ENCOURAGING LARGER WORLD BANK AND IMF IRAQ PRESENCE

C O N F I D E N T I A L BAGHDAD 003283 SIPDIS E.O. 12958: DECL: 10/08/2018 TAGS: ECON EAID OFDP IZ SUBJECT: ENCOURAGING LARGER WORLD BANK AND IMF IRAQ PRESENCE REF: BAGHDAD 2990 Classified By: EMIN - Marc Wall, reason 1.5 (b,d) ¶1. (U) This is an action message, see para three. ¶2. (C) We believe the upcoming Bank/Fund meetings in Washington, which will be attended by Iraqi Finance Minister Jabr and Central Bank of Iraq Governor Shabibi, present a golden opportunity to press the World Bank and IMF to increase their staff presence in Iraq. As the Iraqi government increasingly provides for its own security, and as it prepares for provincial and national elections in 2009, the time has arrived for the international organizations to step up to their responsibilities and manage their programs with robust Iraq-based staffing. The security situation, while fragile, is no longer the deterrent it once was. The UN is currently expanding its presence, both in Baghdad and in the provinces, and several neighboring countries are moving to reestablish their diplomatic presence. But the IMF still has no staff in Baghdad and the World Bank currently has only one international staff member here. World Bank Country Director Jean Michel Happi has told us that the Bank plans to send two or three professional staff to join him, but the timetable for expansion is not fixed. The World Bank's plans to concentrate its efforts on public administration and public financial management would provide valuable support for our own current assistance strategy. We would argue that there is enough work for several World Bank staff in Iraq, and the sooner they get here the better. ¶3. (C) In September, IMF Managing Director Strauss-Kahn told Ambassador Crocker that he would react positively to an Iraqi request for an extension of a formal relationship between the IMF and Iraq after the end of the current Standby Arrangement in March of 2009. We have pressed the Iraqis to do so, and, while Shabibi is open to a post-SBA relationship (reftel),it is not clear whether the GOI delegation is going to Washington prepared to solicit it. We believe that IMF has much still to offer Iraq (e.g. assistance on reserves management) and should undertake that assistance with an on-the-ground staff presence. ¶3. (SBU) Action requested: We urge Washington to press both sides on these issues during the Bank/Fund meetings next week. If the Iraqis have not yet asked the IMF to extend something like a precautionary SBA, we should urge them to do so next week. And we should press management at both the Bank and Fund to agree to establish robust on-the-ground presence in Iraq as soon as possible. CROCKER