NAJAF CHAMBER OF COMMERCE BULLISH ABOUT GROWTH

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 001177

SIPDIS

SIPDIS

E.O. 12958: DECL: 04/03/2017
TAGS: ECON PGOV PREL IZ
SUBJECT: NAJAF CHAMBER OF COMMERCE BULLISH ABOUT GROWTH


Classified By: PRT Team Leader Mark Davison for reasons 1.4 (b) and (d)
.


1. (U) This is a PRT Najaf cable.


2. (C) SUMMARY: In a March 24 meeting with PRT Najaf IPAOs,
the President of the Najaf Chamber of Commerce and
Provincial Council member, Mr. Zohair Shorba, identified
the obstacles to Najaf's economic progress - lack of an
investment code, inaccessibility of the province,
dilapidated infrastructure, and a shortage of capital and
technology - while sharing his fervent optimism about short
and long-term growth prospects of the province. END SUMMARY

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The Najaf Chamber of Commerce
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3. (C) With over 27,000 members, the Najaf Chamber of
Commerce
is the oldest and largest Chamber in Iraq. (Comment: Its
ranks are admittedly inflated; several neighboring
countries require membership in the Chamber of Commerce
before issuing a business visa. Others join the Chamber
simply to obtain the permit to distribute goods to ration
card holders. End Comment) The approximately 7,000 active
members, however, are wholeheartedly engaged in the
commerce of the province, which largely centers around
religious tourism to some of the holiest sites in Shi'a
Islam, including the Imam Ali Shrine.


4. (C) Companies pay an annual membership fee of 50 U.S.
dollars. The Chamber's main source of revenue, however, is
its mandatory certification of all goods leaving the
province. The Chamber supports its members though
educational outreach; for example, it has conducted a
series of seminars about the new investment code and the
proposed hydrocarbon law. It also advocates for policy
reform at the provincial and national levels.

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Obstacles and Avenues to Rapid Growth
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5. (C) In a March 24 meeting Najaf PRT IPAOs, the President
of
the Najaf Chamber of Commerce and Provincial Council
member, Mr. Zohair Shorba, said that the province had been
historically neglected by the Iraqi government and
investors for the last 35 years and had been particularly
disadvantaged by Saddam Hussein, resulting in "zero
infrastructure." Nevertheless, Shorba was effusive in his
optimism for the economic future of the province and more
recent Coalition infrastructure improvements. According to
Shorba, the obstacles stunting Najaf's growth are currently
being removed.


6. (C) Shorba said that since the occupation, domestic and
foreign investors have been anxiously awaiting Iraq's new
investment code. No business person would invest capital
until they clearly knew the terms of the controlling legal
regime. Shorba said the reaction of the Najaf business
community to the investment code has been very positive,
and now that the law is being enacted, investors will have
the surety they have been seeking.


7. (C) Given the insecurity of Baghdad and the extreme
difficulty of overland travel, domestic and foreign
investors have found Najaf to be inaccessible. Who would
be willing to invest, Shorba rhetorically asked, if they
can't travel to see their investment? This obstacle is
being addressed, Shorba said, by the construction of the
Najaf International Airport (Note: The progress of which is
an ongoing topic addressed in PRT weekly sitreps. End
Note). While another international airport may eventually
be constructed between Najaf and Karbala, the Najaf airport
will serve a vital function for the next five years and
likely beyond.


8. (C) While Shorba said there was still a long way to go on
the infrastructure of the province, he noted that most
Najafis perceive post-occupation infrastructure projects as
visible. Some smaller Provincial Reconstruction and
Development Projects had served political ends, but
forthcoming private investment would be more focused and
this would meet true market needs. He noted a soft drink
bottling plant in Kufa, which overcame the problem of
intermittent electricity by installing a series of
generators. He insisted that entrepreneurs would find
similar solutions to the infrastructure problems they may
encounter.


9. (C) Shorba expressed confidence that an abundant amount

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of
capital is available, both within Iraq and abroad, for
investments in Najaf. As Iraq adopts a positive investment
policy, the money will begin flowing in. Money alone,
however, will not be enough. Najaf also needs missing
technology, which Shorba is confident will accompany the
capital. He cited a recently opened water bottling plant,
which was largely financed by Iraqis, while the technology
was provided from Iran. While insisting Najaf's economic
base will remain focused on religious tourism and the
accompanying hospitality and entertainment industries,
Shorba asserted that there is a strong growth potential in
the province for similar light industries with imported
technology.


10. (C) Shorba brushed aside concerns about violence and
insecurity, explaining that if investors are worried about
their investments, private insurance is available. He
similarly dismissed concerns about corruption, insisting
that 90 percent of corruption is caused by impatient
private citizens looking to cut bureaucratic corners.


11. (C) Comment: Shorba's glowing forecast for Najaf's
economic future is typical of a Chamber of Commerce
booster. The province's dilapidated infrastructure remains
a challenge, which continues to be addressed by the PRDC in
projects supported by Economic Support Funds (ESF) and will
eventually benefit from the much larger budget funds
coming from the central government. The province is
relatively stable and peaceful, and has been spared the
inter-Shi'a violence currently consuming neighboring
Diwaniyah province. Religious pilgrims will continue to
add to the economy. We are also heartened that the
province is forging a comprehensive development strategy
that builds on its strengths while improving its
infrastructure weaknesses. End comment.
CROCKER