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. -------------- Payment Due -------------- 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. -------------- -------------- What is Good for Business is Good for Iraq -------------- -------------- ¶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.) -------------- Others in the Same Boat -------------- ¶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. -------------- Comment -------------- 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