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rescinded and those affected to become eligible for pension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).

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Comment
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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