Identifier
Created
Classification
Origin
08BAGHDAD2962
2008-09-14 13:07:00
SECRET
Embassy Baghdad
Cable title:  

AMB, CG AND PM DISCUSS ELECTIONS, GOI/KRG

Tags:  PGOV PREL MOPS MARR PTER ENGR EPET IZ 
pdf how-to read a cable
VZCZCXRO2431
OO RUEHBC RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #2962/01 2581307
ZNY SSSSS ZZH
O 141307Z SEP 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9397
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RHMFISS/HQ USCENTCOM MACDILL AFB FL PRIORITY
RUEHBC/REO BASRAH PRIORITY 2343
RUEHKUK/REO KIRKUK PRIORITY 2282
RUEHIHL/REO HILLAH PRIORITY 2289
RHMFISS/HQ USEUCOM VAIHINGEN GE PRIORITY
S E C R E T SECTION 01 OF 03 BAGHDAD 002962 

SIPDIS

E.O. 12958: DECL: 09/13/2018
TAGS: PGOV PREL MOPS MARR PTER ENGR EPET IZ
SUBJECT: AMB, CG AND PM DISCUSS ELECTIONS, GOI/KRG
RELATIONS, OIL AND POWER, FOREIGN INVESTMENT AND ONGOING
CONTRACT NEGOTIATIONS.

BAGHDAD 00002962 001.2 OF 003


Classified By: AMB Ryan C. Crocker for reasons 1.4 (b) and (d)

S E C R E T SECTION 01 OF 03 BAGHDAD 002962

SIPDIS

E.O. 12958: DECL: 09/13/2018
TAGS: PGOV PREL MOPS MARR PTER ENGR EPET IZ
SUBJECT: AMB, CG AND PM DISCUSS ELECTIONS, GOI/KRG
RELATIONS, OIL AND POWER, FOREIGN INVESTMENT AND ONGOING
CONTRACT NEGOTIATIONS.

BAGHDAD 00002962 001.2 OF 003


Classified By: AMB Ryan C. Crocker for reasons 1.4 (b) and (d)


1. (S/NF) SUMMARY: In the regular weekly meeting held on
September 11 with Iraqi Prime Minister Nuri al-Maliki,
Ambassador and Commanding General MNF-I General David
Petraeus discussed the elections law, relations between the
KRG and GOI, foreign business investment in Iraq, crude oil
processing and heavy fuel oil (HFO) stocks, and ongoing
contract negotiations. Ambassador stressed the importance
of elections; Maliki was optimistic on holding elections in
Iraq by the end of the year, "with or without a new
elections law." Ambassador, in responding to Maliki's
rhetoric toward the Kurds, emphasized that political
problems must have political solutions and cautioned
against actions that could jeopardize all that had been
achieved. PM Maliki discussed UAE investment and
diplomatic relations in Iraq, as well as the "late arrival"
of U.S. companies in Iraq. General Petraeus noted that
Iraq's precipitous rise in the price of HFO had filled
storage capacity at the Baiji refinery and negatively
affected continued refining. Maliki called the Minister of
Oil and directed him to lower prices in order to increase
exports of HFO and free up storage capacity for continued
crude oil processing. General Petraeus further commented
that a number of contract disputes over "a few million
dollars" were costing the GOI tens of millions of dollars
in lost revenues. General Petraeus specifically mentioned
the O&M contract for electrical power generation and
ongoing issues with the Baghdad International Airport
(BIAP) security contract. The PM's staff called the
Minister of Electricity who said O&M contract would be
signed "next week." End summary.


2. (S/NF) PM Maliki welcomed John Hannah, Special Assistant
to the Vice President for National Security Affairs, and
asked Hannah to pass on his regards to VP Cheney. The PM

commented about VP Cheney's recent trip to Georgia and
remarked that while the Georgians have historically had
problems with Russia, even under the former Soviet Union,
the current crisis happened and developed very quickly.

--------------
Status of Elections Law
--------------


3. (S/NF) Ambassador opened by noting that the Iraqi
Council of Representatives (COR) was back in session and
that he had met with Speaker Mashadani to discuss the
elections law. Ambassador said that Mashadani is
determined to bring Parliament to consensus, taking into
account the recommendations offered by the United Nations
Assistance Mission in Iraq. Ambassador further commented
that Mashadani had formed a committee comprised of Sunni,
Shia, Turkmen, Kurds and Christians to discuss the
elections law; which had also recently met.


4. (S/NF) PM Maliki said that he had also talked to
Mashadani and that Mashadani was optimistic an agreement
would be reached. Maliki said that "they" had all agreed
that, with or without a new elections law, the elections
must take place.

--------------
Political Solutions for Political Problems
--------------


5. (S/NF) Using the elections to turn the subject to the
Kurds, Maliki complained about Kurdish claims that Mosul
is a disputed area. The PM stated that he didn't
understand how the Kurds could continue arguing over
disputed areas and causing problems. "Do the Kurds want
their own state" he asked rhetorically. Either Iraq will
follow a federal system or not. If this is how the Kurds
view federalism it will mean "civil war." Ambassador
interjected that the problems Maliki was describing were
actually caused by Saddam and his destructive use of
sectarianism. Maliki conceded the point and said Saddam's
practices continue to have repercussions.


6. (S/NF) Changing tack, PM Maliki stated that he had met
with Barham Salih and showed him a visa that KRG issues to
Iraqis to enter the KRG. When the visa expires, Iraqis are
supposed to leave the KRG. Maliki asked rhetorically
whether it was required to have a visa for travel between
states in the U.S. Ambassador replied that when he first

BAGHDAD 00002962 002.2 OF 003


arrived in Iraq he noted the predominant emotion was that
of fear. The Sunni were afraid of the future. The Shia
were afraid of the past. The Kurds were afraid of the past
and the future. Now the KRG issue is a result of two
things: first, the legacy of Saddam and, second, the lack
of a political dialogue in Iraq involving all parties to
establish an agreed upon future for Iraq.


7. (S/NF) Maliki responded that in addition to fear there
was greed. The Shia had thought that they would control
the entire country. The Kurds had thought they would
extend their borders to the city of Samarra. The Sunni had
thought by means of insurgency they could bring back the
past. Everyone is more realistic now except for the
Kurds, Maliki emphasized. He concluded that the Kurds are
"foolish if they think that they can establish such a
state."


8. (S/NF) Ambassador remarked that it was important to look
at all that had been accomplished. He noted that
everything Maliki had achieved over the last year was
difficult even to comprehend. The strength of the State
was vastly greater than before. Maliki commented that
these accomplishments came at great expense of American and
Iraqi blood. The PM noted that it is often said - "keeping
a victory is harder than achieving it." Ambassador replied
that we can't afford to risk all that had been achieved,
given the price we have paid.


9. (S/NF) Ambassador stated that "political problems
require political solutions." He told Maliki that he was
planning to travel to Erbil later in the day and would meet
with KRG President Barzani. (Note: This trip was
subsequently postponed until 9/16 due to poor weather in
Erbil. End Note) He told Maliki that he would tell
President Barzani the same thing. Maliki stated that he
wanted Ambassador to convey his warmest regards and respect
to KRG President Barzani but he hoped Barzani would be
objective. He said that the constitution was the common
ground upon which they could agree and that the Kurds must
avoid taking short term measures that could jeopardize all
they had achieved. Ambassador concurred.

--------------
UAE Diplomatic and Business Presence in Iraq
--------------


10. (S/NF) Shifting focus, Ambassador commented on the UAE's
recent establishment of diplomatic relations with GOI.
The UAE Ambassador to Iraq presented his credentials to GOI
and was confirmed. Maliki said that he had met with the
UAE Ambassador who was eager for UAE companies to enter
Iraqi markets. The PM noted that UAE companies had
expressed interest in many sectors, including housing,
water, sewage and power.


11. (S/NF) Ambassador remarked on the current housing
problem in Iraq and encouraged Maliki to work with UAE and
possibly Egyptian companies to develop large scale housing
projects. Maliki responded that there is already an
agreement to build 63,000 housing units at the Rasheed
military base and another 75,000 housing units in Dinma.
Maliki stated that these projects would also employ many
Iraqi workers and engineers. Additionally, the PM noted
plans to build two new hospitals and that funding has been
set aside for a total of ten new hospitals.

--------------
U.S. Business Investment in Iraq
--------------


12. (S/NF) PM Maliki noted that U.S. companies are very,
very slow to invest in Iraq, with the exception of General
Electric (GE),which recently signed a contract to
construct power plants. Maliki commended General Petraeus
for encouraging GE's involvement. General Petraeus asked
about the Parsons Brinckerhoff contract for maintenance of
Iraq's electrical power generation system, emphasizing its
importance and asking if it had been signed. The PM asked
his Chief of Staff, Dr. Tarek Abdullah, to call the
Minister of Electricity (MoE) to check on the status of the
contract. Dr. Tarek left the room and upon returning
reported that the last revisions had been received the
previous day and that MoE plans to sign the contract next
week. General Petraeus and Ambassador noted that the costs

BAGHDAD 00002962 003.2 OF 003


from the delay are considerable as the lack of maintenance
had affected electrical generation and urged the PM to have
the agreement signed as soon as possible.

--------------
Oil and Power Production
--------------


13. (S/NF) PM Maliki, in discussing electrical power
generation, commented on the lack of available diesel fuel
for use in Iraqi power plants. He noted that Iran and
Kuwait are not supplying sufficient supplies of diesel to
meet current Iraqi demand.


14. (S/NF) General Petraeus cautioned the PM on the GOI's
precipitous increase in the price of HFO. General Petraeus
noted that Syria and Jordan are no longer purchasing HFO
from Iraq because of the price hike and that reserve
capacity is now at 98%, which is affecting the ability to
refine more crude oil at the Baiji refinery. Ambassador
said that the reality was that no one is going to pay that
price for HFO and that it would ultimately shut down
production because storage was being overwhelmed by HFO.
General Petraeus commented that Baiji refinery would have
to shut down because of the excess HFO. Petraeus urged the
PM to address this issue, as production was already being
adversely impacted by the excess stocks of HFO.


15. (S/NF) PM Maliki interrupted the meeting and called
Hussein Shahristani, Minister of Oil, from his cell phone
and discussed the situation. Maliki directed Shahristani
to lower the price of HFO, in order to stimulate demand for
Iraq's excess capacity. General Petraeus offered that the
PM could increase the price of oil gradually over time, but
that such extreme price increases were problematic. PM
noted that an additional problem is transporting fuel to
the Baiji refinery. General Petraeus replied that the
Coalition is working on the pipelines from several
locations to Baiji and that these repairs were coming
along.


--------------
Airport Security Contract Negotiations
--------------


16. (S/NF) General Petraeus emphasized the importance of
resolving issues over the security contract for BIAP. He
noted that for the last 14 months operations at BIAP had
been threatened by the uncertainty of a month to month
contract. General Petraeus again warned of the potential
costs of prolonged contract disputes and quibbling over
money, and he pointed out that a long-term contract would
have been cheaper for Iraq. He noted that many companies
are reluctant to do business in Iraq, due to the
uncertainty in the business climate. He also stated that
the U.S. did not care which company was chosen to provide
security - only that there was stability.

--------------
Rule of Law Complex Opens
--------------


17. (S/NF) PM Maliki, General Petraeus and Ambassador
discussed the opening of the new Rule of Law Complex that
all three had attended on 10 September. Ambassador noted
the importance of PM Maliki's presence at the event and the
message it sent to Iraqis. PM Maliki commented that there
is much work to be done with regard to rule of law in
Iraq. He also noted that they hope to get rid of a number
of "bad judges" to improve the administration of justice.
CROCKER