BUSINESSMAN URGES PRIVATE INVESTMENT IN BASRAH

C O N F I D E N T I A L BASRAH 000037

SIPDIS

SIPDIS

E.O. 12958: DECL: 5/6/2017
TAGS: ECON EAGR EIND EINV IR IZ
SUBJECT: BUSINESSMAN URGES PRIVATE INVESTMENT IN BASRAH

REF: 06 BASRAH 175

CLASSIFIED BY: Louis L. Bono, Director, Basrah Regional Embassy
Office, Department of State.
REASON: 1.4 (b)


1. (C) Summary and Introduction: The head of the Basrah
Business Center, Abdul Hafiz al-Ati, met with the Regional
Embassy Office (REO) Basrah director April 26 and urged the
United States to "take a small step" to attract foreign
investment in Basrah's crippled economy. He said business
development is the key to reversing Iran's economic imperialism
in the region. End summary.


2. (C) Al-Ati leaped at the suggestion of a tomato canning
factory on the border with Kuwait. In al-Ati's estimate, many
Kuwaiti business people are eager to help stabilize Iraq, but
lack a mechanism to do so. The Basrah business community, which
includes landowners and tribal leaders, would seize an
opportunity to create a sustainable business that provides jobs,
he added. The Basrah tribal and commercial leaders would
recruit the workforce and assure facility protection, according
to al-Ati. The REO director endorsed the suggestion, saying
that an American company might be willing to export tomato
canning machinery and know-how, if its risks could be covered.
He promised to look into investment opportunities via the U.S.
Export-Import Bank (EXIM) and the Overseas Private Investment
Corporation (OPIC).


3. (C) Al-Ati said unemployment, not ideology or theology, fuels
the violence tearing apart Basrah. He said that owners of date
palm plantations are renting their lands to militias because
agricultural production is crippled. (Note: Date palm
plantations create microclimates to raise fruits, vegetables and
livestock. (See reftel.) End note.) Al-Ati declared that the
farming sector will be devastated in a year if current trends
continue. He said the repercussions of a successful tomato
canning operation would reach far beyond creating a few factory
jobs and a market for a few hectares of tomatoes. In his view,
it would kindle efforts by community leaders -- sheikhs,
clerics, businessmen and professionals -- to reknit the social
fabric that has been shredded by elected politicians who have
turned Basrah into an arena of mafia war. The ripple effect of
a successful tomato cannery would create incentives to
reinvigorate other commercial sectors, such as fertilizer,
paper, building materials, and sugar, according to Al-Ati. The
REO director, playing to devil's advocate, said if the
enterprise failed, the bad news would reinforce foreign
investors' fears. Al-Ati replied that the risk was small for a
huge success that could mark the beginning of the reversal of
Iran's "economic invasion."


4. (C) According to al-Ati, Iran is intentionally flooding
Basrah and other parts of southern Iraq with all sorts of
consumer goods at prices far below those offered by Kuwait and
other Gulf trading partners. He said that Iran's intent is to
make southern Iraq its economic vassal, and that Iran has
designs to build a petrochemical complex in Basrah to take
advantage of its oil reserves. Al-Ati said it is necessary to
reenergize Basrah's gutted economy in order to reverse this
trend.


5. (C) Comment. REO Basrah is eager to host a business
roundtable for the Basrah commercial community with
participation by Embassy Baghdad economic and commercial
principals. REO Basrah believes it would be useful to explore
Al-Ati's ideas for small business development and how the USG
could lend support. End comment.

BONO