MOH AGREES TO ANTI-ARAB LEAGUE BOYCOTT LANGUAGE

C O N F I D E N T I A L BAGHDAD 002629 SIPDIS E.O. 12958: DECL: 08/15/2018 TAGS: ECON ETRD KPBT PREL EFIN IZ SUBJECT: MOH AGREES TO ANTI-ARAB LEAGUE BOYCOTT LANGUAGE REF: A. BAGHDAD 2467 ¶B. BAGHDAD 764 ¶C. DAVIDSON-EMBASSY BAGHDAD E-MAIL 25 FEB 08 ¶D. BAGHDAD 42 Classified By: A/DCM Charles P. Ries, for reasons 1.4 (b,d). ¶1. (C) SUMMARY: The Ministry of Health has agreed to eliminate Arab League Boycott (ALB) language in all future procurement contracts. With this breakthrough, two of three areas in which the GOI had been using contracting language that violated U.S. anti-ALB legislation (trademark applications and MOH procurement) are no longer implementing ALB provisions. END SUMMARY. ¶2. (SBU) Embassy officials met August 14 with Deputy Health Minister Abdullah Essam to follow up on our early August efforts to convince him to remove ALB language from a pending Ministry of Health (MOH) contract with a U.S. firm (Reftel B). As he had promised, Essam had explored both that contract and the possibility of permanently removing ALB from all MOH contracts. He was accompanied by Abdullah Salam, an attorney from Kimadia, the MOH's procurement arm. One Case Resolved -------------- ¶3. (C) Salam explained that the problem surrounding the contract in question was resolved on August 9, when Kimadia agreed to attach an annex that voided ALB implementing clauses. A local representative of the U.S. firm had signed the annex and acknowledged that the newly amended contract, in his view, was no longer in violation of U.S. anti-ALB legislation, Salam reported. Salam showed us a power of attorney that appeared to give the local representative the authority to sign on behalf of the U.S. supplier, as well as the annex to the contract. (NOTE: He did not provide us copies of these documents, but Embassy staff roughly translated the annex as follows: "This constitutes legal agreement between the two parties that clauses E and F of Section 16 of this contract have been removed and will not be implemented." We understand that the U.S. firm is already working with USDOC to ascertain if the annex is indeed sufficient to satisfy U.S. law. End Note.) Salam stated that since the Kimadia and the U.S. supplier had already signed the original contract, the only way to remove the ALB language from the signed document was via an annex. No ALB Implementation in Future MOD Contracts -------------- ¶4. (C) Looking forward, Essam and Salam agreed that ALB implementing language would be excluded from all future Kimadia contracts and replaced with language that honored Iraq's commitment as an Arab League member but did not violate U.S. law. Specifically, the following clauses will be eliminated: "Certificate of origin (should certify that the goods are wholly produced or manufactured in the country of origin and do not comprise any parts, raw materials, labor or capital of Israeli origin and should bear the following certification: 'The producer or manufacturer is not a branch or mother company of firms in the Israeli boycott blacklist') is required with the offer from each item offered." They will be replaced with language DOC has determined to be in conformance with US anti-ALB legislation (Ref C): "These goods are wholly of U.S. origin." COMMENT: Two Down, One To Go -------------- ¶5. (C) Post's action plan (Ref B) for securing GOI non-implementation of ALB provisions is now two-thirds complete. USDOC had received reports of the use of ALB language in three areas: trademark applications, MOH contracts, and South Oil Company (SOC) contracts. Trademark issues were addressed previously (Refs B,D),and post believes that issues at the MOH have now been resolved. Our access to and influence with Basrah-based SOC are the most problematic, but we have already taken up the issue with the Ministry of Oil and briefed PRT Basrah, which is prepared to engage SOC directly. ¶6. Comment Continued: The battle, however, is not yet won. We will still continue to engage to discourage Iraqi attendance at Arab League Boycott meetings in Damascus, and we will monitor closely the actions of GoI ministries and agencies for any backsliding. END COMMENT. CROCKER