STREET TALKS BUSINESS AND POLITICS IN A KURDISH

C O N F I D E N T I A L SECTION 01 OF 02 KIRKUK 000092

SIPDIS

SIPDIS

BAGHDAD FOR ECON, POL, NCT

E.O. 12958: DECL: 4/14/2016
TAGS: ECON PGOV KDEM KCOR IZ
SUBJECT: STREET TALKS BUSINESS AND POLITICS IN A KURDISH
NEIGHBORHOOD


KIRKUK 00000092 001.2 OF 002


CLASSIFIED BY: John Bradford, Acting Regional Coordinator, REO
Kirkuk, DoS.
REASON: 1.4 (b),(d)




1. (C) INTRODUCTION AND SUMMARY. On a visit to Ankawa District
in Erbil City, business owners told IPAO an influx of migrants
was pushing up real estate prices. The owners complained about
inflation, fuel prices, and how winning contracts required party
membership. Ankawa is a middle-class, predominately Christian,
neighborhood and home to several international organizations and
businesses, including the USAID compound. END INTRODUCTION AND
SUMMARY.

Government Relationships Mean Everything
--------------


2. (SBU) Beirut Restaurant, owned by Pierre Moutrane, a
Lebanese businessman in partnership with the mayor of Ankawa,
has been open for just one month. He said that as a foreigner
he could have been a sole investor, but the partnership helped
him with things like registering. He said business was taking
off slowly and that he was optimistic about the future. Despite
the name, the restaurant serves American food and caters to a
primarily international clientele.


3. (SBU) Mahmud Burhan's internet cafe has been open for two
years, but recently business has declined due to competition
from the wireless industry. Burhan's primary business,
headquartered in a different part of Erbil, was selling
satellite dishes in Mosul, rural parts of Erbil Province and to
the U.S. and Korean military bases. Burhan said he was trying
to expand the company into wireless within Erbil City; however
the KRG restricted private companies from accessing the
industry.


4. (C) Burhan blamed the KDP for not giving small businesses a
chance. In addition to cornering certain markets, he said they
have made it difficult for him as an independent to register his
company to enter other computer-related fields or win large
government projects. He complained that party membership should
not be a requisite for doing business. Before Operation Iraqi
Freedom, he said it was the same situation, except the Baathists
received all the benefits. In 1996 he joined the PUK, but has
since renounced membership. (NOTE: Through part of 1996, the
PUK controlled Erbil, but the KDP took over later that year and
has run Erbil since then. END NOTE.)

Real Estate Boom Fed by Migrants
--------------


5. (SBU) Jalad, a senior partner in a real estate company run
by three families, said the housing market in Ankawa District
was strong because the government had given many poor people
free land in exchange for political support. Many had then
turned around and sold the property for $50-60,000 and left the
area. In the last 2-3 months, between 400-450 families seeking
sanctuary from the instability of southern Iraq had moved into
the neighborhood, dramatically raising housing prices. Jalad
estimated that in today's market, a 125 square meter house sold
for around $80,000, twice what it was a year ago. He said the
government supported the poorest families by paying their rent.
He said the migrants were 90% Christian and 10% Muslim. As an
estate agent, Jalad charged 1% to both the buyer and seller and
10% of the first month's rent. The company paid $100 a year in
property taxes.


6. (SBU) Jalad said he was in the process of registering with
the Ministry of Justice for a new construction company, both for
his own financial benefit and because he wanted to be a part of
the reconstruction of Iraq. Although he is a member of the
dominant KDP, he said party membership was irrelevant for
receiving government support. He said that 75% of his neighbors
were communists, but that the government supported them anyway.
Jalad said U.S. companies should invest in the Kurdistan region
and locate their business in Ankawa as, thanks to the number of
PSD teams associated with international organizations in the
area, it was the safest neighborhood in Iraq.

Inflation Doubles Prices and Costs
--------------


7. (U) Ramzi Odish returned from Sweden 2 1/2 years ago to open
a Middle-eastern deli. He said that although business was
improving, they were still struggling. The biggest problem was
the rising cost of fuel. He said he needed to pay $16 a month
for electricity. Other costs were unstable: for example, an LGP
cylinder cost $20 a month ago and today $8, a year ago it was

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$.34-$.40. He said the high cost of fuel also affected his
family, particularly his elderly mother and the children who
lived in his house without electricity at night.


8. (U) Haji Jalil, a Sunni Kurd with 11 children and 3
grandchildren, owns a fruit stall on a corner of an Ankawa
intersection. He buys his imported fruit from the main fruit
market and runs a brisk business. Jalil said the Christian
markets viewed him as strong competition because he undercut
their inflated prices. He used to be an importer of tomatoes
from the south. He said that business had improved since Saddam
Hussayn's day, except inflation and the fuel shortage were
problems. Rental cost for a pick-up truck to transport fruit
had increased from $1.34 last year to $4 this year. Fruit
prices had doubled: the price of an orange had risen from $.50
to $1. He said he earned $250 a month, in partnership with one
of his 5 sons. Two of his sons were drivers and earned about
$670 per month. As a member of the PUK, Jalil said he also
received $20 a month from "Mam Jalal" - a sentimental reference
to the head of the PUK and Iraqi President, "Uncle" Jalal
Talibani.


9. (U) Mr. Akira's family has run a well-stocked store with
domestic and imported consumables since 1992. In the last year,
most products like diapers and crackers had doubled in price,
while milk and cigarettes that were $2.50 a year ago had
increased to $3.50. He said he paid $500 a year in property
taxes to the government. Akira blamed inflation on the increase
in energy prices.

Comment:
--------------


10. (SBU) Each owner, except the internet cafe and the catering
company proprietors, appeared to be running a brisk business.
The most-frequented shops appeared to be running on a U.S.
dollar economy with both customers and owners handling several
$100 bills. Overall, business owners appeared frustrated by the
rise in fuel costs and subsequent inflation; however, they were
generally optimistic about the future.
BRADFORD