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