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