AMBASSADOR MEETS ALI BABAN, NEW MINISTER OF

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 001972

SIPDIS

SIPDIS

E.O. 12958: DECL: 06/10/2016
TAGS: EAID ECON EINV ELAB PREL PGOV
SUBJECT: AMBASSADOR MEETS ALI BABAN, NEW MINISTER OF
PLANNING AND DEVELOPMENT

Classified By: Ambassador Zalmay Khalilzad for reasons 1.4 (b) and (d)


1. (C) SUMMARY: Ali Baban, the new Minister of Planning, paid
an introductory call to Ambassador on May 27. Baban
discussed donor assistance, creating jobs through
micro-finance and business development, and attracting
foreign investment. He also introduced new ideas for an
Office of International Cooperation to coordinate donor
assistance efforts and for an Investment Management Office.
Baban welcomed USG assistance and the opportunity to work
with an Embassy team on these issues. Ambassador stressed
the need for a strong legal regime to promote investment and
job creation, as well as USG interest in Iraq presenting a
comprehensive development plan to the international community
as part of the Compact for Iraq. END SUMMARY.

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DEVELOPING THE PRIVATE SECTOR AND
ATTRACTING FOREIGN INVESTMENT
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2. (C) In his introductory call on the Ambassador, Minister
Baban was critical of the effectiveness of some USG
assistance but also expressed views concurrent with our own
on next steps. Baban emphasized his "main concern" of giving
the Iraqi people hope, particularly job-seeking youths. He
criticized that U.S. assistance is not being seen by many
Iraqis and that he wants to publicize assistance to make it
more effective. Baban argued that the high unemployment rate
(30-40 percent) has a negative effect on the security
situation. To help remedy this, Baban said he would like to
see micro-finance institutions active in every province --
dispensing $5,000 to $10,000 in capital to those interested
in starting businesses. Minister Baban added that creating
training or vocational centers also would be important for
new job seekers. Ambassador emphasized the need to create a
strong legal regime for investment as a step toward job
creation.


3. (C) Ambassador listed funding that is available ($35
million from USAID and $40 million from IRMO) to provide
assistance to small and medium-sized businesses (SMEs). He
also offered assistance from a group of Embassy
representatives to participate in a working group to set
goals and timelines for creation of laws to support private
sector development (including foreign investment). Although
Minister Baban welcomed assistance from this team, he also
showed some hesitancy in remarking that "small steps" rather
than "big laws" are needed. Minister Baban added that he
plans to create an Investment Management Office within the
Ministry of Planning and Development to facilitate
legislative efforts and ideas. (NOTE: Minister Baban seemed
unaware of the Ministry of Planning's prior initiatives, such
as Former Minister Saleh's effort to create an Iraqi
Investment Promotion Agency (an inter-ministerial effort to
centralize investment promotion efforts). END NOTE.)

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MINISTER REACTS TO COMPACT
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4. (C) Ambassador raised the issue of the International
Compact and expressed hope that Iraq will be prepared to
present its development plan to the international community
prior to the launch of the Compact in the fall. He urged the
GOI to forge an agreement with Gulf states to reduce Iraq's
debt and work on repatriations. Ambassador mentioned his own
recent trip to Qatar, during which the Emir raised the idea
of gaining support from the Gulf Cooperation Council (GCC)
countries for an Iraq Development Bank with approximately $4
billion in capital. Ambassador added that the UAE now
appears prepared to help Iraq.


5. (C) In response, Minister Baban mentioned his plans to
appoint an experienced Deputy Minister to head a special
Office of International Cooperation. The Deputy Minister,
Baban explained, would play a strong role in coordinating the
GOI's approach toward donor assistance. Baban noted that it
is important for Iraqis to "feel" the aid that Iraq is
receiving and to see results. He also said it is important
for Iraqis to hear that USG assistance will not stop, which
he believes will give Iraqis more confidence in the Iraqi
economy.

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COSIT - BETTER STATISTICS NEEDED!
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6. (C) Noting that he understands the political implications
of inaccurate data, Baban raised the importance of developing

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the capacity of the Central Office of Statistics and
Information Technology (COSIT) and the need for an accurate
census. Baban said he discussed these issues in a meeting
with the Director of COSIT.

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COMMENTS
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7. (C) COMMENT: Because the meeting took place so soon after
Baban's appointment as minister, we are not surprised that he
did not discuss specific appointees or in-depth changes in
the Ministry (aside from his idea for appointing a Deputy
Minister for International Cooperation). However, Baban's
lack of awareness about important work on investment
promotion that occurred during DPM Saleh's tenure at the
Ministry means that we have a lot of work ahead of us. We
intend to use Minister Baban's welcome of additional
ministerial assistance and capacity building to bring him up
to speed on various initiatives, particularly on economic
reform. Under the wrong leadership, the Ministry could be a
tool of state economic control; however, previous Planning
Minister Saleh was greatly helpful in overcoming cabinet
resistance to necessary change on many reform issues.


8. (C) COMMENT CONT'D: Moreover, the Ministry's role as the
primary source of basic statistical information for the GOI
means that it provides a critical resource to measure the
impact of social and economic measures. Finally, the
Ministry's probable role as the coordinator of the Iraqi
response to the International Compact will put it in a key
position vis-a-vis the international donor community. Our
work to build capacity in the ministry thus will be all the
more important as we seek to have the Iraqis articulate their
own vision for future economic development and put their own
commitments on the table opposite those of the international
community.
KHALILZAD