COUNCIL OF REPRESENTATIVES APPROVES 2007 BUDGET

C O N F I D E N T I A L BAGHDAD 000441

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/09/2017
TAGS: ECON EFIN PGOV IZ
SUBJECT: COUNCIL OF REPRESENTATIVES APPROVES 2007 BUDGET

REF: A. BAGHDAD 408

B. BAGHDAD 290

Classified By: Economic Minister-Counselor Daniel Weygandt for reasons
1.4 (b) and (d).


1. (C) Summary: The Council of Representatives approved the
2007 budget at 18:30 on February 8, just before going into
recess. Negotiations between the Kurds and the central
government were tentatively concluded late afternoon on
February 8, with an agreement to 'reach an agreement between
the Prime Minister and the President of the Region to equip,
arm, and pay the region within the National Defense System.'
This agreement appears open to interpretation - CoR members
of different parties have different understandings. Other
changes include transferring 5% of the 'social benefits'
allocation from the Prime Minister, Presidency Council, and
Council of Ministers to the Council of Representatives, and
eliminating the article authorizing specific loans from
Japan, Iran, Saudi Arabia, and the World Bank. The 10
billion dollar investment budget remains intact. Having
fulfilled its constitutional requirement to pass the budget
before the end of the legislative term, the CoR recessed
until early March. End Summary

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The CoR Votes
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2. (U) Voting on the budget was not on the CoR's published
agenda as of the morning of February 8, as negotiations
continued about the funding of the Kurdish Peshmerga. After a
full morning session the CoR decided to return after lunch to
vote on the budget, and the day's session went much longer
than usual. The Speaker called for a vote on the whole
budget law, which reportedly passed with 157 votes. (Note:
The morning session had about 180 members present, and
assuming several did not return for the second part of the
session, the budget was passed with an overwhelming majority
of those present. End note.) A member of the Shi'a
coalition objected to the quick vote and requested a more
thorough review of articles which had changed since prior
budget discussions. The members agreed to vote on changes to
previous drafts. During this process the article authorizing
the government to sign specific loans with Japan, Iran, Saudi
Arabia, and the World Bank was voted down. A final vote was
again held on the 'whole budget', which passed with a large
majority (no count was reported),and the members
congratulated each other with applause. Immediately following
this vote, the Speaker continued to read out more changes,
and the CoR voted to reallocate 5% of the 'social benefits'
allocation of the Prime Minister, Presidency Council, and
Council of Ministers to the Council of Representatives. The
CoR was then addressed by the Minister of Health about a
US-Iraqi arrest of a Deputy Minister of Health earlier that
day, and then recessed until early March.

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Funding the Peshmerga
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3. (C) The last minute rush to vote on the budget was
caused by a dispute about the funding of a 'Regional Guard',
the Kurdish Peshmerga (ref A). This issue emerged after the
Kurds walked out of the January 27 session dedicated to
voting on the budget (ref B) and was not resolved until the
afternoon of February 8. The agreement, as reported in a
press release from the First Deputy Speaker Khalid Attiya, is
that "agreement shall be reached between the Prime Minister
and the President of the Region to equip and arm the regions
within the National Defense System". Kurdish members of the
CoR reported to emboffs that this meant that the GOI PM and
KRG president would agree on allocation to equip, arm and pay
the salaries of the Peshmerga out of central funds. The
Kurds were clearly pleased. Finance Committee Chair Ayad al
Samara'i (Tawafuq - IIP) described this additional language
to the budget law as largely insignificant; since no specific
allocation was given to the Peshmerga, and any new allocation
would have to come to the CoR for approval before it would be
released. Ridha Jawad Taqi (SCIRI - UIC) described the
resolution of negotiations as 'postponing the dispute'. It
remains to be seen how this agreement will be implemented.


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"Still Problems, But It Needed to Pass"
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4. (C) After a long day, CoR members seemed pleased with
themselves for finally passing the budget. Ayad Al Samara'i
said that there were still problems with the budget, but that
it needed to pass. Specifically, in his review as the
Finance Committee Chair he did not see enough planning from
the line ministries - when asked to justify their budget
requests they were unable to come up with specific plans, and
so he thinks it will be difficult to execute the full
budgets. Still, Al Samara'i, as other members, felt a sense
of accomplishment about the CoR's work. (Note: Following
the end of the session, there was a reported threat of a car
bomb on the only road driving out of the CoR, and members
were unable to leave the area for another two hours. End
note.)

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Comment
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5. (C) The CoR's 70th session of February 8 is evidence of
what the CoR can accomplish when it must, and that members
are willing to stay in session until 19:00 to do so. The
sense from the CoR was that the final budget was not perfect,
but that the country needed it to pass; members did feel a
sense of urgency. The budget law was approved with an
overwhelming majority, the 10 billion dollars for capital
investment projects is intact, and now the GOI can focus on
the real challenge of executing its budget.
KHALILZAD