for the resolution process and the people involved. ¶8. (SBU) After today's meeting, the MOT floated the idea of the USG paying half of Global's arrears. Per previous COM direction, Embassy representatives replied that the USG would not do so, and that the ITG should not consider it a possible option under any circumstances. ¶9. (SBU) COMMENT: The Embassy continues to monitor the situation and encourage both sides to come to an agreement that will avoid airport closure. Global representatives appear to firmly believe that the "good faith" offered last week by the ITG was actually done in "bad faith" as reflected in today's policy reversals. As such, we remain doubtful that a mutually agreeable solution can be found. Since any new security arrangements put in place in the event of Global's departure would need to be thoroughly vetted before the civilian side of the airport can reopen, we are engaged to ensure that if the airport closes it would not impact our and ITG participation in the July 10- 11 Joint Economic Reconstruction and Economic Development (JCRED) meeting or the July 18-19 IRFFI Meeting in Amman. END COMMENT ¶10. (SBU) REO Hillah, REO Mosul, REO Kirkuk, REO Basrah, minimize considered. SATTERFIELD