Identifier
Created
Classification
Origin
08BAGHDAD1971
2008-06-27 14:29:00
SECRET//NOFORN
Embassy Baghdad
Cable title:
JUNE 25 MEETING WITH GOI REGARDING TUWAITHA YELLOW
how-toVZCZCXRO6879 RR RUEHBC RUEHDE RUEHIHL RUEHKUK DE RUEHGB #1971 1791429 ZNY SSSSS ZZH R 271429Z JUN 08 ZDK ZUI RUEHCB 9467 1821743 FM AMEMBASSY BAGHDAD TO RUEHC/SECSTATE WASHDC 8015 INFO RUCNRAQ/IRAQ COLLECTIVE RUEHC/OPEC COLLECTIVE RUEKJCS/SECDEF WASHINGTON DC RUEHC/SECSTATE WASHDC 8016 RHEBAAA/USDOE WASHDC RHEHAAA/WHITE HOUSE WASHINGTON DC//NSC//
S E C R E T BAGHDAD 001971
SENSITIVE
SIPDIS
E.O. 12958: DECL: 06/25/2018
TAGS: CA ECON ENRG IZ KNNP PARM PREL
SUBJECT: JUNE 25 MEETING WITH GOI REGARDING TUWAITHA YELLOW
CAKE DELIVERY TO CANADIAN BUYER, CAMECO
REF: A. SECSTATE 55887
B. BAGHDAD 01775
Classified By: CETI, AMBASSADOR C RIES FOR REASONS 1.4(B),(D) AND (E).
S E C R E T BAGHDAD 001971
SENSITIVE
SIPDIS
E.O. 12958: DECL: 06/25/2018
TAGS: CA ECON ENRG IZ KNNP PARM PREL
SUBJECT: JUNE 25 MEETING WITH GOI REGARDING TUWAITHA YELLOW
CAKE DELIVERY TO CANADIAN BUYER, CAMECO
REF: A. SECSTATE 55887
B. BAGHDAD 01775
Classified By: CETI, AMBASSADOR C RIES FOR REASONS 1.4(B),(D) AND (E).
1. (S) SUMMARY: EMIN and Energy Attach met on June 25 with
Minister of Science and Technology, Raid Fahmi,to hear
Fahmi's views about the financial consequences of USG's
delivering the 550 MT of natural uranium (Yellow Cake) to
Canada after the Sales Contract's June 15 delivery date.
Fahmi asked the USG to provide him with a letter explaining
why the delivery is being made after the June 15 date and
suggested the USG share the financial responsibility for the
estimated $23 m reduction in sale proceeds Fahmi expects due
to the post-6/15 delivery. EMIN responded that Post will
draft a letter explaining the reasons for the so-called
"late" delivery and proposed that the USG reduce by half the
previously agreed $14 m transportation cost-share in
settlement of the issues, (i.e.,for a total of $7 m). Fahmi
agreed with EMIN to discuss these proposals with his
Committee and therafter with the Council of Ministers.END
SUMMARY.
2. (S) Fahmi told EMIN he had discussed the delivery with
GOI's Yellow Cake Sales Committee. The Committee, he said,
was concerned that GOI not absorb all the reduction in sales
proceeds resulting from the late delivery. Based on spot
market price trends Fahmi's experts estimate the reduction
will be $23 m from the Contract's full price of $90 m. He was
concerned about possible allegations of corruption because
the sale proceeds will not equal the $90 m he had promised to
the COM. Fahmi requested Embassy to explain by letter how the
late delivery occurred, resulting in the lower price under
the GOI-Cameco Sales Contract. EMIN agreed that the Embassy
will draft such a letter which will explain that the USG had
unilaterally made the transport arrangements based on the
need for OPSEC.
3. (S) Regarding splitting equally the amount of reduced sale
proceeds (estimated by Fahmi at $23 m) between the USG and
GOI, Fahmi first noted that GOI would favor (under these
circumstances) that USG pay the entire transport cost,
thereby eliminating the entire $14 m cost-share previously
agreed to be paid by GOI. EMIN countered that USG needed to
show Congress that GOI contributed to the cost of the
transport. Eliminating the entire $14 m cost-share would not
be feasible. Moreover, EMIN reminded Fahmi that USG intended
to spend the receipts from the cost-share in Iraq through
I-CERP. The Minister worried also that under the
circumstances an allegation was possible that GOI was
negligent in not insisting on a transport contract with the
USG for removing the Yellow Cake to Canada. But Fahmi noted
the Committee's view that USG, being in charge of the
transport, had significant responsibility for the resulting
loss of GOI's sale proceeds.
4. (S) EMIN first suggested that USG would take
responsibility for a proportionate percentage of the loss,
based on GOI's percentage reduction of the sale price. As the
$23 m expected market adjusted shortfall was roughly 25% of
the $90 m full Contract price that GOI would've received if
the YC was delivered by June 15, EMIN offered to drop 25% off
of the $14 m cost-share due to the USG (reducing GOI's
cost-share by $3.5 m to $10.5 m). Fahmi said he thought this
would be insufficient. EMIN then suggested that since the USG
had been responsible for transport perhaps we could drop the
GOI's cost-share $14 m by one-half to $7 m. Fahmi agreed to
consider this once the Embassy's proposal was offered by
letter. EMIN agreed to send Fahmi the Embassy's proposal in
writing, along with a separate letter on the circumstances
attending the transportation scheduling arrangements.
5. (S) The Minister suggested the parties await the actual
spot market price in effect on the date of delivery (expected
to be July 3rd) before finalizing any agreement. EMIN agreed.
6. (S) Embassy will prepare both letters requested by Fahmi
and clear them with Washington Agencies before discussing
further with Minister Fahmi.
CROCKER
SENSITIVE
SIPDIS
E.O. 12958: DECL: 06/25/2018
TAGS: CA ECON ENRG IZ KNNP PARM PREL
SUBJECT: JUNE 25 MEETING WITH GOI REGARDING TUWAITHA YELLOW
CAKE DELIVERY TO CANADIAN BUYER, CAMECO
REF: A. SECSTATE 55887
B. BAGHDAD 01775
Classified By: CETI, AMBASSADOR C RIES FOR REASONS 1.4(B),(D) AND (E).
1. (S) SUMMARY: EMIN and Energy Attach met on June 25 with
Minister of Science and Technology, Raid Fahmi,to hear
Fahmi's views about the financial consequences of USG's
delivering the 550 MT of natural uranium (Yellow Cake) to
Canada after the Sales Contract's June 15 delivery date.
Fahmi asked the USG to provide him with a letter explaining
why the delivery is being made after the June 15 date and
suggested the USG share the financial responsibility for the
estimated $23 m reduction in sale proceeds Fahmi expects due
to the post-6/15 delivery. EMIN responded that Post will
draft a letter explaining the reasons for the so-called
"late" delivery and proposed that the USG reduce by half the
previously agreed $14 m transportation cost-share in
settlement of the issues, (i.e.,for a total of $7 m). Fahmi
agreed with EMIN to discuss these proposals with his
Committee and therafter with the Council of Ministers.END
SUMMARY.
2. (S) Fahmi told EMIN he had discussed the delivery with
GOI's Yellow Cake Sales Committee. The Committee, he said,
was concerned that GOI not absorb all the reduction in sales
proceeds resulting from the late delivery. Based on spot
market price trends Fahmi's experts estimate the reduction
will be $23 m from the Contract's full price of $90 m. He was
concerned about possible allegations of corruption because
the sale proceeds will not equal the $90 m he had promised to
the COM. Fahmi requested Embassy to explain by letter how the
late delivery occurred, resulting in the lower price under
the GOI-Cameco Sales Contract. EMIN agreed that the Embassy
will draft such a letter which will explain that the USG had
unilaterally made the transport arrangements based on the
need for OPSEC.
3. (S) Regarding splitting equally the amount of reduced sale
proceeds (estimated by Fahmi at $23 m) between the USG and
GOI, Fahmi first noted that GOI would favor (under these
circumstances) that USG pay the entire transport cost,
thereby eliminating the entire $14 m cost-share previously
agreed to be paid by GOI. EMIN countered that USG needed to
show Congress that GOI contributed to the cost of the
transport. Eliminating the entire $14 m cost-share would not
be feasible. Moreover, EMIN reminded Fahmi that USG intended
to spend the receipts from the cost-share in Iraq through
I-CERP. The Minister worried also that under the
circumstances an allegation was possible that GOI was
negligent in not insisting on a transport contract with the
USG for removing the Yellow Cake to Canada. But Fahmi noted
the Committee's view that USG, being in charge of the
transport, had significant responsibility for the resulting
loss of GOI's sale proceeds.
4. (S) EMIN first suggested that USG would take
responsibility for a proportionate percentage of the loss,
based on GOI's percentage reduction of the sale price. As the
$23 m expected market adjusted shortfall was roughly 25% of
the $90 m full Contract price that GOI would've received if
the YC was delivered by June 15, EMIN offered to drop 25% off
of the $14 m cost-share due to the USG (reducing GOI's
cost-share by $3.5 m to $10.5 m). Fahmi said he thought this
would be insufficient. EMIN then suggested that since the USG
had been responsible for transport perhaps we could drop the
GOI's cost-share $14 m by one-half to $7 m. Fahmi agreed to
consider this once the Embassy's proposal was offered by
letter. EMIN agreed to send Fahmi the Embassy's proposal in
writing, along with a separate letter on the circumstances
attending the transportation scheduling arrangements.
5. (S) The Minister suggested the parties await the actual
spot market price in effect on the date of delivery (expected
to be July 3rd) before finalizing any agreement. EMIN agreed.
6. (S) Embassy will prepare both letters requested by Fahmi
and clear them with Washington Agencies before discussing
further with Minister Fahmi.
CROCKER