SITREP 1: JAN 28 FIRE AT CENTRAL BANK OF IRAQ

C O N F I D E N T I A L BAGHDAD 000253 SIPDIS SIPDIS E.O. 12958: DECL: 01/28/2018 TAGS: EAID ECON EFIN SUBJECT: SITREP 1: JAN 28 FIRE AT CENTRAL BANK OF IRAQ Classified By: Economic Counselor Todd Schwartz ¶1. (C) This situation report includes information available as of 1600 Baghdad local time. Around 0100 on January 28 a massive fire broke out in the Central Bank of Iraq (CBI) main building that rendered it unusable. The fire, the source of which has yet to be determined, gutted almost the entire building, to include: 1) ground floor Accounting, 2) mezzanine floor Loans and Agreements, 3) first floor Research and Statistics Department, and Investments Department, 4) second floor Administration and Information Technology (IT), and 5) third floor Governor's Office. The rooftop interbank payment system main rack of servers appears to be unharmed. However, with no electricity to the building the electronic fund transfer (EFT) system is inoperable. The currency vaults in the basement of the bank reportedly are intact, but underwater from firefighting efforts. These are three separate vaults that hold gold, US dollars, and Iraqi dinar. ¶2. (C) Initial on-site reports from from the IT floor reveal the Iraqi Central Bank Accounting System (ICBS) was destroyed. Central Bank employees normally back up this system everyday to a CDRom, but it is unclear if this backup was stored outside the bank at the time of the fire. During the on-site visit to the IT floor, a hard drive drum to the ICBS was discovered. All paper files were destroyed in the fire, which includes all CBI debt documentation, research files, reconciliation documentation for the net international reserves required under Iraq's Standby Arrangement (SBA) with the IMF, all paper documentation for accounting transactions, and all CBI administrative documentation. ¶3. (C) The CBI has an annex next to its main building that houses the Banking Supervision, Anti-money Laundering, Foreign Exchange, and Currency Departments. This annex was not affected by the fire and CBI Governor Sinan Al-Shabibi and other senior management have moved their operations to this annex as of today. Dr. Shabibi is determined to start basic operations tomorrow, including foreign exchange auctions. This annex also houses some Iraqi dinar in a vault that has not been affected by the fire. Rafidain Bank across the street also has offered additional space to temporarily house displaced CBI staff. ¶4. (C) Treasury Attache has encouraged Dr. Shabibi to reach out for any help the US Mission in Iraq can offer. CBI already has reached out to CBI consultants for assistance, and CETI plans to convene the major donors involved with the CBI--USAID, US Treasury, DOD, IMF, WB, etc.--to meet with Dr. Shabibi to discuss and coordinate recovery assistance to the CBI. COMMENT: The CBI has been a relative success story for Iraq by meeting IMF SBA targets at the same time helping to rein in inflation with calibrated monetary policy. Quick, targeted international assistance will be critical to support the CBI. END COMMENT. BUTENIS