NIC CHAIRMAN OPTIMISTIC DESPITE CHALLENGES

C O N F I D E N T I A L BAGHDAD 002811

SIPDIS

E.O. 12958: DECL: 09/01/2018
TAGS: EINV ETRD PGOV ECON IZ
SUBJECT: NIC CHAIRMAN OPTIMISTIC DESPITE CHALLENGES

Classified By: EMIN Marc M. Wall for reasons 1.4 (b,d).


1. (C) SUMMARY: National Investment Commission (NIC)
Chairman-Designate Ridha continues to aggressively court
foreign investors, even though the GOI has not promulgated
implementing regulations for the 2006 Investment Law to
support his mission. Ridha is creative and well-intentioned,
but he is also so eager to bring investors to Iraq that he
may be seeking work-arounds (in the absense of a true
investment regime) and may be promising investors protections
that he cannot necessarily gaurantee. END SUMMARY.


2. (SBU) Economic Minister-Counselor (EMIN) made his initial
call on NIC Chaiman-Designate Ahmed Ridha September 1. Ridha
described his mission to encourage foreign and domestic
investment in expansive terms, saying that what he is really
trying to do is create an entirely new "economic philosophy"
in Iraq. After 40 years under the yoke of a command economy,
the task is not easy, he said. During the Saddam era, "the
private sector was the enemy, but now we are asking it to
lead" Iraq's reconstruction and development. Ridha described
with some frustration ministers of government who still view
"investment" as a series of projects that their ministries
plan, fund and fully control. The free market will take hold
here, he concluded, but it will take time and a lot of
re-education.


3. (U) Turning from philosophy to concrete successes, Ridha
brightened. He stated that the NIC has facilitated USD 74
billion in FDI over the past five months. This includes an
Iraqi-led international consortium's USD 13 billion
investment in the Grand Basra port, and a potential USD 17
billion airport construction investment from a Saudi-led
consortium. (The latter is temporarily on hold because of
security-related allegations surrounding one of the Saudi
investors.) Looking forward, Ridha said he has been
negotiating a potential USD 38 billion investment in housing
and university buildings in Najaf with an international
consortium that includes US investors; a USD 5 billion
medical center and pharmaceutical plant with an Iraqi-Saudi
joint venture; a possible USD 30 billion
Kuwaiti-Emirati-Iraqi nationwide housing investment; and what
he called a Chinese-funded "Disneyland" in Baghdad (pricetag
unspecified).


4. (SBU) While all of this is good -- or potentially good --
news, Ridha did suggest that there is growing frustration
within the NIC over the lack of implementing regulations to
support the 2006 national investment law and over the Council
of Representative's failure to confirm him officially as NIC
chairman. A full set of implementing regulations was drafted
four months ago and delivered to the Shura Council. The
Shura took six weeks to approve and to refer the regulations
to the Council of Ministers (COM) for promulgation, but when
it finally acted it did so with enthusiasm, Ridha reported.
Now, however, the COM still has failed to move the texts
forward. EMIN noted that this lack of a clear regulatory
framework -- as well as current delays in passing legislation
that permits foreign firms to register and operate legally in
Iraq -- are a clear disincentive to American firms. Ridha
did not dispute this, but encouraged US firms to come to Iraq
anyway. Tell US investors to come -- the NIC will ensure
that they are treated fairly and their investments protected,
he urged. "If American investors want to wait for all the
regulations to be in place, they will wait ten years." Ridha
also noted that Asian, Middle Eastern and a slowly increasing
number of European firms are moving investments forward.


5. (C) COMMENT: The legislative and "philosophical"
disincentives to investment in Iraq -- as well as the
security concerns -- remain very real, and no one knows that
better than the still-unofficial NIC chairman. For these
reasons, we truly admire the optimism, enthusiasm and
creativity Ridha has brought to his task. However, in this
meeting we sensed that frustration may be prompting Ridha to
try to work around the fact that his government thus far
proven unable to produce a valid legal investment framework
for him to publicize. We also sensed that he may be asking
investors to come to Iraq under conditions that are not ideal
and perhaps offering them promises of protection that he may
-- or may not -- be able to gaurantee. END COMMENT.
BUTENIS