KRG PRESIDENT BARZANI ON THE HYDROCARBON LAW

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 004044

SIPDIS

SIPDIS

STATE FOR E, NEA-I AND EEB

E.O. 12958: DECL: 12/12/2017
TAGS: EPET ENRG ECON PREL IZ
SUBJECT: KRG PRESIDENT BARZANI ON THE HYDROCARBON LAW

Classified By: CETI Ambassador Charles Ries, reasons 1.4 b,d



1. (C) SUMMARY: During an 8 December meeting with Under
Secretary Reuben Jeffrey, KRG President Masoud Barzani

SIPDIS
expressed concern with what he described as the
centralization of power amongst a certain few in Baghdad.
President Barzani said that the hydrocarbon law had become a
political issue and expressed his support for passage of
national hydrocarbon legislation as a guarantee of some KRG
control of revenue from the country's natural resources. END
SUMMARY.


2. (C) Following meetings by Under Secretary Jeffery with
KRG Prime Minister Nechirvan Barzani and several of his
ministers, including Minister of Natural Resources Ashti
Hawrami (septel),Under Secretary for Economic, Energy, and
Agricultural Affairs Reuben Jeffery sat down with KRG
President Masoud Barzani on 8 December to discuss the status
of the hydrocarbon law in the context of his visits with
several Baghdad officials. Under Secretary Jeffery stated
that his Baghdad interlocutors believe the current obstacles
to passage are political rather than technical. U/S Jeffery
said that it appeared that the differences relate to three
core philosophical issues: (a) the degree of federalism, (b)
the extent of market orientation versus centralization of
natural resource development in Iraq, and (c) the
transparency of the KRG and GoI handling of Iraq's oil
resources. Minister Hawrami acknowledged that ill-will had
been created in Baghdad by the KRGs signing of contracts,
regardless of their legality, but exp
lained that after months of delays the KRG "could not wait
for Baghdad." Under Secretary Jeffery expressed his support
for PM Nechirvan Barzani's trip to Baghdad in coming days to
discuss hydrocarbon legislation, Peshmerga funding in the
2008 budget law, and implementation of Article 140 over the
disputed territories.


3. (C) President Barzani said that the hydrocarbon law had
become a political issue. He explained that many officials
in Baghdad still believed that all power should be with the
central government. He stated that he wants to pass
hydrocarbon legislation to clarify roles and responsibilities
so that the KRG would not find itself at the mercy of Baghdad
officials, whom he described as authoritarian. President
Barzani repeated several times that the KRG wanted to be a
partner, and not a subordinate, in the affairs of the
country, stating that KRG representatives were trying to play
an active role in the country's political process.


4. (C) President Barzani agreed with Under Secretary
Jeffery that security progress should be exploited with
progress on important legislation and provision of services,
but feared that if American forces were to drawdown soon that
Shias and Sunnis would resume fighting between and amongst
themselves. He asserted that the only viable way ahead was
federalism and revenue sharing and expressed his belief that
with the recent developments in Anbar, Sunnis were quickly
coming to the same conclusion.


5. (C) President Barzani expressed confusion with the
failure of the several iterations of agreements that the KRG
and the central government had already reached. He noted in
February 2007 leaders had reached agreement on a federal oil
and gas law, and had reiterated in August 2007 with President
Talabani and the group of five the leaders' commitment on
passing legislation including de-Baathification, provincial
powers, and the hydrocarbon law.


6. (C) President Barzani stated that the KRG was willing to
continue to negotiate and engage the Shia and Sunnis
actively, commenting that the Sunni position was moving
closer to the Kurds. President Barzani also said that he
planned to follow-up with GoI President Talabani to ensure
that both are conveying the same message to the central
government.


6. (C) COMMENT: While President Barzani expressed his
support for the hydrocarbon law, he did not delineate any
concessions the KRG would be willing to make to reach
agreement with the central government. This may have been a
reflection of the way he has distanced himself from the
particulars of the issue, delegating responsibility for the
thorny matter to PM Nechirvan Barzani and Minister of Natural
Resources Hawrami. END COMMENT


7. (U) This cable was cleared by E staff prior to departure.

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