TAWAFUQ FINANCE COMMITTEE MP OPTIMISTIC ABOUT

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003807

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/20/2017
TAGS: ECON EFIN ELAB PGOV IZ
SUBJECT: TAWAFUQ FINANCE COMMITTEE MP OPTIMISTIC ABOUT
BUDGET, PENSION REFORM

REF: A. BAGHDAD OI OF 11/16/07

B. BAGHDAD 3749

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


1. (C) Begin Summary: Ala'a Alsadon (IIP, Sunni) told us 20
November that she remains optimistic that the 2008 draft
budget will be passed in a timely fashion. She confirmed that
the Council of Representatives (CoR) completed a first
reading of the draft budget on 19 November, having formally
received the Council of Ministers (CoM) approved draft the
day before. CoR leadership has called for a special
continuous session beginning 25 November, during which period
the CoR will meet daily except Fridays until the budget is
passed. Alsadon also noted that the CoR passed an amended
version of the pension reform legislation on 19 November that
will be sent again to the Presidency Council (PC) for
approval. She claimed all of the outstanding issues raised by
the PC's veto were resolved and predicted the PC would not
veto the legislation a second time. End Summary.

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2008 Budget Process
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2. (C) In a 20 November meeting with Econoffs, Finance
Committee member Ala'a Alsadon said that, following the first
reading of the 2008 draft budget on 19 November, CoR
committees have begun reviewing budget allocations for the
respective ministries over which they have oversight
authority. In spite of a point of order raised by another CoR
member questioning the legality of the first reading that
(according to an earlier law, the draft budget should have
been presented by the Finance Minister who was out of
country),Alsadon stated that the Finance Minister would make
his budget presentation during the legislation's second
reading in an upcoming session of parliament. She believed
that this course of action was acceptable and legally sound.


3. (C) Alsadon agreed with the CoR leadership's decision to
call for a special continuous session during which the CoR
would meet daily except Fridays until the budget is passed.
She noted that the Hajj period would begin around 10
December, which would almost certainly prevent the CoR from
reaching a quorum for almost two weeks. Her best case
scenario would have all of the debate and discussions
completed prior to the Hajj period such that once the period
ends, MPs will be able to vote on a final budget. When asked
about the prospects for passing other important legislation
during the budget debates, Alsadon cited the 2007 budget
process, during which work on other pieces of legislation
virtually ground to a halt.

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Pension Reform: Veto Overruled
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4. (C) On the pension reform legislation, Alsadon said that
the Finance Committee had reached an agreement with PC staff
and the Pension Reform Steering Committee on all issues
raised by the PC's veto, paving the way for the successful 19
November CoR vote overturning the PC's veto. Among other
concessions, the Finance Committee amended the legislation,
adding a provision whereby the CoM and PC had the right to
nominate surviving family members of "national heroes" to
receive pensions. Any nominee would be subject to CoR
approval. Alsadon felt that this provision would be
sufficiently transparent to prevent abuse.


5. (C) When asked about the PC's concern with the provision
regarding the "martyrs" and former political prisoners,
Alsadon noted that the Finance Committee and Pension Reform
Steering Committee convinced the PC staff that those laws
were not germane to the pension amendment and should not be
an obstacle to the legislation's passage. Similarly, the PC
staff's concerns regarding CPA Order 91 (relating to
militias) also were allayed.


6. (C) Alsadon asked why the USG was so interested in pension
reform. In reply, Econoffs raised both the fiscal stability
interest as well as the legislation's prospects to further
national reconciliation. Alsadon agreed that the pension
legislation would benefit all Iraqis regardless of sect or
ethnicity. However, she complained that other government
benefit programs, specifically the social safety net and
funds for internally displaced persons, were rife with
sectarianism with an exceedingly disproportionate share of
the beneficiaries Shi'a. Moreover, she claimed half of the
employees of the Ministry of Displacement and Migration were
receiving displaced persons benefits.


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Comment
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7. (C) While Alsadon's guarded optimism on the budget process
is a welcome sign, when asked about the proliferation of line
items in the budget, Alsadon bemoaned this obvious sign of
government corruption. She stated that the CoR's primary
function is to hold the executive branch accountable for
questionable budget items. As the CoR budget season
progresses, we will continue our engagement with CoR members
to identify and defuse potentially divisive issues in order
to facilitate timely budget passage. We will report our
analysis of the CoM approved budget septel, and will continue
to monitor the status of the pension legislation as it
returns to the PC for approval.
CROCKER