PRESIDENCY COUNCIL VETOES PENSION REFORM

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003749 SIPDIS SIPDIS E.O. 12958: DECL: 11/14/2017 TAGS: ECON EFIN PGOV IZ SUBJECT: PRESIDENCY COUNCIL VETOES PENSION REFORM LEGISLATION REF: A. BAGHDAD 3730 ¶B. BAGHDAD OI OF 11/10/07 ¶C. BAGHDAD 3557 Classified By: Acting Deputy Chief of Mission Charles P. Ries for Reaso ns 1.4 (b) and (d) ¶1. (C) Begin Summary: Vice President Tareq al-Hashimi's recent veto will delay implementation of sensible pension reform legislation that would potentially benefit all public sector employees, including members of the military, regardless of sect. Discussions between the Pension Reform Steering Committee (PRSC) and Hashimi's staff have resolved seven of eight issues. The last remaining item concerns whether to extend pension benefit coverage to surviving family members of "martyrs" and former political prisoners. The PRSC, in accordance with IMF and World Bank guidance, oppose this measure, arguing that it will jeopardize Iraq's future fiscal stability. The CoR will need to vote again to overrule the Presidency Council's veto, and we have received no indication how Hashimi will react once the Presidency Council revisits the legislation. End Summary. ¶2. (C) In a letter dated 30 October 2007, the Presidency Council (PC) vetoed pension reform legislation the Council of Representatives (CoR) approved on 3 October 2007 (reftel C). The PC letter outlines 8 points for the CoR to address. The PRSC informed us that during meetings with VP Hashimi's staff, seven of the eight points were discussed and agreement reached. One outstanding issue remains. The legislation seeks to apply uniform standards to all retirees in Iraq. As part of this overarching goal, the legislation rescinds existing laws that provide pension benefits with a few notable exceptions. Among the exceptions are the so-called "martyrs" law (#3/2006) and the political prisoners law (#4/2006). Hashimi's staff insists that the aforementioned laws be rescinded and those affected to become eligible for pension benefits according to the calculations as promulgated in the vetoed legislation. The PRSC rejects this proposal because such a change would unduly strain the federal government's fiscal obligations. The IMF and World Bank are in agreement with the PRSC on this point. The financial benefits accorded surviving relatives of "martyrs" and political prisoners as promulgated in the existing laws are not as generous as that for which they would become eligible if Hashimi's wish is met. Moreover, the PRSC believes that extending pension benefits as a form of government welfare (akin to Hashimi's proposal) goes beyond the original intent for the scope of the pension reform legislation. ¶3. (C) In a 12 November meeting with Hashimi (reftel A), Ambassador Crocker and Senior Advisor David Satterfield noted their disappointment that the Presidency Council vetoed the pension reform legislation. Hashimi initially denied any connection to the issue, remarking "it's propaganda." However, Hashimi's Chief of Staff initiated a call to the staffer who tracks the issue, and handed the phone to Hashimi. Following a brief conversation, Hashimi finally accepted responsibility for the PC's rejection of the legislation, asserting that it was a "technical issue," and promising to send "notes" to the Embassy the following day to show the objection was "not a political issue." Ambassador Crocker encouraged a review of financial implications of the proposal. Hashimi quickly changed the subject. ¶4. (C) On 13 November, Hashimi's staff sent the Embassy two documents. The first document was a copy of a letter from Hashimi's office to the Presidency Council dated 28 October which lists verbatim the 8 objections cited in the 30 October letter to the CoR, formally vetoing the legislation. The second document is a letter dated 31 October from the Council of Ministers (CoM) secretariat to the PC, requesting the PC delay acting on the legislation because the legislation was not presented to the CoM or the Shura Council (Note: This letter is ostensibly meaningless because it was sent after the PC formally vetoed the legislation. In addition, while the final amended version of the legislation may not have been formally presented to the CoM and Shura Council, an earlier version certainly was. We do not believe that the Iraqi Constitution mandates that amended legislation be presented to the CoM and Shura Council another time. End Note). -------------- Comment -------------- ¶5. (C) This most recent turn of events on the pension reform legislation is discouraging. Should Hashimi continue his intransigence refusing to concede this last point, the legislation is doomed. If the CoR votes to overrule the first veto, which requires a simple majority, and Hashimi vetoes it BAGHDAD 00003749 002 OF 002 for a second time, a super majority of 3/5 would be required to secure passage. Although attendance at regular CoR sessions occasionally exceeds the minimum 165 that would be required to overrule a second veto, the likelihood of a unanimous vote under such a rare circumstance is a virtual impossibility. We will continue to engage CoR members to identify a solution to the current impasse. End Comment. CROCKER