COR ECONOMIC COMMITTEE CHAIR ON 2007 BUDGET

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 004746

SIPDIS

SIPDIS

E.O. 12958: DECL: 12/27/2016
TAGS: ECON EFIN IZ
SUBJECT: COR ECONOMIC COMMITTEE CHAIR ON 2007 BUDGET
PROCESS, LACK OF SERVICES, AND MILITIAS

REF: BAGHDAD 4721

Classified By: Acting Economic Minister-Counselor Edward Kloth for reas
ons 1.4(b) and (d).


1. (C) Summary: In a December 25 meeting with Acting
Economic Minister-Counselor and Treasury Attache, the Chair
of the Economic Committee at the Council of Representatives
Dr. Haider Abadi (Shi'a - Da'wa) discussed the 2007 draft
budget. The executive branch sent the budget to the Council
of Representatives (CoR) over two months late this year, and
the process for the CoR's review and approval of the budget
is still undetermined. Dr. Abadi expressed serious concern
about complaints he heard from people during his recent visit
to the south-central provinces. He also felt strongly that
the GOI must soon address the threats that militias pose to
the democratic government in Iraq. End summary.

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Rushed And In Flux
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2. (C) The Iraqi government does not have much experience
with budget development and analysis, Dr. Abadi said, and the
process is very rushed this year. While the budget was
supposed to have been submitted to the CoR on October 15, the
CoR received it on December 24. The CoR has yet to decide on
the structure of the plenary review of the budget. Dr. Abadi
told Emboffs that he understood that in Britain, the
parliament only discusses the budget for one day, while in
other countries it can take three months. "I think we need a
review process that is somewhere in between those extremes"
he said.


3. (C) The budget will be discussed at the next plenary
session of the CoR, likely on January 7 2007, after the Eid
holiday. While Dr. Abadi will be traveling until then,
members of the Economic Committee will be working on the
budget. (Note: Econ Committee member Dr. Amirah Al Baldawi
followed up with a request for a meeting on December 26. End
note.) The Minister of Finance will present the budget to
members of the United Iraqi Alliance (UIA) on December 27,
Dr. Abadi said. He hopes that the Kurds and members of the
Sunni party Tawafuq will arrange similar meetings, so that
everyone will be prepared to vote on the budget in early
January. He also expects that members will scrutinize the
provincial allocations, including ministries' plans for
spending money on projects in the provinces. (Note: While
CoR members are elected by party lists, not by province, the
various political groupings have geographical roots. End
note.)

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Services or Else...The South Feels Neglected
--------------


4. (C) Recently returned from a short trip to the southern
and central provinces, Dr. Abadi expressed serious concern
that dissatisfaction with the GOI is reaching a tipping
point. He noted many complaints about the lack of basic
services and the resentment that GOI (and by implication,
U.S.) funding is rewarding areas such as Anbar where people
"make trouble." He said that in Najaf people do not
understand why a "supposed" technocrat like the Minister of
Electricity is unable to provide sufficient electricity.
Another problem raised was the shortage of fuel - "they don't
have diesel fuel there," Dr. Abadi said. "My car runs on
diesel, and I had to leave it there because we could not find
fuel."


5. (C) Dr. Abadi said that Basrah, Nasiriyah, and Amarah are
all very neglected. They have the oil, he said, but they are
not getting any benefits. "This is dangerous, because they
could sabotage the oil exports," said Dr. Abadi. He said that
people resent seeing violent areas rewarded with more money.
Even politicians, Dr. Abadi said, were starting to think that
they should encourage, rather than discourage, 'trouble' in
their areas as a way to get attention and funding. Dr. Abadi
also noted that the national budget process was under
pressure from the U.S. military to focus its attention on
Anbar.

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Militias Are More Reliable Than The Government
-------------- -


6. (C) Dr. Abadi was concerned that if the security
situation continues to deteriorate, the people will lose
faith in the government and the terrorists will win.
"Militias," he said, "are delivering more than the
government." He described the Baghdad Security Plan as

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having failed to meet raised expectations, and said that
people are losing confidence in both the Iraqi Police and the
Iraqi Army. Dr. Abadi said that the Prime Minister is very
concerned about the perception that the Mahdi army and other
militias are more reliable than the government in providing
security. "The price of the militia's protection is the loss
of freedom," Dr. Abadi said, "and we did not get rid of
Saddam Hussein just to give up our freedom so soon."

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Comment
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7. (C) As with many politicians and officials in the
Government of Iraq, Dr. Abadi's description of the major
problems facing the country reflects a sectarian perspective.
Dr. Abadi's trip south described here was part of high level
United Iraq Alliance (UIA) meetings about the Sadrist
involvement in the government (reftel). The CoR has not yet
decided on the structure of its review of the 2007 budget.
The process began with the referral of the budget to both the
Economic and Finance Committees. Initial reports indicate
that some CoR members are working informally on the review
even though there has not been a quorum at the CoR for over a
week. As he did when reviewing the investment law earlier
this year, Dr. Abadi asked for USG assistance in analyzing
and understanding the 2007 budget. Post is following up with
other members of the Economic and Financial Committees. End
comment.
SCOBEY