FURTHER ON RUSSIAN COMPANIES IN IRAQ

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003037

SIPDIS

E.O. 12958: DECL: 07/20/2015
TAGS: PREL ETRD EPET RS IZ
SUBJECT: FURTHER ON RUSSIAN COMPANIES IN IRAQ

REF: A. MOSCOW 8677

B. MOSCOW 8678

Classified By: Charge d' Affaires David M. Satterfield for rreasons 1.4

(b) and (d)


1. (C) Embassy Baghdad read with great interest Embassy
Moscow's two excellent cables on Russian companies in Iraq
and on how Russia is coming to terms with the new Iraq
(REFTELS),and wanted to add that at least one Russian
company is reaching out to the U.S. in Baghdad in an attempt
to generate business. On July 10, former Russian Ambassador
to Syria Alexander I. Zotov (now retired) called on Charge
ostensibly to discuss political developments in Iraq. In
reality, he wanted to discuss business prospects for a
company he is now representing, Russian Engineering Company.


2. (C) Zotov reminisced about how his first overseas
assignment was as a junior officer in Moscow's Embassy in
Baghdad. He feels as if he has come full circle and says he
is motivated by a strong desire to help the Iraqi people. He
said that to do so, he has come to the realization that to
help Iraqis, one must work with the Americans. The company
he represents operates in the south of Iraq but currently has
very little work to do. Although Zotov's card indicates he
works for the "Russian Engineering Company," he passed us
another with the name of the person in charge in Iraq that
listed a company name of "Energo Engineering Enterprises."
(The logo bears a strong resemblance to the now infamous
Enron E.)


3. (C) Zotov explained that in his view, four of Iraq's
biggest problems are unemployment, lack of adequate energy
generation, difficulties with transport, and a failure to
maximize oil exports. He said his company is well placed to
help solve all these by employing large numbers of Iraqis,
constructing power plants, helping to clear Iraq's Persian
Gulf ports to open the country up to cheaper and more
efficient ways of moving its products, and by repairing the
Basra oil terminals. He estimated that Iraq loses more than
one million dollars a day by having to utilize roundabout
shipping routes and lamented the fact that his firm has been
negotiating for over a year on the port clearing contract.
This means the Iraqis have lost more revenue by doing nothing
than they would have by paying the contract price for the
project.


4. (C) Zotov said he understands that because the U.S. is
funding most of Iraq's major projects there is a preference
to give the work to American companies. All he is asking
for, he said, is a fair chance to compete for some of the
projects coming on line. He said that his company has been
in Iraq for some time, knows the country well, and is ready
to go to work. IRMO Senior Transportation Advisor, who along
with Acting PolMil Counselor was present with the Charge,
advised Zotov that contracts for salvaging and dredging
operations at Basra would be coming out soon, and that the
terminals will be rebuilt, although not for one or two more
years. He also advised him that so far $40M has been spent
or committed on these projects. He offered to forward
Zotov's contact information to the Ministry of Oil.


5. (C) On the political front, Zotov told Charge that he
has spoken with the Prime Minister and advised him that
Russia, too, had recently undergone revolutionary changes.
He said that under present circumstances extraordinary steps
are needed by the Iraqi Transitional Government (ITG) and
that the people need to be convinced their leadership is
moving forward to solve the country's problems, not merely
engaging in political infighting designed to protect their
own positions. Zotov says he told the PM that the ITG needs
to be in touch with the people, make decisions, and take
action. He warned that the reconstruction process was mired
in bureaucracy and urged that corners be cut and necessary
steps be taken to produce discernable results that will give
hope to the people.


6. COMMENT: Zotov seemed somewhat of a forlorn figure,
diligently making the rounds in search of business
opportunities that may prove elusive. It was evident that he
would prefer to be acting in his old diplomatic capacity,
rather than as a representative/salesman of a private
enterprise competing in a tough market that appears at least
a bit stacked against his client/employer. END COMMENT.


7. REO HILLAH, REO BASRAH, REO KIRKUK, REO MOSUL minimize
considered.
Satterfield