MFA CONFIRMS ITS ROLE IN ENFORCING THE ARAB LEAGUE

C O N F I D E N T I A L SECTION 01 OF 03 BAGHDAD 000765

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/08/2016
TAGS: ECON KBCT PGOV PREL IZ
SUBJECT: MFA CONFIRMS ITS ROLE IN ENFORCING THE ARAB LEAGUE
BOYCOTT

REF: A. 2005 BAGHDAD 4893

B. 2005 BAGHDAD 3132

C. 2005 BAGHDAD 2972

Classified By: Deputy Chief of Mission David M. Satterfield for reasons
1.4 (b) and (d).


1. (U) Please see para 11 for an action request.


2. (C/REL GBR AUS) SUMMARY: On March 2, Emboffs met with
Ministry of Foreign Affairs (MFA) officials, including the
director of the MFA Arab League Boycott (ALB) Office, to
discuss the MFA's role in the enforcement of the boycott in
Iraq. The MFA argued that the continued operation of its
Boycott Office is based on a law passed in 1956 that was
not/not amended or repealed by subsequent CPA orders. We
told the MFA officials that Iraq's continued enforcement of
the ALB will be problematic for acceding to the WTO and
encouraging foreign investment. They are aware of our
concerns but said they view the problem primarily as
political and one that the GOI is not yet ready to address.
Enforcement of the ALB tends to be inconsistent, and large
firms that do business with Israel are operating here.
Nevertheless, even ad hoc enforcement is unacceptable and the
Embassy continues to press the GOI at all levels to stop
enforcing the ALB (reftels). END SUMMARY.


3. (C/REL GBR AUS) On March 2, Econoff and Embassy Legal
Advisor met with Deputy Foreign Minister Hamoud Bidan, Dr.
Srood Najib (Head of the International Organizations and
Multilateral Cooperation Department),and Hikmat Alani
(Director of the Arab League Boycott (ALB) Office within the
MFA). The MFA's Boycott Office employs four to five
individuals and is part of the MFA's Arab League Office.

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Role of the MFA
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4. (C/REL GBR AUS) The MFA's Boycott Office is the primary
conduit for boycott-related information between the ALB main
office in Damascus and other Iraqi ministries. According to
Hikmat, Iraqi ministries are the primary enforcers of the
boycott; the MFA merely transmits requests for verification
from Iraqi ministries to the ALB office in Damascus.
Operationally, Hikat told us it works as follows: Ministries
who have questions as to whether the boycott applies to a
particular company send the name to the MFA, which then asks
Damascus. Once the MFA receives a response from Damascus, it
forwards the response back to the requesting ministry. The
MFA also receives regular blacklist reports from the Damascus
office, but it is unclear how much of that information the
MFA disseminates to Iraqi ministries that have not requested
the information specifically.


5. (C/REL GBR AUS) In response to our point that CPA Orders
repealed certain ALB laws, Hikmat asserted that it is
incumbent upon each ministry to comply with relevant law. If
a ministry asks for boycott-related information, the MFA will
furnish the answers but will not examine the legality of the
ministry's request, Hikmat added. Hikmat noted that, as
recently as the day before, the MFA had transmitted a list of
companies from the Ministry of Industry and Minerals (MIM) to
Damascus for verification on whether certain companies are on
the ALB blacklist.

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Arab League Meetings
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6. (C/REL GBR AUS) The MFA's Boycott Office continues to
send delegates to the biannual ALBB meeting held by the Arab
League (AL) in Damascus. Hikmat said that AL members have
been quite pleased that Iraq continues to attend even after
the end of Saddam Hussein's regime. Hikmat noted that the
MFA and the Ministry of Trade (MoT) each sent two delegates
to the last ALB meeting in November 2005; the next meeting is
scheduled for April or May 2006. (NOTE: AL countries that no
longer enforce the boycott, such as Jordan, Egypt and
Bahrain, do not attend these meetings. END NOTE.)


7. (C/REL GBR AUS) In preparation for the next ALB meeting,
both the MFA and MOT have requested formal guidance from the
PM's Office on how to respond to questions about Iraq's
compliance with the boycott since there are blacklisted goods
and companies already in Iraq. (NOTE: Notwithstanding the
MFA's role in enforcing the ALB, several companies that do
business with Israel already operate inside Iraq, including

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Royal Jordanian Airlines and General Electric. END NOTE.)
According to Hikmat, since 2003, the GOI has denied at the
ALB meetings that there are any blacklisted goods or
companies in Iraq. Hikmat said that he does not wish to
misrepresent Iraq's compliance with the boycott at the next
meeting nor does he want to cause tension between Iraq and
the other AL countries. This is why, he explained, his
office has made official requests for guidance from the PM's
Office. Hikmat noted, however, that the PM has yet to
respond to queries that the MOT submitted three months ago
and the MFA more than one month ago.

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ALB Laws and Regulations
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8. (C/REL GBR AUS) All three MFA interlocutors confirmed
that Law No. 34 of 1956 is the foundational legislation for
ALB implementation in Iraq. (NOTE: Law No. 34 states, "His
Majesty the King may take the measures necessary to ratify
the Unified Law on the Boycott of Israel Regulations," and
stipulates that it is the duty of Ministers "to implement
this Law." END NOTE.) The MFA interprets Law No. 34 as
mandatory and in effect. In addition, according to the MFA,
there are other regulations that remain valid despite CPA
orders that attempted to dismantle ALB enforcement. (NOTE:
CPA Orders 39 and 80 effectively repealed ALB provisions in
the areas of company registration and trademark registration
but did not directly address Law No. 34. END NOTE.) One
particular regulation, about which the MFA officials did not
provide specific details, requires all ministries to verify
with Damascus, via the MFA, that every company with which a
ministry contracts is not on the ALB blacklist.


9. (C/REL GBR AUS) NOTE: The Arab League Boycott often is
characterized as having primary, secondary, and tertiary
aspects. These are generally understood as follows: the
primary boycott prohibits the import of Israeli products or
direct trade with Israel; the secondary boycott prohibits
transactions with companies that invest in or do business
with Israel; and the tertiary boycott prohibits transactions
with companies that do business with secondary boycott
companies but that do not have any direct investments or
business with Israel. Law No. 34 of 1956 clearly imposes
both primary and secondary boycotts. (Several elements of
the statute, including language cited below in para 9,
illustrate the primary boycott.) With regard to the
secondary aspect of the boycott, the law states, "foreign
companies and institutions that have interests, subsidiaries
or general agencies in Israel shall be considered as being in
the category of entities and persons with which dealing is
prohibited..."


10. (C/REL GBR AUS) NOTE CONT'D: It is less clear to us
whether this particular law imposes a tertiary boycott. The
law also provides that "all persons, whether natural or
legal, are prohibited from making, whether directly,
indirectly or through an intermediary, any covenant with
entities or persons resident in Israel, belong to it by their
nationality, work for its account, or who act in (Israel's)
interest, wherever they may reside." This wide provision
could perhaps be construed to cover tertiary aspects of the
boycott depending on how terms and phrases like "covenant"
and "acting in (Israel's) interest" are interpreted, but such
a construction is not obvious. In addition, MFA officials
intimated that there are other regulations issued by the
Damascus office. It is plausible that some of these
subsequent regulations could clarify the applicability of the
tertiary aspect of the boycott. END NOTE.


11. (C/REL GBR AUS) ACTION REQUEST: Post would appreciate any
clarification from Washington agencies, such as the
Department of Commerce, as to how the Arab League imposes the
tertiary aspect of the boycott. END ACTION REQUEST.

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Stopping ALB Enforcement
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12. (C/REL GBR AUS) Najib emphasized that stopping
enforcement of the ALB would require the repeal or suspension
of Law No. 34, although he and his colleagues indicated that
official instructions from the Prime Minister may be
sufficient. (COMMENT: Although it is likely a PM order would
be followed by the ministries, it could be challenged as long
as Law No. 34 remains on the books, on the grounds that the
PM does not have the authority to unilaterally amend valid
legislation. END COMMENT.) Bidan and Najib said they both

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recognize that continued enforcement of the ALB deters
foreign investment and would hinder Iraq's accession to the
WTO. According to Bidan, the ALB issue is a "political one."
Najib concurred, explaining that although the GOI intends to
slowly dissolve the MFA's Boycott Office, the issue is not
being focused on right now.

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COMMENT
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13. (C/REL GBR AUS) COMMENT: Actual enforcement of the ALB
in Iraq has been ad hoc and inconsistent. Not every ministry
requests ALB verification for contracting companies, and
requests for certification of boycott compliance in the
company registration process appear to have ceased. We have
not seen any listing of blacklisted ships in the official
gazette since late 2004. Companies that have business
relationships with Israel, including Royal Jordanian
Airlines, General Electric, and Caterpillar, do operate in
Iraq despite the ALB. The mission will continue to urge the
GOI vigorously at the highest levels to dismantle ALB
enforcement as well as the ALB legal framework in Iraq
(reftels). END COMMENT.
KHALILZAD