MEETING WITH LOCAL IRAQI BUSINESSMEN

C O N F I D E N T I A L BAGHDAD 003465

SIPDIS

SIPDIS

E.O. 12958: DECL: 09/13/2016
TAGS: EAGR ECON EINV IZ
SUBJECT: MEETING WITH LOCAL IRAQI BUSINESSMEN

Classified By: Charge Daniel V Speckhard for reasons 1.4 (b) and (e).

1.(C) Summary. On September 6, Econoff and IRMO met with
local Iraqi businessmen who have contracted with the GOI to
provide foodstuffs for the Public Distribution System. They
complained that the GOI had not paid them for the items
delivered and that the GOI's policies and procedures delay
ships in the harbor and then delay payment, making it
extremely difficult to conduct business. They warned that if
the GOI continues in this manner, it will have a difficult
time finding legitimate international partners with whom to
do business. They also provided a copy of recommendations
they presented to the Minister of Trade Abd-Falah al-Sudani
on August 15. The businessmen warned that unless conditions
improve quickly, they may decide to invest elsewhere. End
Summary.

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Payment Due
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2.(C) On September 6, IRMO senior consultant and Econoff met
with several Iraqi businessmen who had requested a meeting to
discuss problems they were having with the GOI on the
execution of contracts related to the Public Distribution
System (PDS). Mr. Mohammed Hassoun Taha of the Mezzan Iraq
Company has been in private business in Iraq and the Gulf
area since 1968. He very energetically described his
difficulty getting paid by the Ministry of Trade (MoT) for a
delivery of 60 million USD of sugar to the GOI, despite a
direct order for payment from the Minister to his staff. The
MoT had also recently requested that Mr. Taha also deliver
(within 48 hours) 40 million USD worth of edible oil. Mr.
Taha was incredulous that the GOI officials would ask for a
delivery of a large quantity of foodstuffs in such a short
time. He attributes these problems to a total lack of
understanding of business and shipping practices by the MoT.

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What is Good for Business is Good for Iraq
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3. (SBU) According to Mr. Taha, his company provides top
quality products to the GOI, as evidenced by independent
testing results. He bemoaned the corruption in the country
that results in stolen foodstuffs being re-sold to the GOI.
Mr. Taha is a member of a local think-tank, the Iraq
Institute for Economic Reform. The Institute recently
presented to the MoT recommendations for reform, including
prompt payment for goods purchased, provision of adequate
storage and warehousing facilities, compliance with
provisions of contracts, and improved and streamlined
inspection procedures - all sound policies the USG has
encouraged the GOI to adopt. Mr. Taha said he wants to
invest further in Iraq, but that if current business
conditions do not improve, he will take his investment
elsewhere. (Note: He made no mention of security issues.
End Note.)

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Others in the Same Boat
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4. (SBU) Later in the meeting, Mr. Taha was joined by other
businessmen who had similar complaints. One had a shipment
of rice being held up in the port because, according to the
businessman, the GOI changed the requirement after the
contract was executed and does not now want to accept the
rice, but will not release the ship either. They all agreed
with Mr. Taha about the general problems of doing business
with the GOI. The IRMO officer commented that in his
meetings with the Minister of Trade, the Minister himself has
often complained about the inefficiencies and other problems
of conducting business in Iraq.

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Comment
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5.(C) Comment. IRMO in its frequent working meetings with
the MoT has often made suggestions similar to those outlined
by the group. Post agrees with the businessmen that if the
GOI continues in this manner, it will find it harder and
harder to trade with legitimate international partners. We
will continue to press senior government officials on the
urgent need for reform. End Comment.

SPECKHARD