THIRD US-ISCI ECONOMIC DIALOGUE MEETING: ENERGY

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002395 SIPDIS SIPDIS E.O. 12958: DECL: 07/16/2017 TAGS: ECON EFIN PGOV IZ SUBJECT: THIRD US-ISCI ECONOMIC DIALOGUE MEETING: ENERGY AND WATER REF: A. BAGHDAD 1707 ¶B. BAGHDAD 1569 Classified By: Economic Minister Charles Ries for reasons 1.4 (b) and ( d). ¶1. (C) Summary: The US-ISCI Economic Dialogue meeting on July 11 focused on addressing energy shortages and maintaining the Nassiriya water plant. Ministry of Finance Advisor Dr. Azez Jafar committed to ensuring greater Ministry of Finance participation in the Energy Fusion Cell, and offered to facilitate coordination between the Ministries of Oil and Electricity. The meeting's ISCI representatives consisted of Minister of Finance Advisor Dr. Azez Jafar, Council of Representatives Member Abdul Kareem Al-Nakib, Baghdad Mayor Sabir al-Esawi and VP Advisor Dr. Fareed Yassin. The U.S. side included the Economic Minister, Economic Minister-Counselor, Director of the Energy Fusion Cell, USAID Director, ITAO Deputy Director for Finance, and emboffs. This meeting was the third US-ISCI Economic dialogue (refs A and B). End summary. -------------- Introductions -------------- ¶2. (C) As Vice President Adel Abdul Mehdi was meeting with Ambassador Crocker separately during this dialogue meeting, Dr. Azez Jafar chaired the meeting for the ISCI representatives. He welcomed Ambassador Charles Ries to Iraq, thanking him for his partnership in the US-ISCI Economic dialogue, and noted that it has been helpful in working towards economic solutions. Vice President Advisor Dr. Fareed Yassin also thanked Ambassador Ries for the US's sacrifices in Iraq, and noted the importance of increasing the availability of electricity and focusing on privatization of Iraqi government assets. -------------- Energy Fusion Cell -------------- ¶3. (C) Director of the Energy Fusion Cell (EFC) Brigadier General Cripwell gave an overview of the EFC's purpose and activities. He highlighted the need for coordination between the Ministries of Defense, Interior, Electricity, Oil and Finance in order to address the shortage of electricity in Iraq. "The Energy Fusion Cell will only succeed if the Coalition and Iraqis work together to develop solutions together," BG Cripwell said. He noted that the EFC is working to streamline the process of meeting short-term strategic issues such as optimizing power to Baghdad, which he stated was caused both by a lack of supply as well as inequitable (unauthorized) distribution around Iraq. BG Cripwell also said there was a need for an information strategy in order to let Iraqis know who is responsible for the electricity and fuel shortages. ¶4. (C) Dr. Azez expressed frustration with continued talk about activities and potential solutions when the outcome continues to deteriorate. He said that there has been poor coordination between the Ministry of Oil and the Ministry of Electricity, and infrastructure is regularly attacked. BG Cripwell noted that the focus of the EFC on coordination and securing infrastructure, and said that one problem has been the lack of serious participation by relevant ministries other than the Ministry of Defense. EconCouns noted that while in past people have always been able to lay the blame elsewhere, the EFC allows for coordination by all the relevant participants. "These issues regularly come up in the Iraqi Executive Steering Committee meetings," he said, "and the EFC can resolve some of the outstanding coordination issues." ¶5. (C) Dr. Azez was skeptical that any responsibility lay with the Ministry of Finance (MoF),saying that the MoF has allocated the Ministries of Oil and Electricity sufficient funds, and there have not been requests for more. BG Cripwell pointed to an example of ninety-three tankers of kerosene stuck in Kuwait for lack of funding. Baghdad Mayor Sabir al-Esawi supported BG Cripwell's assessment that difficulty in accessing funds is part of the energy shortage. Dr. Azez insisted that the Minister of Finance would want to resolve this issue immediately, and said that he would send the Director Generals of Accounts and Budget from the MoF to the Energy Fusion Cell to work out a solution. He also offered to help coordinate the involvement of the ministries of electricity and oil. Ambassador Ries noted that problems with executing budgets for government services can be challenging in many countries, and said that the only solution was the hard work of coordination. BAGHDAD 00002395 002 OF 002 -------------- Nassiriya Water Treatment Plant -------------- ¶6. (C) The U.S. Senior Advisor for Water Linda Allen requested assistance in resolving serious transition problems at the Nassiriya Water Treatment Plant, an important and expensive USG-funded reconstruction project serving 500,000 people. This two-year project is physically ready to be transferred to the authority of the Ministry of Municipalities and Public Works (MMPW),but they have been unable to train employees. The facility itself has been subject to intermittent attacks since the beginning of July. 100 skilled workers are needed to run the facility, and while they have been on the MMPW payroll for several months they have not completed the necessary training and remain unwilling to travel out to the site of the Nassiriya Plant. ¶7. (C) Dr. Azez asked what Vice President Adel Abdul Mehdi could do to help, and Mr. Al Esawi thanked Dr. Allen for all of her hard work on water treatment programs in Iraq. Dr. Allen recommended that the VP encourage the workers to participate fully in the training, and attempt to respond to their requests for transportation, salary, and appropriate housing. Dr. Allen also invited the VP to visit the water treatment plant on July 15. -------------- Comment -------------- ¶8. (C) As with earlier sessions, the third US-ISCI economic dialogue provided a useful forum for exchange of information. This meeting was, however, more focused and may prove to have resulted in specific operational outcomes at both the EFC and the Nassiriya Water Treatment Plant. It is clear that many parts of the Iraqi government are still learning how to coordinate and work together, as illustrated by Dr. Azez's surprise at complaints about availability of funds. Vice President Adel Abdul Mehdi joined the group as the meeting ended and met briefly with Ambassador Ries for the first time. CROCKER