DESCRIPTION OF INTERNATIONAL COMPACT AGREED UPON

UNCLAS SECTION 01 OF 03 BAGHDAD 002350 SIPDIS SENSITIVE SIPDIS NSC FOR HADLEY, TREASURY FOR RKIMMITT E.O. 12958: N/A TAGS: ECON EAID EINV PGOV PREL IZ SUBJECT: DESCRIPTION OF INTERNATIONAL COMPACT AGREED UPON IN BAGHDAD (SBU) On July 4, the following description of the International Compact was agreed upon in Baghdad by the GOI (DPM Barham Salih),the UN (Special Representative of the Secretary-General Ashraf Qazi),and Embassy Baghdad for use SIPDIS with the invitations to the Compact launch event to take place later this month (date TBD). BEGIN TEXT -------------- The International Compact for Iraq: A Shared Vision, A Shared Commitment -------------- The International Compact is an initiative of the Government of Iraq for a new partnership with the international community. Its purpose is to achieve a National Vision for Iraq which aims to consolidate peace and pursue political, economic and social development over the next five years. The primary focus will be to build a framework for Iraq's economic transformation and integration into the regional and global economy. However, it is recognized that good governance and resolution of security and political challenges are pre-requisites for progress in all other areas, including economic revival and normalization. The Compact will aim to build on the achievements of the Iraqi people and Government as envisaged by Security Council Resolution 1546, including the holding of two national elections; the drafting and adoption - through a national referendum - of a permanent constitution; the convening of the elected Council of Representatives and formation of a government of national unity. Through the Compact the Government and the international community will be committed to achieving a range of policy objectives in support of the National Vision. Similarly, the Compact will take account of several initiatives and measures for enhancing security and economic revival, chiefly the National Reconciliation Plan. -------------- A Commitment to the Strategies, Plans and Investments That Will Realize This Vision -------------- The Compact will be based on a shared commitment to the National Vision for Iraq and to the national objectives that support it. With respect to socio-economic development these objectives will be achieved through implementation of Iraq's National Development Strategy. Therefore, the Compact will also be based on shared commitment to iterative and consultative development and implementation of the National Development Strategy, to underlying sector-by-sector strategies, and to the action and investment plans that will be defined by these strategies. -------------- A Mechanism to Ensure These Commitments Are Met -------------- The Compact will be implemented via a consultative group process, around a commonly understood fiscal framework against which substantive commitments will be made. As part of this process, progress will be measured in terms of achievement of key strategic benchmarks. A follow-up mechanism will also be devised to coordinate pledges, trust funds and disbursement of capital in support of the Compact. In particular, existing pledges from the Madrid Conference and the IRFFI will require consideration. The Government of Iraq is supportive of IRFFI being refocused to augment the Compact. This mechanism should draw on lessons learned from the experience of creating and operating the IRFFI. A central principle is that where possible, assistance should be channeled through the Government budget. The private sector's potential contribution to Iraq's development needs should also be considered. -------------- BAGHDAD 00002350 002 OF 003 International and Regional Partnership -------------- The Government recognizes the importance of regional relationships in support of Iraq's development. Regional cooperation must therefore underpin the international partnership that will be formed by the Compact. -------------- Scope -------------- The scope of the Compact would be to achieve both near- and long-term economic goals. These will address immediate needs, but also, through a process of meeting commitments to reform and restructuring, move Iraq along an evolutionary path away from aid receipt to financial self-sufficiency, economic development and growth. The scope of the Compact will also, necessarily, need to consider links with Iraq's security and political challenges. In particular the significant fiscal implications of the security issue will need to be considered within the context of Iraq's economic development. Initiatives to address near and long term economic goals would be underpinned by a fiscal framework covering the full program period, likely to span 5 years - equivalent to the electoral mandate period of the current government. -------------- Linked to Political and Security Considerations -------------- This partnership will be based on a shared recognition that repairing the social fabric of Iraq will be essential for success. This will depend on good governance, improving security environment and the provision of basic services; strengthening dialogue, reconciliation and inclusiveness; the development of national and local political, social and civil society institutions; and effective human rights protection and rule of law systems that are in accordance with international norms. Collectively they represent the sine qua non for sustainable progress towards realizing the objectives of the Compact. Consequently, periodic coordination meetings will be held to monitor progress in the political and security situation and to formulate supporting programs in these critical areas. -------------- Multilateral Support -------------- The United Nations will play a central and impartial role in coordinating and monitoring implementation of the Compact agenda. In conjunction with the World Bank it will provide Iraq with expert assistance in formulating its objectives drawing, in particular, on the Millennium Development Goals. The result will be a joint plan to support the efforts of the Government to achieve internationally supported goals. The Compact is intended to be a statement of strong regional and international support for the political and economic vision of the elected government of Iraq underscored by specific financial commitments. Accordingly, the pledging of assistance for the reconstruction and development plans of the Iraqi government would be welcomed as an important support for meeting agreed and measurable benchmarks for the disbursement of assistance. -------------- Formulation of the Compact -------------- The completed Compact document would be presented by the Government of Iraq at a high-level event in Iraq or the region by NLT than November 2006. In September, ministerial meetings should be convened during the UNGA in New York and the IMF-WB annual meeting in Singapore to report progress on the compact and mobilize support for it. At this time, the strategies, action and investment plans will be presented. These will be implemented and further BAGHDAD 00002350 003 OF 003 developed via an iterative process spanning the planning period of the Compact to 2011. Formulation of the Compact will take place around comprehensive national consultations to assess needs and pathways at Governorate and National levels. Similarly, planning will be based on current and projected capacity at all levels of government. In this capacity, the UN been invited to co-chair a Preparatory Group. In addition, the World Bank, which is planning to strengthen its presence in Baghdad, will act as a counterpart to assist and support the government to successfully develop a fiscal framework based on the Compact. The Bank will also work closely with the UN in supporting the Iraqi Government to formulate the National Vision for Iraq. -------------- Preparatory Group -------------- A Preparatory Group will provide strategic advice and engender high level political support to the Compact. The Preparatory Group would negotiate an executive timetable and assume responsibility for the Compact preparations including support to the Government of Iraq in development of action and investment plans and commitments that it would make through the Compact. It will also advise the Government of Iraq on follow-up mechanisms, as invited. The Preparatory Group would be co-chaired by the Government of Iraq and the UN, substantively supported by the World Bank and UNDP, closely coordinated with the IMF and other international financial institutions. It will report directly to the Deputy Prime Minister of Iraq and the Deputy Secretary-General of the United Nations. SIPDIS Membership of the Preparatory Group should, as far as possible, adhere to a principle of "wide but restricted" participation to maintain a balance between inclusiveness and operational efficiency. Accordingly, it would initially be open to significant contributors to Iraq's development and technical partners, namely: UN, World Bank, IMF, EC, Arab Development Fund, Islamic Development Bank, France, Germany, Italy, Japan, Kuwait, Saudi Arabia, South Korea, Spain, UAE, UK, and US. In addition, the Preparatory Group would invite the IRFFI Chair to participate in order to ensure proper coordination between the Compact and IRFFI trust funds. The Co-Chairs will designate a small steering group to assist the Preparatory Group in establishing a timetable, guiding negotiations and overseeing implementation, including the role of monitoring and evaluation against benchmarks once the Compact is launched. Further membership of the Preparatory Group would be determined by due consultation. END TEXT. Khalilzad