REHABILITATING INDUSTRY IN DIYALA PROVINCE - PROGRESS AT

UNCLAS SECTION 01 OF 02 BAGHDAD 004055 SIPDIS SIPDIS SENSITIVE E.O. 12958: N/A TAGS: ECON ETRD EAID EFIN IZ SUBJECT: REHABILITATING INDUSTRY IN DIYALA PROVINCE - PROGRESS AT DIYALA ELECTRIC INDUSTRIES ¶1. (U) This is a PRT Diyala reporting cable. SUMMARY -------------- ¶2. (U) In the wake of recent clearing operations by Coalition Forces in Baqubah, rehabilitation of the primary State-Owned industrial facility in Diyala province made good progress in September and October. The Director General returned to the facility after several months' absence, the Department of Defense's Task Force for Business Stability Operations (aka "Brinkley Group") performed a thorough assessment of several manufacturing lines, and the Government of Iraq (GOI) has renewed commitments to support the facility. Progress at Diyala Electric -------------- ¶3. (U) The months of September and October were busy for the PRT's primary industrial focus at the moment, Diyala Electric Industries (DEI). First, engineers and production experts from the Department of Defense's Task Force for Business Stability Operations (aka Brinkley Group) performed a four-day site assessment which was very successful. They were able to evaluate the distribution transformer plant, power transformer plant, oxygen/argon plant, and the fiber-optic plant. The Brinkley Group security consultant also completed a security survey of the facilities and will provide the PRT with his recommendations. ¶4. (SBU) DEI provided greater access to personnel and equipment than ever before. The provincial government, Brinkley Group, PRT, and 3-1 Cavalry (CAV) Brigade (BDE) have developed a division of effort plan to bring four of DEI's production lines (x2 transformers, oxygen, and fiber-optic) back up to full production capacity. The provincial government has budgeted approximately $7M USD from the 2007 Budget to be used primarily for purchase of raw materials. The Brinkley Group will provide a grant of at least $500k USD to be used primarily for purchase of repair parts. They will also contact the World Bank regarding low-interest loans that could be used to replace worn out machinery. Finally, the PRT and 3-1 CAV BDE are exploring options to provide sufficient power to the plant for full operation, which will probably involve purchasing generators. ¶5. (SBU) Second, the Director General of DEI, Abdul Wadood, returned from his self-imposed exile after three months. Under Abdul Wadood's previous tenure, DEI was moribund. He provided a long list of excuses why he could not get the plant running again, and showed no initiative to overcome them. Since he fled the province in June DEI had made steady progress towards partial operation with the Acting DG, Mahmoud Abdul-Razaq, in charge. Fortunately, Mr. Wadood appears to be more cooperative now than before he left in May. For example, he reports that DEI has increased the number of commuter buses moving personnel in the greater Baqubah area from seven, at the beginning of the month, to thirty-three by the end. Mr. Wadood also claimed that that the working hours have increased by one hour since his return and are now from 0800 to 1200. He committed to increasing them by two more hours from 0800 to 1400 after Ramadan is over in mid-October. He's also committed to attending the weekly Governor's cabinet meeting at the Governance Center (GC) on Monday mornings. ¶6. (SBU) Third, the Deputy Commanding General of Multinational Force-Iraq (MNF-I),Lieutenant General Rollo, visited DEI along with the Deputy Governor. During the visit it was clarified that the Ministry of Industry and Minerals (MIM) had received approximately $500k USD recently allocated by the Deputy Prime Minister's office for back pay and victim compensation, but it has not provided the funds to DEI. When pressed, Mr. Wadood also admitted that the presence of the Iraqi Army is needed at DEI in order to protect the workers, and they should not be removed. To illustrate the fragile security situation in Diyala, twelve DEI employees were abducted this month when their bus was intercepted by Anti-Iraq Forces (AIF) on the road just west of DEI. Fortunately, they were quickly released unharmed once they identified themselves as Sunni. ¶7. (SBU) Finally, according to Mr. Wadood, the Ministry of Industry and Minerals (MIM) has recently made several encouraging moves toward helping DEI become functional again. First, MIM has allocated $4 billion ID for DEI to purchase a critical piece of machinery for the Transformer plant. The MIM has made the stipulation that the equipment must be purchased by the end of the calendar year or DEI will lose the money, and Mr. Wadood is now in negotiations with a German company to supply it. Second, the MIM asked the DG whether DEI needed two heavy fuel oil generators (5 MW and 7 MW),which it would import from Korea, to help insure sufficient electrical power to the production lines. DEI replied in the affirmative via official letter in October. COMMENT -------------- BAGHDAD 00004055 002 OF 002 ¶8. (SBU) All agencies of the US Government need to continue providing their full support to DEI to further encourage the positive steps being made at DEI. Increasing production will provide desperately needed employment opportunities, inject needed currency into the local economy, provide equipment critical to repairing Iraq's damaged electrical infrastructure, and directly support Coalition Forces counter-insurgency strategy in the recently liberated city of Baqubah. End. BUTENIS