BABIL PROVINCIAL GOV'T HOLDS FRUITFUL DISCUSSION WITH NAT'L

C O N F I D E N T I A L HILLAH 000128

SIPDIS

SIPDIS

E.O. 12958: DECL: 9/22/2017
TAGS: ECON PGOV EFIN PREL IZ
SUBJECT: BABIL PROVINCIAL GOV'T HOLDS FRUITFUL DISCUSSION WITH NAT'L
REPS ON BUDGET EXECUTION, ECONOMIC DEVELOPMENT

REF: BAGHDAD 3024

CLASSIFIED BY: Mary H. Witt, PRT Leader, PRT Babil, REO
Al-Hillah, U.S. Department of State.
REASON: 1.4 (b),(d)




1. (U) This is a PRT Babil Cable.


2. (C) On September 20, representatives from Deputy Prime
Minister (DPM) Barham Saleh's office travelled to Al-Hillah to
meet with Babil Governor Salem Saleh Mahdi Al-Muslimawi, members
of the Babil Provincial Council (PC) and provincial directors
general (DGs) to discuss provincial budget execution and
economic development. Recurring themes at today's meeting
included discussion on funding levels along with the rate of
budget disbursement from the national government and funding
requests for specific industrial and infrastructure projects.
Members of the Babil PRT and embassy econoff attended as
observers making it clear that the discussion was an Iraqi one
with no direct role for the USG other than logistical support.
The meeting, which was held at the governor's office, served as
a preparatory meeting for a subsequent forum on the same topics
(similar to the September 6 event held for Anbar - reftel - and
an earlier DPM engagement in Diyala),to include higher-level
national government participation including Saleh and possibly
the ministers of finance and public works.


3. (C) Budget execution and funding levels provoked the most
discussion during the meeting. Praise for Babil's successful
meeting of GOI Ministry of Finance (MOF) benchmarks for budget
execution was unanimous -- indeed, the DPM's staff cited this as
the principal reason the DPM had chosen Babil as the next
province with which to move forward on his "Forum" initiative.
At the same time, members of the Babil PC and the various DGs
expressed their frustration at the late disbursement of funds
from the national government as well as what they deemed to be
insufficient funds provided to the province up to now. Of
particular concern to PC members and DGs were long-term
strategic projects such as roads, hospitals, and public works
projects which could not be funded in one year due to the
duration of the construction period. Consequently, they
claimed, the province cannot file accurate yearly funding
requests. Compounding this rigidity, the Babil officials also
complained about the late disbursement of funds from Baghdad
(despite their having met all the benchmarks),which has slowed
down their ability to expend funds. All these factors combine
to cause construction halts and (in some cases) the need to
provide letters of credit to contractors in order to ensure
unimpeded work. PC members and the DGs requested permission to
increase budgetary flexibility by allowing for fiscal year
"roll-over" capability. Babil officials also expressed their
wish that Baghdad announce the amount of total funds available
before the province filed its annual funding request, while the
DPM staffers countered that it would be best if the province
continued with the current requirement that it place its request
with the national government first. These disputes aside,
however, the DPM's staff looked forward to continuing the
dialogue and asked for a list of candidates by Monday for
training in disbursement procedures under the micro-credit and
home loan programs likely to be part of the economic initiatives
announced at a future "Babil Forum".


4. (C) After the conclusion of the meeting, the DPM's staffers
met with members of the Babil PRT, visiting Embassy Baghdad
econoff, and MNF-I STRATEGIC EFFECTS team to discuss a draft
program for the Babil Forum. A tentative program includes
meetings at the governor's office, Provincial Council, a meeting
with Babil sheikhs, and a press conference. PRT will continue
to coordinate with Embassy Baghdad and Babil officials.


5. (C) Comment: Most observers of provincial reconstruction
have noted a broad disconnect in outlook and approach between
the national and provincial governments. With its control of
the purse strings, national government support of provincial
reconstruction is crucial. While the September 20 meeting
between Baghdad and Babil officials underscored continuing
differences in outlook, it holds out hope for a channel towards
convergence of priorities. Although the DPM's "Forum"
initiatives are not yet clearly part of any systematized
GOI-generated provincial outreach process, DPM Saleh has sought
to refine the approach with each event to obtain earlier
ministerial and Prime Minister buy-in and approval of financing.
Consequently, Saleh may become a facilitator of GOI -
Provincial communication, and continuing the dialogue between
the two is essential to forging mutual cooperation in the
reconstruction effort. End comment.

WITT