Identifier
Created
Classification
Origin
06BAGHDAD4690
2006-12-24 11:56:00
CONFIDENTIAL
Embassy Baghdad
Cable title:  

ARAB LEAGUE BOYCOTT AND IRAQ

Tags:  ECON EINV KBCT PGOV PREL IZ 
pdf how-to read a cable
VZCZCXRO3297
RR RUEHBC RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #4690/01 3581156
ZNY CCCCC ZZH
R 241156Z DEC 06
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 8696
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RHEHAAA/WHITE HOUSE WASHINGTON DC//NSC//
RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 004690 

SIPDIS

SIPDIS

PLEASE PASS TO USTR

E.O. 12958: DECL: 12/19/2016
TAGS: ECON EINV KBCT PGOV PREL IZ
SUBJECT: ARAB LEAGUE BOYCOTT AND IRAQ

REF: A) BAGHDAD 2080 B) BAGHDAD 2150 C) BAGHDAD 2383
D) USDOC 6445 E) BAGHDAD 4147 F) BAGHDAD
4067 G) BAGHDAD 1921 H) BAGHDAD 4115 I)
BAGHDAD 3303 J) BAGHDAD SBU O-I:11/25/05 K)
BAGHDAD 3979

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

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 004690

SIPDIS

SIPDIS

PLEASE PASS TO USTR

E.O. 12958: DECL: 12/19/2016
TAGS: ECON EINV KBCT PGOV PREL IZ
SUBJECT: ARAB LEAGUE BOYCOTT AND IRAQ

REF: A) BAGHDAD 2080 B) BAGHDAD 2150 C) BAGHDAD 2383
D) USDOC 6445 E) BAGHDAD 4147 F) BAGHDAD
4067 G) BAGHDAD 1921 H) BAGHDAD 4115 I)
BAGHDAD 3303 J) BAGHDAD SBU O-I:11/25/05 K)
BAGHDAD 3979

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


1. (SBU) Action request, see para 11.


2. (C) Summary. Post has been working actively to engage the
GOI on enforcement of the Arab League Boycott (ALB),since
Iraq's status was changed to "under review" in June 2006.
Post has discussed with the GOI the particular problems four
U.S. companies (Pepsi, ABRO, Eli Lilly, and Wyeth
Pharmaceuticals) face in doing or trying to do business in
Iraq because of GOI official requests for assurances that the
firms are complying with the ALB restrictions on trade with
Israel. Because of the precarious political and security
situation in Iraq and based on conversations with GOI
officials, Post believes that these issues can be resolved on
a case-by-case basis. Public steps, such as Treasury listing
Iraq in the Federal Register, in accordance with Section
999(a)(3) of the International Revenue Code of 1986, or
naming Iraq in USTR's annual National Trade Estimate (NTE)
report will prove counterproductive when such listings hurl
the issue into the political arena here. Post strongly
believes that continued quiet diplomacy, focusing on
individual cases, is the best approach to help U.S. firms do
business. Post requests information on all cases brought to
the attention of Washington agencies, so that we can seek
resolution through appropriate GOI officials. End summary.

--------------
REVIEW OF PAST ENGAGEMENT WITH THE GOI ON ALB
--------------


3. (C) Post has vigorously protested to high-level GOI
officials' enforcement of the ALB on more than a dozen
occasions since the new government formed in May 2006. The
Ambassador raised the issue of GOI enforcement of the ALB
involving U.S. companies (Pepsi, ABRO, Eli Lilly and Wyeth

Pharmaceuticals) with Prime Minister Maliki in June (ref A).
Further, the Economic Minister-Counselor raised the ALB issue
with Deputy Prime Minister (DPM) for Economic Affairs Barham
Salih in June 2006. DPM Salih said that the GOI would review
the broad issue of ALB enforcement on a case-by-case basis
(ref B). During his visit in July 2006, Commerce Secretary
Gutierrez also raised the problems created by the ALB with
DPM Salih, as well as with the Minister of Industry and
Minerals (Fawzi Hariri) and Minister of Trade (Abd al-Falah
al-Soudani).


4. (C) While the Ministry of Trade does not enforce ALB in
its company registration process, Post raised the ALB
problems with Minister al-Soudani to gain support from him on
this issue. In a meeting July 2006, he said he is "ready to
assist" to solve the issue, but that he cannot go it alone.
He understood that enforcement of the ALB is a big deterrent
for foreign investors. Al-Soudani, however, was reluctant to
play a lead role on what is potentially a politically charged
issue (ref C). Commerce Secretary Gutierrez also pressed
this issue with al-Soudani later in July 2006. Other
officials in the Department of Commerce also raised ALB with
al-Soudani again in November 2006. The Minister reconfirmed
that the MoT does not include ALB language in its
registration procedures or enforce the ALB. He also agreed
to raise the ALB issue with Deputy Prime Minister Barham
Salih (ref D).


5. (C) In a November 2, 2006 meeting, when Deputy Economic
Minister raised the problem, Deputy Minister of Industry and
Minerals (MIM) Dr. Sami Araji said that he requested that the
Deputy Prime Minister's Ministerial Economic Committee
resolve the issue (ref E). He said that the GOI is fully
aware of the seriousness of the problem and the negative
impact on potential U.S. investment.


6. (C) On October 29, Post met with Dr. Yassin, the Director
General (DG) of Kimadia (the procurement arm for the Ministry
of Health),regarding the problems of two U.S. pharmaceutical
companies, Eli Lilly and Wyeth Pharmaceuticals. These two
companies were barred from tenders by Kimadia, because they
do business with Israel. When pressed on the issue, Dr.
Yassin said that he was open to removing this requirement,
but suggested that U.S. companies could also "donate" medical
equipment and other supplies to Iraq (ref F). (Dr. Yassin
was "dismissed" by the Minister of Health October 30 and

BAGHDAD 00004690 002 OF 002


replaced with a Sadrist DG, Dr. Ammar).


7. (C) Post pressed the ALB issue with the Ministry of
Foreign Affairs on at least three different occasions in the
last six months. Post raised ALB with Foreign Minister
Hoshyiar Zebari in May 2006 after the new government formed
(ref G). The Minister noted that the question is very
sensitive and that "we need to find a politically clever way
to handle this issue." In a November 2006 meeting, Deputy
Foreign Minister Labeed Abbawi said that letters to the MFA
received from the Central Boycott Office (CBO) in Damascus
are "ridiculous" and that the GOI does not take much interest
in them (ref H). Deputy Foreign Minister Mohammed Hamoud
Bidan also told us that the Boycott Office within the
Ministry of Foreign Affairs is "dead of activity" (ref I).

--------------
PROGRESS MADE
--------------


8. (SBU) Patience has brought success in the past. In 2005,
the Ministry of Oil resolved an ALB enforcement problem with
General Electric and a supply contract. Although the
Ministry of Oil initially insisted on including ALB language
in the contract, the ministry later agreed to remove the
language (ref J).


9. (C) During the debate on the investment law on the floor
of the Council of Representatives (CoR) in October 2006, some
members proposed adding language prohibiting investment from
"an enemy state" (a characterization of Israel by a few Shia
members of the CoR) (ref K). Post quietly engaged the CoR
economic leadership as well as other members who understand
U.S. concerns and the problematic language was dropped.

--------------
WAY FORWARD
--------------


10. (C) Post strongly believes that continuing our quiet
diplomacy will be the most effective way to remove ALB
related roadblocks to U.S. firms here. We do have allies and
need to avoid public actions that will make it more difficult
for them to cooperate without losing sight of our goal of
Iraq's formal withdraw from the ALB at an appropriate time.
In a December 13 meeting, DPM Salih's Chief of Staff asked
Acting Economic Minister Counselor to bring to his attention
the particulars of ALB related problems. We requested copies
of offending documents such as copies of the certifications
that U.S. companies were asked to sign at the Ministry of
Industry and Minerals Trademark Office or similar documents
demanded by the Ministry of Health/Kimadia. DPM Salih's
Chief of Staff noted that the issue was politically sensitive
and that ministers would be reluctant to seek a formal
solution. He emphasized that if the issue is made a public
political issue, it would be counterproductive to resolving
particular cases of ALB enforcement.


11. (SBU) Action request: In order to provide the
information requested by the DPM's Office, Post requests that
Washington agencies, including the Department of Commerce's
(DOC's) Office of Anti-Boycott Compliance, provide us with
the list of twenty-two additional companies that have
contacted the DOC regarding ALB enforcement complaints and
provide details in appropriate form for us to share with GOI
officials regarding the specific issues and the ministries
involved. Post also recommends that we use the U.S.-Iraq
Business Dialogue as an additional opportunity for gaining
Iraqi allies in our effort to ensure that the ALB is not a
barrier to the growth of trade and investment in Iraq by U.S.
firms.
KHALILZAD