INITIAL MEETING WITH THE MINISTER OF HOUSING AND

UNCLAS BAGHDAD 002141 SIPDIS SIPDIS E.O. 12958: N/A TAGS: ECON EIND ELTN EPET IZ SUBJECT: INITIAL MEETING WITH THE MINISTER OF HOUSING AND CONSTRUCTION ¶1. (SBU) SUMMARY: In a June 20 introductory meeting with Deputy EconCouns, IRMO Senior Consultant for Transportation and the Gulf Regional Division (GRD) Commander, the new Minister of Housing and Construction (MOCH) Bayan Dazai expressed her gratitude for U.S. assistance in the reconstruction of Iraq, but lamented there is still much work to be done. She was receptive to working closely with the USG on housing, housing finance, privatization, and anti-corruption, as well as construction projects and capacity development, within her Ministry. END SUMMARY -------------- Much Work Still to be Done -------------- ¶2. (SBU) The Minister recounted her shock, when she arrived from Irbil to assume her new position, at the lack of development outside of the Kurdish Region. As she stated &Baghdad is still living in the seventeenth century.8 Minister Dazai repeated several times that &so much work has to be done.8 ¶3. (SBU) The Minister asked about the progress status of the Project Partnership Agreement contracts. Of the $75M for the five bridge and three road USG contracts under this program, the MOCH has to front typically 5-10 percent of the individual project costs to cover mobilization and initial construction, though the USG reimbursed the MOCH up to a set amount. In a meeting on May 12, the MOCH issued warnings to contractors onseveral of these projects to fulfill their contractual obligations. The GRD Commander mentioned that the Baghdad-Kirkuk 2nd Carriageway (North) project was only two-four percent complete due to previous issues with the contractor. They included currency conversion problems, current security threats, and the lack of supply, low quality, and price increases of bitumen and fuel that caused the fixed price contract to become unprofitable. We note that the supply problem is caused by limited production capacity, maintenance, infrastructure (pipeline) sabotage. The supply problem experienced by contractors on these USG-funded efforts is compounded by the fact that the State Commission for Roads and Bridges (SCRB) did not place these projects on their master plan which provides projects priority procurement of materials at subsidized prices. We have been working with the SCRB, MOCH, and Ministry of Oil to resolve this issue. ¶4. (SBU) The Minister affirmed the poor quality of bitumen �A;produced in Iraq and stated she wants to import better quality bitumen. The GRD Commander asked Minister Dazai to tell the Minister of Oil how important raising the standards of crude oil production is to the economic development of Iraq (bitumen is a often used interchangeably with &asphalt8 and &tar8 and is made from the residue left when refining crude oil.) ¶5. (U) The Minister also pointed out that in her previous position as Deputy MOCH in the Kurdish Regional Government, she was able to sign contracts to import anything her Ministry needed, whereas in the Central Government of Iraq, she must obtain approval. ¶6. (SBU) The GRD Commander noted the USG programs were never designed to &finish everything8, but to start reconstruction projects, and we have made significant progress in a lot of areas. The Commander invited the Minister to the ribbon cutting ceremony of the Afras Water Treatment plant in Irbil in July. The Minister responded positively regarding the ceremony, but commented on the poor water quality in Baghdad compared to the Kurdish region. -------------- -- Minister Will be a Champion for Economic Reform -------------- -- ¶7. (SBU) We told the Minister we work closely with Deputy Prime Minister Barham Salih, the World Bank, International Monetary Fund, United Nations and foreign investors to assist Iraq with making necessary fundamental economic reforms. We mentioned the Econ Counselor spearheads the Embassy,s anti-corruption efforts and asked to schedule a follow-up meeting to discuss anti-corruption, privatization, housing and housing finance, and other policy reform priorities. The Minister responded we were welcome to meet again at any time. The Minister also positively responded to arranging follow-up meetings to discuss project progress and available USG assistance. ¶8. (SBU) As Embassy representatives have done in all introductory meetings with new Ministers, the IRMO Senior Consultant for Transportation presented an Embassy-produced Ministerial Transition briefing book to the Minister highlighting USG assistance in strategic planning, management training, technical assistance, public outreach, and identifying budget requirements. -------------- Comment -------------- ¶9. (SBU) The MOCH Minister told EconOffs in a later conversation that she never wanted to be the GOI Minister of Construction and Housing, but that she was selected by Barzani. The Minister encourages cooperation with the USG and seems to be a champion for promoting private sector development. We have requested for the Minister,s CV; once received we will forward to the Department. SPECKHARD