ENGAGING THE CENTRAL BANK OF IRAQ (CBI) GOVERNOR

UNCLAS BAGHDAD 000972 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: EFIN ECON KTFN KCRM IZ SUBJECT: ENGAGING THE CENTRAL BANK OF IRAQ (CBI) GOVERNOR ¶1. (SBU) Summary: In a meeting on March 12 the Ambassador complimented Central Bank Governor Dr. Sinan Shabibi for stabilizing Iraq's currency and helping Iraq get an IMF standby arrangement last year. The Ambassador also noted the importance of continuing to fight terrorist financing. Dr. Sinan asked for help in the CBI's money laundering reporting office unit. The IRS-CI attache urged Dr. Sinan to work with the USG to implement a CPA order to allow the Government of Iraq to seize former regime elements (FREs) and their assets. End Summary. ¶2. (SBU) The Ambassador complimented Dr. Sinan Shabibi for the many achievements he has contributed to on behalf of Iraq, particularly his work to maintain exchange rate stability and with the IMF and Paris Club. The Ambassador discussed the political situation with Dr. Sinan, commenting that the current hurdle to finalizing the government in Iraq is the selection of the Prime Minister. He asked Dr. Sinan for his opinion on who would be a good candidate for the position. Dr. Sinan said the candidate should be someone who is strong politically but also a liberal. Dr. Sinan demurred from naming anyone in particular at this time, but said he would think about the matter and get back with the Ambassador. ¶3. (SBU) The Ambassador and Dr. Sinan agreed that politics needs to be kept out of the CBI. The Ambassador also urged the Governor to keep making progress on regulatory and money laundering issues. ¶4. (SBU) The Governor stressed that the CBI is striving to get the country's banking system moving away from being cash-based. The implementation of the payment system will be one of the keys to accomplishing this goal. He added that they also need help to develop further their banking supervision. Dr. Sinan expressed his gratitude to the Treasury Attache/IRMO Financial and Fiscal Affairs Director for all of his assistance and advice. ¶5. (SBU) Dr. Sinan asked the Ambassador for more help and technical advice for the Money Laundering Reporting Office (MLRO). He said they need to concentrate on the money laundering issue and asked for training on how to get their unit up and running. The IRS-CI Attache noted the State Department's Terrorism Finance Working Group (TFWG) was poised to provide assistance. The TFWG is waiting to send a Financial Systems Assessment Team (FSAT) to Iraq. ¶6. (SBU) IRS-CI Attache Crowe raised the topic of FREs and their assets. Attache Crowe noted that Article 6.2 of CPA Order 93 mirrored the language in the United Nations Security Resolution (UNSCR). Crowe asked if Dr. Shabibi would be willing to implement the CPA Order, should he be presented with information about FRE assets. Dr. Shabibi answered positively, noting that he would work with the Ministry of Finance to process the information for the approval of the Council of Ministers. Upon the Council's approval, the assets could be repatriated to the Iraqi government's Developmental Fund for Iraq. KHALILZAD