RAMADI'S AGRICULTURAL DEVELOPMENT BANK: SADDAM'S

C O N F I D E N T I A L BAGHDAD 004838

SIPDIS

E.O. 12958: DECL: 11/27/2015
TAGS: ECON PGOV IZ
SUBJECT: RAMADI'S AGRICULTURAL DEVELOPMENT BANK: SADDAM'S
SOCIALISM ALIVE AND WELL IN ANBAR

Classified By: Michael J. Adler, Acting Political Counselor
for reasons 1.4 (b),(d).


1. (C) Summary. Managers of the Ramadi branch of the
Agricultural Bank admitted they issued few loans and were
bureaucratically constrained by parent institution Ministry
of Finance from more creative means of increasing their
financing. Nonetheless, employees bustled about doling out
slips of stamped and signed papers, with no overt signs of
cash at hand. Perhaps a mechanism to revitalize the
depressed Anbar economy through microfinancing, significant
reform is necessary to salvage this archaic institution.
End Summary.


2. (C) On November 27 PolOff accompanied a Civil Affairs
team for a site survey of the Ramadi branch of the
Agricultural Bank. At a small building a short walk from
the downtown government center, roughly a dozen customers
crowded in front of a bank of windows in the run-down
building. In conversations with the assistant bank
manager, and later, branch manager, neither appeared
intimidated by the CF presence. Both readily responded in
detail to questions of the bank's activities and customer
base. Neither, would however, firmly commit to an
invitation to join a business development council to advise

Ramadi City Council, citing security as a main impediment.

3. (C) None of the four 'loan officers'' desks contained
computers. When a customer presented a check for cashing,
the Assistant Manager Abdulhameed Khader reminded his clerk
to check the paper records to confirm an adequate account
balance; the branch did not have electricity to consult an
unseen computer. Khader noted the branch maintained 12
employees and seven guards, an additional two employees
held temporary status. Khader stated most of the bank's
loans were for between 10-20 million Iraqi dinar (7,000-
14,000 USD),and depending on the maturity of the loan
ranged from 8-14 percent interest. He identified three
main categories of loans: agricultural, 'industrial' and
'trading'. The Assistant Manager said no one of late had
applied for loans to purchase agricultural equipment,
livestock or seed. He observed (evidently referring to
prior to the regime's fall),the bank had been a hub of
activity; he gave no explanation for the decline in
agricultural borrowers.


4. (C) Upon his arrival, Branch manager Isam Yassam
Abdullah, politely requested the military officer to
summarize the purpose of the visit. Noting the
Agricultural Bank maintained another branch in Falluja, he
attributed the dearth of agricultural borrowers to the
security situation. He obliquely referred (as did the
Assistant Manager) to issuance of loans to bank employees,
noting they made payments via a deduction to their monthly
salaries. (Comment. The references raised suspicions
whether this practice led to a backdoor 're-lending'
process. End Comment.) Abdullah, contended the
Agricultural Bank was similar to 'regular' (but also Saddam
era state-owned) institutions like Rafidan and Rasheed
banks. The Ministry of Finance 'owned' the bank, supplied
its capital and issued mandatory guidance on what category
of loans his branch was permitted to offer customers. The
Branch manager added that the Ministry of Agriculture had a
signed agreement with the Ministry of Finance to provide
agricultural loans (for irrigation improvements, livestock
etc.) at a subsidized interest rate of 7-8 percent. He did
not elaborate on why this mechanism was currently unused.
Atmospherics and Comment

--------------


5. (C) Well dressed and courteous, Abdullah looked the part
of a former regime technocrat against the backdrop of an
outmoded and decaying institution. It was not apparent
where or if the branch stored cash deposits. Beyond the
counter was an old walk-in safe, doors ajar and stuffed
with disorganized and falling paper files. The customers
crowding the window at our arrival, slipped away gradually
and -- interpreting this as a signal -- we cut our visit
short. The managers intimidated they had little control
over lending policies, which were determined at the
Ministry in Baghdad. Neither were they apparently forward-
leaning in stimulating new business opportunities.
Antiquated and poorly maintained infrastructure plagues the
province from water plants to electricity grids, the
agricultural and irrigation networks are mostly likely face
similar straits. The question is whether an injection of
new funds and flexible lending guidelines could infuse this
institution with sufficient vitality to shed its leaden
atmosphere of former Soviet Union decrepitud
SATTERFIELD