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