KARBALA'S PROVINCIAL INVESTMENT COMMISSION

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002972

SIPDIS

E.O. 12958: DECL: 09/15/2015
TAGS: EINV ETRD ECON IZ
SUBJECT: KARBALA'S PROVINCIAL INVESTMENT COMMISSION

REF: BAGHDAD 2812

Classified By: PRT Team Leader Don Cooke for reasons 1.4 (b,d).

This is a PRT Karbala Reporting Cable.


1. (C) Summary: Karbala's Provincial Investment Commission
(PIC) is composed of seven university professors who focus
more on where investments should be placed than on how to
accommodate and advocate for investors. Because the PIC
has as yet received no funding from Baghdad, it relies on
its members' dedication and on money from the Provincial
Council (PC). Unfortunately, despite professing a desire
to work with the PRT to attract investors, Acting PC
Chairman Abd al-Al al-Yasiri's priority is to ensure that
his personal interests are served. The PIC currently is in
a disagreement with the Municipalities Ministry over the
intent of the Iraqi Investment Law. End Summary.

From "Where" to "How"
--------------

2. (SBU) The Karbala PIC consists of seven university
professors, all approved by the Provincial Council (PC)
last spring. The PIC is well organized, but members
address their tasks with a level of deliberation that can
be frustrating. For example, their first order of
business, which took several months to accomplish, was to
identify locations for 20 blue-sky investment ideas,
including a theme park. The PRT has encouraged the PIC to
adopt a less rigid approach and to focus on investment
opportunities currently at hand. Unfortunately, rather
than looking for ways to accommodate and advocate for
investors, the PIC frequently appears to see its role as
limited to telling them where they may or may not build.
The PRT engages with the Karbala Provincial Investment
Commission (PIC) on a weekly basis.


3. (SBU) Following months of PRT lobbying, senior
provincial officials have agreed to relocate the PIC from a
dilapidated, one-room office in the Governance Center to a
full office suite in a new public building controlled by
Governor Aqeel Mahmoud al-Khazali. The PRT meanwhile
continues working to help its interlocutors appreciate the
PIC's potential for "selling" Karbala to investors. This
concept has proven difficult for some here to grasp, but
signs of progress are emerging. Aqeel recently informed
the PIC that it can accept the PRT's offer to use QRF funds
to begin furnishing the PIC's new office. At the PRT's
suggestion, he encouraged a roundtable discussion at FOB
Husayniyah that included PIC members, representatives from
the Karbala Chamber of Commerce, and other key business
leaders. The purpose was to promote public-private sector
dialogue aimed at enhancing official understanding of the
commercial sector's needs.

Not in the Money
--------------

4. (SBU) The PIC looks to the PRT for assistance in
pressing the Government of Iraq (GOI) for funding. Its
members work without salaries, equipment, or expense
accounts. They donate their time and personal assets in
support of the PIC's mission. This is no small burden, as
none of the seven can boast of having more than a modest
income. The PIC this year submitted a budget as directed
by the National Investment Commission, but PIC members say
they have received no funding to date.


5. (C) Along with Acting PC Chairman Abd al-Al al-Yasiri,
PIC members repeatedly have said they want to work with the
PRT to attract investors. However, the reality is that the
PIC typically informs the PRT of visits by potential
investors only after the visitors have departed. We
suspect the root of the problem is al-Yasiri, who has a
well-earned reputation for micro-managing money matters to
ensure that his personal interests are served. The fact
that what little money the PIC has comes from the PC,
combined with al-Yasiri's alleged ties to Iran (reftel),
auger poorly for PRT-PIC collaboration. GOI funding would
give the PIC the autonomy it needs to be effective.

Battling Baghdad
--------------

6. (SBU) The PIC currently is courting two residential
builders who have proposed projects to construct
approximately 5,000 homes each as well as several potential
hotel developers. The housing plans are inching forward,
but the hotels have hit a snag. PIC members complain that
the Municipalities Ministry, rather than charging fixed
land-rental fees, is insisting on receiving rents from the
developers based on a percentage of the hotels' profits.
PIC Chairman Dr. Jalal al-Hashemi has told us that he
believes the Ministry is violating the spirit if not the
letter of Iraq's Investment Law, which was intended to

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minimize taxes and other obstacles to investment.
CROCKER