ECON COMMITTEE CHAIR DISCUSSES FRAMEWORK

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002477

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/25/2017
TAGS: IZ ECON ENRG PREL
SUBJECT: ECON COMMITTEE CHAIR DISCUSSES FRAMEWORK
HYDROCARBON LAW, ECONOMIC REFORM WITH EMIN

Classified By: Economic Minister Charles P. Ries for reasons 1.4 (b) an
d (d)


1. (C) Summary: In a July 24 introductory meeting with
Economic Minister, Dr. Haider al-Abadi (Dawa),Chairman of
the Economic Committee in the Council of Representatives
(CoR),provided his views on the current status of the
hydrocarbon framework law in the CoR. Abadi expressed
interest in receiving a brief explaining the great potential
for undiscovered but potentially significant oil and gas
deposits beneath al-Anbar province. Three laws related to
World Bank loan programs are not expected to pass prior to
the beginning of the CoR recess in August. Abadi said he
would continue to convene a number of roundtable discussions
with other members of the Economic Committee and working
level ministry official to generate consensus on an economic
reform strategy for Iraq. End Summary.

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Hydrocarbon Framework Law Stalled
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2. (C) During his introductory call on the CoR's Economic
Committee Chair, EMIN probed Abadi on the current status of
the framework hydrocarbon law. "We would have had a first
reading this week," Abadi said, "but the Kurds said they
would walk out if we put it on the agenda." Abadi found this
decision particularly exasperating given that there would be
opportunities to review the text after the first reading of
the law. He plans on reviewing the law in the Economic
Committee as well, with discussions open to other members of
the CoR.


3. (C) In general, Abadi said that the climate in Iraq for
passing the framework law was not positive. He was surprised
to see that even in England newspapers like the Guardian
report inaccurate accusations about the effects of the law.
He noted that much opposition centers on the provisions for
production-sharing agreements. He thinks that this opposition
could be placated by stipulating a cap on production-sharing
agreements for the next four years, during which he said,
there is unlikely to be too much investment anyway because of
the security situation. Abadi complained that the CoR needed
to recognize that Iraq's future economic prosperity depends
on this law's passage and, for this reason, forego temporal
political considerations.

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Revenue Management Law
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4. (C) Regarding the revenue management law, Abadi said that
they needed to make sure that there was sufficient funding
for the central government. EMIN stated that a proposal for
10% of oil revenues to be set aside for strategic projects
might be acceptable for all sides. Abadi agreed that this
compromise could prove to break the current impasse. In order
to allay Sunni fears that the passage of the
hydrocarbon-related legislation would leave them with an
inequitable distribution of resources, EMIN raised the
possibility of having oil specialists at post provide a
detailed briefing to Sunni CoR members on the potential for
substantial oil and gas reserves to be discovered in al-Anbar
province. Abadi expressed a great degree of interest in this
idea. (Note: Post plans to brief DPM Salaam Zoubaie as well.
End Note.)

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World Bank Loans Unlikely to Pass Before Summer Recess
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5. (C) Abadi said that there was support for the laws
approving World Bank loans at the CoR, but that there was not
enough time to pass them before the summer recess. He said
that while a first reading was held this week, it only
covered the World Bank loans for projects in the Kurdistan
Regional Government. "We were surprised, but the reading only
referred to Kurdistan," he said. Abadi considers these loans
an important part of the government's economic development
work and thinks that they should be passed.

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Developing a GOI Strategy for Economic Reform
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6. (C) EMIN inquired about a roundtable discussion held by
the Economic Committee last week. Abadi replied that the
session was very productive. He was hoping to convene three
additional sessions, involving officials at the ministerial
level, to develop a consensus on a GOI plan for economic
reform. The final session would culminate in the presentation
of an economic reform white paper that would lay out a

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consistent GOI economic reform strategy. Abadi hopes that
this resolves disputes as to the direction of the GOI's
economic reform, and thinks it will support Deputy Prime
Minister for Economic Affairs Barham Salih's ideas. The
roundtable focused on ways to privatize State Owned
Enterprises, reduce government payrolls, and encourage
private sector activity.
CROCKER