CETI: DPM BARHAM SALIH WANTS CONTINUED

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002819 SIPDIS E.O. 12958: DECL: 09/01/2018 TAGS: PREL EFIN ETRD EAID ECON SUBJECT: CETI: DPM BARHAM SALIH WANTS CONTINUED COLLABORATION, PROPOSES US/IRAQ BUSINESS FORUM REF: A. BAGHDAD 2768 ¶B. BAGHDAD 2811 Classified By: EMIN - Marc Wall, Reason 1.5 (b,d) ¶1. (C) Summary: At his introductory meeting with EMIN Wall on September 1, DPM Barham Salih provided a tour d'horizon of economic issues. He noted that Iraq is in a transitionQperiod; key challenges include: political reorganization (including the status of Kirkuk),energy -- especially hydrocarbons legislation -- and fiscal management. Barham supported the International Compact with Iraq process but noted that other ministers are skeptical because they can't see that it reflects a new, stronger and more self-confident Iraq setting its own priorities. Barham thought the investment climate was improving and believed that a new Strategic Framework Agreement's economic chapter could cover bilateral investment issues with the U.S. He proposed that we organize the U.S./Iraq Dialogue on Economic Cooperation (DEC) before the end of the year, and use the occasion to convene a large business forum with U.S. firms. End Summary. ¶2. (C) At incoming EMIN Wall's introductory call on DPM Barham Salih on September 1, Barham expressed his great satisfaction with the close relationship he had with outgoing EMIN Ries and his desire to have a similarly close relationship with Wall. He said, "although there are people in the cabinet who do not support such close contacts with the USG, I believe it is necessary." He underscored that circumstances have changed over the last year, indicating EMIN would likely face less "crisis management." There remain significant obstacles, however, including political organization, Kirkuk, "oil laws," and budget execution, he said. None of which can be tackled in isolation, he observed, adding that "we must all remain conscious of the consequences of failure." ¶3. (C) Asked whether the GOI was working to organize an energy strategy, Barham said he had recused himself from engaging directly. He noted the PM had set up the GOI inter-ministerial council to address broader energy issues and the Minister of Electricity is good, he "gets it." The Ministry of Oil, on the other hand, "doesn't lend itself" to making compromises necessary for a broader energy strategy. Barham assured EMIN that World Bank advisors will be helping the GOI to develop such a strategy. (Comment: Per ref A, the outgoing World Bank country director told us that the Bank would provide support for developing an energy strategy only if the GOI asked the Bank for it. End comment.) Barham also noted that USG players are engaged to support the GOI in this work, especially on the military side. Overall, he is happy with the quality of support the GOI is getting. In response to EMIN's query on the GOI's reaction to General Electric's bid for a large power generation facility, Barham noted that his old friend, a "former U.S. Foreign Relations Committee staffer" now works for GE and had been in touch with Barham. Barham offered to be in touch with the Minister of Electricity on this issue, if needed. ¶4. (C) Referring to the International Compact with Iraq (ICI),Barham said the Stockholm ministerial was a great success. The ICI "serves a purpose, it creates momentum in the GOI." Barham hopes to convene a meeting of the Baghdad Consultative Group within ten days to discuss a restructuring of the GOI's ICI implementation mechanisms which was approved with the UN at an ICI Executive Meeting on August 21. However, he said, some ministers don't understand the ICI, believing that it reflects Iraq's old relationship of dependence on foreign donors. Barham thinks that's wrong; the ICI advances the GOI's own priorities. He fears that some ministers' new confidence in Iraq is, in some respects, overconfidence. Relief of Kuwaiti and other Gulf debt is still a problem due to Arab politics, he said. He had been on the phone with Treasury DepSec Bob Kimmitt within the past couple of days talking about debt relief and the Israel boycott language, which is a problem in Iraq with the "Islamist" parties, not "my constituency." ¶5. (C) On investment issues, Barham assured EMIN that the National Investment Commission (NIC) is now working, and governorates all across Iraq are standing up their Provincial Investment Commissions. He said NIC Chair Ahmed Ridha is very enthusiastic and hadn't made any complaints to Barham. Asked about rules on registering foreign companies, which are keeping some U.S. firms on the sidelines, Barham agreed there are problems with registration and tax codes, and he is following this up with the Shura Council. (Comment: per ref B we do not share NIC Chair Ridha's apparently cavalier approach to obstacles to FDI in Iraq. It may be that Barham, who is a close friend of Ridha and a fellow alumnus from the same school in Suleimania, has been influenced by Ridha's BAGHDAD 00002819 002 OF 002 "damn the rules, full speed ahead" attitude. End Comment.) ¶6. (U) Dialogue on Economic Cooperation: Barham emphasized that he would like to organize the next DEC before the end of this year, or certainly before the end of January 2009. He proposed that we work together to organize a "big" business forum at the same time. In his view this would send an important message. When EMIN mentioned the need for the GOI to finalize the TIFA, Barham replied that the SFA will have an economic chapter. (Note: apparently implying that this would supersede a TIFA. End note.) We are following up on DEC planning with Barham's staff. ¶7. (U) Comment: Barham's proposal for a DEC and a concurrent business forum is intriguing but perhaps overly ambitious in the timeframe he envisions. We would welcome guidance. End Comment. BUTENIS