Identifier
Created
Classification
Origin
06BAGHDAD724
2006-03-07 13:22:00
UNCLASSIFIED
Embassy Baghdad
Cable title:  

PST BAGHDAD: ECONOMIC DEVELOPMENT ACTIVITIES

Tags:  PGOV ECON EINV EAID IZ IR KS KU CH 
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VZCZCXRO0791
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK RUEHMOS
DE RUEHGB #0724/01 0661322
ZNR UUUUU ZZH
R 071322Z MAR 06
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 3122
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RHMFISS/HQ USCENTCOM MACDILL AFB FL
RUCNRAQ/IRAQ COLLECTIVE
UNCLAS SECTION 01 OF 02 BAGHDAD 000724 

SIPDIS

SIPDIS

STATE FOR NEA-I/ECON

E.O. 12958: N/A
TAGS: PGOV ECON EINV EAID IZ IR KS KU CH
SUBJECT: PST BAGHDAD: ECONOMIC DEVELOPMENT ACTIVITIES
IN BAGHDAD PROVINCE

UNCLAS SECTION 01 OF 02 BAGHDAD 000724

SIPDIS

SIPDIS

STATE FOR NEA-I/ECON

E.O. 12958: N/A
TAGS: PGOV ECON EINV EAID IZ IR KS KU CH
SUBJECT: PST BAGHDAD: ECONOMIC DEVELOPMENT ACTIVITIES
IN BAGHDAD PROVINCE


1. INTRODUCTION: This cable is the first of many
cables that Provincial Support Team - Baghdad (PST-B)
will produce during the remainder of 2006. Cables
from PST-B will focus on economic, political, and rule
of law issues concerning Baghdad Province.


2. INTRODUCTION CONT'D: Despite a largely non-
permissive environment within Baghdad Province, the
Baghdad Provincial Governorate has unilaterally moved
to jumpstart economic development and reconstruction
within the province. Evidence is apparent with recent
overtures made to foreign governments as well as
interest by foreign companies who see Baghdad as a
potentially profitable location despite its security
risks. The following are examples of attempts by the
Baghdad Provincial Council (PC) to improve the
economic condition of the Province. END INTRODUCTION.


3. IRAN. Baghdad Province is negotiating with the
Islamic Republic of Iran a substantial loan for
infrastructure and economic development. The long-
term loan, just shy of $1.0 billion, may be issued at
a subsidized rate of interest. (NOTE: We have yet to
find out the exact terms of the loan. END NOTE.)


4. Elements of the PC and the Amanat (City Hall) have
negotiated with Iranian companies to implement water,
sewage, road, and asphalt projects within Baghdad
province. Two notable Iranian companies, ARSA
Construction Corporation and the Al-Asfahan Company
(phonetic),have been the most proactive in
negotiating with the province in an effort to break
into the reconstruction/development sector. Some PC
members believe there is an advantage to entering into
contracts with Iran because of its proximity and the
"shared infrastructure" network.


5. KOREA. The ROK is actively nurturing its contacts
with the Provincial Government to strengthen political
and economic ties. One of South Korea's military
representatives in Baghdad intends to bring a number
of PC members to Seoul to meet with Korean commercial
interests to discuss the potential of opening the

Baghdad commercial market to Korean goods and
services. Additionally, they hope to facilitate an
entree into the reconstruction and development sector
in Baghdad by South Korean companies.


6. The ROK is considering providing $5.0 million to
the PC for development projects. While we do not know
the terms of the prospective grant/loan, it would
likely provide a substantial boost to the PC's
development coffers. At least one PC member has
implied that this funding would be used to build a
street light network utilizing solar power to run the
system. The network would be added to areas currently
at risk and would allow Baghdad municipal workers to
clean streets in the evenings when there is less
vehicular traffic.


7. EGYPT, LEBANON. The PC would like to develop
trade/economic relationships with Egypt and Lebanon.
According to the Chairman of the PC's Reconstruction
and Development committee, Egypt and Lebanon are seen
as neutral countries that are not historical enemies
of Iraq and that have a number of companies in a good
position to enter the Baghdad market.


8. CHINA. In late fall 2005, former PC Chairman
Mazin Makiya traveled to Beijing and helped negotiate
a contract with the Zhongzing Telecommunications
Equipment (ZTE) Company, Ltd., one of China's largest
telecommunications companies. The Iraqi company
Baghdad Connection has the contract with ZTE to
provide wireless phone service within Baghdad
province. Fulfillment of the contract is being
delayed by red tape at the Ministry of Communications
over the issuance of code numbers needed to receive a
signal when making telephone calls. The contract has
the potential to generate jobs for many Iraqi
nationals, something sorely needed in Baghdad.


9. KUWAIT. The Kuwaiti Government plans to provide
the Amanat a loan of $30 million for infrastructure
and development projects in the province.
Additionally, the Kuwaiti Government has expressed a
desire to connect some of it companies with

BAGHDAD 00000724 002 OF 002


representatives from Baghdad Province to discuss
potential joint ventures and other business
opportunities.

--------------
COMMENT
--------------


10. COMMENT: Although foreign investment and
development assistance in Baghdad is not flooding into
the province, a fair number of private investors and
donor countries are willing to explore business
development and reconstruction opportunities despite
the security challenges. This trend potentially bodes
well for Baghdad province and may, in the long-term,
generate benefits for the foreign companies initiating
business early. Western business interests are
noticeably absent from the list of companies willing
to explore business development in the province. This
is likely attributable to the high profile such
companies would have if they established themselves in
Baghdad.


11. COMMENT, CONT'D: The real benefactors of
business development and reconstruction by foreign
interests would clearly be the people of Baghdad. New
development and reconstruction contracts and the
infusion of foreign capital would create jobs and
bring in sorely needed capital. This development
would reduce the monetary appeal of supporting the
insurgency, as the formerly unemployed would
presumably have a greater desire to work for the
betterment of the city, the province, the region, and
the country. END COMMENT.

KHALILZAD