IRAQ: IMPLEMENTATION OF ARAB LEAGUE BOYCOTT

C O N F I D E N T I A L BAGHDAD 001568 SIPDIS SIPDIS STATE PASS TO NEA, EB, L, TREASURY, COMMERCE/BIS/OAC, AND USTR E.O. 12958: DECL: 05/11/2016 TAGS: KBCT EINV ECON PGOV PREL ABLD IZ SUBJECT: IRAQ: IMPLEMENTATION OF ARAB LEAGUE BOYCOTT STATUTES REF: A. SECSTATE 66895 B. BAGHDAD CLASSIFIED O-I: 4/5/2006 C. BAGHDAD SBU O-I: 4/25/2006 D. BAGHDAD SBU O-I: 11/28/2005 E. BAGHDAD CLASSIFIED O-I: 1/26/06 F. 2006 BAGHDAD 765 ¶G. 2005 BAGHDAD 3411 H. BAGHDAD CLASSIFIED O-I: 1/24/06 Classified By: Deputy Chief of Mission David M. Satterfield for reasons 1.4 (b) and (d) ¶1. (C) Summary. In response to the Department's request for information regarding Iraq's practices to harmonize implementation of U.S. laws (ref A),Post provides the following summary of previous reporting on the Arab League Boycott (ALB). Although Iraq's enforcement of the ALB is inconsistent and ad hoc, Iraq does have an Arab League Boycott Office in the Ministry of Foreign Affairs and a boycott law from 1956 that remains on the books. Post will engage the incoming government regarding this issue. End summary. -------------- PARTICIPATION/COOPERATION WITH THE ALB -------------- ¶2. (C) Ref A asked Post to determine whether Iraq requires participation in or cooperation with the ALB or other international boycotts. We determined that there has been sporadic enforcement of the secondary aspects of the ALB by some Iraqi ministries. Most cases have been resolved, but Post is aware of two current unresolved cases. ¶3. (C) Pepsi has been trying to register its trademark since 2003 at the Ministry of Industry's Trademark Office. In November 2005, Pepsi made another follow-up visit to the Trademark Office but was still unable to register its trademark because, despite CPA Order 80's suspension of ALB provisions in Iraq's trademark law, the Trademark Office's procedures ask for an Arab Boycott Declaration. New information (ref B) indicates, however, that the Ministry of Industry and Minerals (MIM) is developing operating instructions for the Trademark Office that omit explicit reference to the Arab League Boycott. MIM plans to present these instructions to the Council of Ministers Economic Committee for a decision shortly. However, given that the government is in a state of transition, it is unclear how long it will take the committee to act once MIM has presented it with the new instructions. ¶4. (SBU) Post recently learned of a second case of secondary enforcement of the ALB (ref C) involving problems that Eli Lilly USA is having with Kimadia, a Ministry of Health (MoH) state-owned enterprise and main drug supplier in Iraq. Kimadia has barred Lilly's participation in a recent $10 million insulin tender because Eli Lilly does business with Israel. Post will raise this issue with the new Minister of Health at the earliest opportunity, once government formation is complete. ¶5. (SBU) General Electric has resolved enforcement problems with the Ministry of Oil relating to one of its supply contracts. Although the Ministry of Oil initially insisted on including ALB language in the contract, it later agreed to remove the language (ref D). In November 2004, the Ministry of Trade published several decisions adding or removing ships to/from an ALB blacklist of ships banned from Iraqi ports because they had docked in Israel. This appeared in the Official Gazette, but Post is unaware of any similar list having been published since 2004. -------------- -------------- STATUS OF SUPPLIERS OR VENDORS COMPLYING WITH ALB -------------- -------------- ¶6. (SBU) Post requested a waiver for 2006 of Section 565 of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 (Public Law 103-236) (ref E, Note: This O-I item is SBU, but was sent with the BAGHDAD Classified O-I on 01/26/06). Section 565 prohibits the Department of State from entering into any contract which expends funds appropriated to the Department of State with a foreign person that complies with the Arab League Boycott of Israel. Post requested this waiver as a precautionary matter, given the unsettled status of ALB implementation in Iraq, to ensure that there is no obstacle to carrying on diplomatic functions of the embassy. -------------- EXISTENCE OF BOYCOTT LAW IN IRAQ -------------- ¶7. (SBU) Post provided the Department with a copy of Iraq's boycott law in April 2005 via e-mail to NEA/I and L. This basic law for ALB implementation in Iraq is officially known as Law No. 34 of 1956 ratifying the Unified Law on the Boycott of Israel Regulations. CPA Orders 39 and 80 effectively repealed ALB provisions in the areas of company registration and trademark registration but did not directly touch upon Law No. 34. -------------- EXISTENCE OF AN ARAB LEAGUE BOYCOTT OFFICE -------------- ¶8. (C) Iraq's Arab League Boycott Office is located in the Ministry of Foreign Affairs (MFA) (ref F). This office employs four or five individuals and is part of the MFA's Arab League Office. The Director of the Arab League Boycott Office is Hikmat Alani. The MFA's Boycott Office is the primary conduit for boycott-related information between the ALB main office in Damascus and other ministries. In a meeting March 2, 2006, Hikmat told EmbOffs that the MFA merely transmits requests for verification from Iraqi ministries to the ALB office in Damascus. Enforcement is left up to the ministries. -------------- -------------- STEPS THE GOI HAS TAKEN TO CORRECT ALB ENFORCEMENT -------------- -------------- ¶9. (C) The GOI has resolved several cases of ALB enforcement, including the removal of ALB language in General Electric's contract (as referenced in para 5). In addition, companies that have business relationships with Israel, including Royal Jordanian Airlines, General Electric, and Caterpillar, do operate in Iraq without legal hindrance. Also, HSBC, which opened branches in Iraq last year, has branches in Israel as well. However, there has been little follow-through in the unresolved trademark issue involving Pepsi, despite at least seven meetings with the GOI on this issue. In one instance, Trade Minister Abd al-Basit Kareem (ref G) noted he would send instructions requesting non-enforcement of the ALB to the Council of Ministers (CoM), but he failed to provide Post a copy of these instructions or to inform the Embassy of the CoM decision on this issue. This issue has been raised by the Ambassador and Deputy Chief of Mission with the highest levels of the GOI during the past year (ref H),but there has been little follow-through on the part of the GOI. Most recently (ref B),as noted in para 3 above, the MIM has taken some steps to draft operating instructions to omit references to the Arab League Boycott. Post plans to keep engaging the GOI on the Pepsi trademark issue, as well as on the newly reported problems that Eli Lilly is having with Kimadia and the Ministry of Health. KHALILZAD