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. -------------- Rushed And In Flux -------------- ¶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.) -------------- 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. -------------- - 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 BAGHDAD 00004746 002 OF 002 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." -------------- Comment -------------- ¶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