MAYSANIS CONTINUE TO ENGAGE WITH PRT

UNCLAS SECTION 01 OF 02 BAGHDAD 003396 SIPDIS SENSITIVE SIPDIS E.O. 12958: N/A TAGS: PGOV IZ SUBJECT: MAYSANIS CONTINUE TO ENGAGE WITH PRT ¶1. (SBU) This is a PRT Maysan report. ¶2. (SBU) Summary and Comment: We have seen a dramatic turnaround in the willingness of Maysan officials to engage with the Provincial Reconstruction Team (PRT),beginning in late May. On September 13, we hosted a substantive meeting with the PRDC Chairman and two other provincial officials at Tallil AB. On September 19, the First Deputy Governor dropped in for a short-notice visit to Tallil, conveying Governor al-Maliki's strongest indication yet of his interest in working closely with the PRT and the UN, with an earnest effort to reassure us of his control of security in the province. They have emphatically pledged to provide full security and protection for any (including US or UK) investors, companies, or other entities working on projects in the province and have shared a written security strategy signed by the Governor. When pressed, they also welcomed a visit by the PRT to the province. The delegation also provided wish-list papers on their education strategy and ideas on expanding private sector finance. ¶3. (SBU) We believe that Maysan provincial officials now recognize the PRT as a resource that can assist them both in projects and in building capacity that will help them deliver services to the Maysan electorate. We assess that they are closely watching news speculation of a US drawdown and want to extract as much benefit from PRT engagement before this happens. We also believe that the Maysanis - as the only Sadrist-controlled province - are committed to demonstrating their governing acumen and ability to create jobs and deliver services to the people, particularly as there are no Coalition forces in-province to blame. Our strategy is to engage broadly with the Maysan Government in support of the current basket of reconstruction projects, as well as planned efforts to expand public administration capacity and gestures to demonstrate the province's importance to the Coalition. End Summary and Comment. READY TO ENGAGE -------------- ¶4. (SBU) During a September 13 meeting, the PRDC Chairman opened with complimentary words about the difference they felt in their relationship with us from that of previous donor groups with which they have dealt. They specifically appreciated the fact that we communicated with them mostly in Arabic. (Comment: The PRT has only recently concluded the hiring process for two LES interpreters, and this was our first meeting with their assistance. End Comment.) The meeting was a fairly pedestrian but productive review of ongoing USG projects and gave us an opportunity to discuss proposed FY07 PRDC projects. We used this opportunity to inquire about interest in other areas of possible engagement, including private sector handicraft sales (locally woven carpets),wheelchair donations, journalist training, alternative energy technology for off-grid areas, and vocational training. The Regional USAID officer added valuable input on potential support opportunities. ¶5. (SBU) On September 18 and 19 we met with United Nations Office for Project Services (UNOPS) Project Manager Ewelina Pusz, who was exploring suitable opportunities for the UN in Southern Iraq. On the second day of her meetings with us, we received an emailed notification that Governor al-Maliki had dispatched a small delegation to meet with the PRT at Tallil AB within two hours. Shortly afterward, we received First Deputy Governor al-Rafaie and two close aides of the Governor. ¶6. (SBU) Al-Rafaie opened by passing the Governor's warm greetings for both the UN and the PRT. He observed that they have had many productive planning meetings with the UN, but that there has been slow follow-through. He claimed that there had been USD 7.9 Million allocated three years ago, but that they had not received it. (Comment: While he did not describe the ostensible purpose for such funding, he assented when Pusz suggested that it may have represented early British development planning. We note that in both this and the last meeting with al-Rafaie, he opened with a vague, generalized complaint. We had no sense that this was serious or that he expected resolution of this funding matter. End Comment.) Seeking to reinforce their seriousness, he added, "After you go, we must depend upon ourselves". SECURITY COMMITMENT -------------- ¶7. (SBU) After these generalized opening remarks, al-Rafaie got to the heart of his message: conveying a sense of commitment to protecting projects in the province. Noting that Maysan's security situation is much better than that in most other provinces in the country (thanks partly to a BAGHDAD 00003396 002 OF 002 uniformly Shia population),he said that Maysani officials were committed to providing protection to any project or entity involved in reconstruction work being done to the benefit of the Maysani people. He volunteered that while they could not claim that they could control everything "100 percent" and that there could be others opposing, that they could, without hesitation, give a 100 percent guarantee of provincial government commitment to security for project work, supplies, and people. He noted, however, that they had a successful track record and that they had provided security for a Brazilian firm in the installation of a 400 kilovolt (kV) substation, and that they had likewise protected a Kuwaiti firm involved in a water treatment plant, as well as a Turkish firm in another project. When we asked if this offer of protection specifically included American and British entities, al-Rafaie replied, "Yes. All of them." He passed us a document signed by Governor al-Maliki, indicating their commitment to: --Ensure the safety of the people and materials of the project site until completion --Provide permanent site protection by Iraqi police with checkpoints --Allow contractors to retain their own on-site guards and issue weapons permits for the guards' use --Provide secure storage for project materials and equipment --Provide protection for the transport of materials from ports and airports to the governorate OTHER MAYSAN PRIORITIES -------------- ¶8. (SBU) Turning to education, al-Rafaie said, "developing the Maysani mind is more important than building (physical) bridges." He offered a letter describing the province's strategy for developing education. Noting that considerable funding had been allocated for education at the primary and secondary levels since 2005, the document asked for assistance in support of enhancing the operations of the recently established Maysan University. It specifically asked for UN and/or PRT assistance with one of the following: --Funding/ building colleges within the university (engineering, administration, law, and education) --Research centers (in agriculture and on the marshes) --University facilities (such as a library or student center) --Staff housing and child care --A teacher training institute --University technical support (including a twinning relationship with an American university, new reference materials, equipment, and planning assistance). ¶9. (SBU) Al-Rafaie told us that they had already taken considerable steps forward on the university. According to a document he gave us, they have already secured funding from the central budget for the first stage of the engineering (civil and mechanical) college's departments. They have also identified and performed a land survey of the best site. Engineering consultants from Baghdad University have prepared designs for optimal site usage. They have received a commitment from the Ministry of Education to fund the design of the university's main gate and fence. (Comment: Pusz suggested that UNICEF may be able to support the teacher training institute. End Comment.) ¶10. (SBU) Al-Rafaie turned to banking and observed that a key factor in the development of the Gulf Countries was their focus on the development of financial institutions. He said that the Iraqi economy needed to be connected to worldwide investment and that the Maysan Government is focusing on widening the role of banks in the province. Mr. Zaid Khalaf Hoshi, a delegation member and advisor to the Governor then observed that the banking system in the country is backward, indicating that the banks suffer from limited capital and few branches; that they lack industrial banks and have only one agricultural bank; that loans are limited by size, numerous guarantees, and high (up to 20 percent) interest rates; and that they have no ability to issue letters of credit (LOCs). It was clear from their comments that they are acutely aware that the paucity of financial intermediaries would continue to constrain the growth and maturity of the presently moribund private sector in Maysan. While there was no explicit appended banking wish-list, their document on banking policy in Maysan reported that they would need to: --Capitalize banks --Increase the numbers of branches of government banks and encouraging private banks to do the same --Increase the number of loans issued --Have banks adopt loan policies with softer conditions and lower interest rates CROCKER