SALAH AD DIN OFFICIAL: GREATER DECENTRALIZATION

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003448

SIPDIS

E.O. 12958: DECL: 01/26/2018
TAGS: ECON EAID EFIN IZ
SUBJECT: SALAH AD DIN OFFICIAL: GREATER DECENTRALIZATION
NEEDED

Classified By: Classified By: PRT Team Leader Richard Larson, reason E.

O. 12958 1.5 (B,D)


1. (U) This is a Salah Ad Din PRT reporting cable.


2. (C) Summary: According to Salah-ad-Din (SaD) Provincial
Council (PC) member Suleiman Yousif Ahmad, limited provincial
authority over budgets and projects contributes to local
residents' lack of confidence in the SaD PC. He maintains
that greater decentralization from the GOI will not only
improve project execution and budgeting for the provinces, it
will highlight PC successes to local residents. To this end,
SaD Deputy Governor Abdullah Hussein Al-Jebarra is advocating
establishment of permanent representation for the provinces
in the Prime Minister's office. End summary.

LIMITS ON PROVINCIAL INPUT INTO BUDGET ALLOCATION
-------------- --------------


3. (C) Suleiman reports that the GoI has been slow and
unpredictable in disbursing the provincial capital budget.
SaD has only received around 32 percent of its 2008 capital
budget and still only 60 percent of its 2007 capital budget.
SaD officials attribute the delay primarily to foot-dragging
and goalpost-moving by the Ministry of Planning. They say
this sort of problem shows the need to empower provinces to
exercise more direct control over their budgets. (Note:
Planning Ministry DG for Budgeting told Emboff October 15
that SaD was one of eight provinces that had not yet provided
documentation on the progress of 2007 capital projects, and
thus had not received their remaining 2007 allocations. End
note.)


4. (SBU) Suleiman also told the PRT that the SaD PC is
dissatisfied with the current budget allocation from the
national government to the provinces. He specifically
pointed to two imbalances that adversely affect the
provinces: 1) the provinces only receive 34 percent of the
total GOI budget, and 2) the imbalance between giving the
three provinces of the KRG 17 percent of the annual GOI
budget while making the remaining 15 provinces share 17
percent of the GOI budget. (Comment: For the purpose of
comparing provinces and the KRG region, it makes most sense
to compare only the capital budgets. By that measure,
ministries received 51.9 percent of the 2008 capital budget
including the supplemental, the KRG got 17.6 percent, and the
remaining provinces received 30.5 percent. Most of the
ministries' capital budget is expended in the non-KRG
provinces. End comment.) SaD residents are largely
dissatisfied with the SaD PC's track record of budget
execution according to Suleiman, but he claims provincial
officials need more authority in order to do a better job.

LIMITS ON PROVINCIAL INPUT INTO PROJECT EXECUTION
-------------- --------------


5. (C) Suleiman also complained that the current system of
project selection and management limits provincial input.
Under the current system, contractors in Baghdad have an
unfair advantage in bidding on ministry projects in the
provinces because the tendering process occurs only in the
capital. Baghdad contractors typically win the contracts and
resell them to local contractors. Because SaD authorities
are not included in the process, it results in waste and
abuse. (Note: This applies to ministerial capital-budget
projects, not to provincial capital-budget projects. End
note.)


6. (C) This leads many SaD residents to conclude that
provincial officials are not doing anything to improve local
infrastructure. Suleiman complained that large capital
infrastructure projects are not possible given the size of
the current provincial budget, and that smaller projects are
spread so thin as to be almost invisible to the public. For
example, Suleiman said that in 2007 SaD built 88 schools
throughout the province, but people scarcely noticed because
the schools were so spread out, each being too small to
attract attention beyond its immediate area.


7. (C) Large infrastructure projects are provided for in
ministries' capital budgets, but they are not coordinated
with the provincial governments, according to Suleiman. He
claimed that provincial officials have a much better
understanding of what local infrastructure needs are, and SaD
residents would be better served if provincial officials were
empowered to oversee these projects. Suleiman said that SaD
has qualified people and should be allowed to plan for its
own needs.

SAD INVOLVEMENT IN THE PROVINCIAL COUNCILS COMMISSION
-------------- --------------


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8. (SBU) Suleiman maintains that more effective
representation for the provinces at national level will
decentralize control of projects, giving some needed
authority to the provinces. The Coordination Commission of
Provincial Councils and Regions of Iraq is one forum for
provincial representation at a national level. Suleiman told
the PRT that SaD has been an active member of the Commission
since its formation in 2006. Each province is represented on
the Commission by two PC members -- in SaD's case, Suleiman
and Mustafa Aish, who has since become the PC Deputy
Chairman.


9. (C) Suleiman said the Commission has attempted to fill the
communications gaps among PCs and between the provinces as a
group and the GoI. He called it the sole coordinating body
representing the provinces collectively at the national
level. (Note: Our provincial contacts dismiss the Ministry of
State for Provincial Affairs as "a mailbox." End note.)
Suleiman asserted that the Commission members coordinate
together and seek to build support among CoR members on
issues that are important to the provinces.

NEED FOR A NEW NATIONAL FORUM FOR PROVINCES
--------------


10. (C) Suleiman identified several features of the
Coordination Commission that limit its effectiveness in
representing provincial interests nationally. One drawback
is that the Commission normally meets only once every two
months. In addition, the Commission has no designated point
of contact in the GOI, since the provinces are separate from
both the executive and legislative branches of the national
government. The Commission invites representatives from the
relevant ministries as issues arise, and communicates with
ministries via memoranda. After its last meeting, the
Commission issued a memorandum to the Ministries of Finance
and Planning, making the case for a decentralized financial
system. But according to Suleiman, no response has yet been
received.


11. (C) As a result, at the August 2008 Baghdad conference
for all provincial governors, SaD joined other provinces in a
call to establish permanent provincial representation in the
Prime Minister's Office. That representation would supervise
the allocation of budgets to the provinces and provide a
full-time point of contact for provincial dealings with the
GoI.
CROCKER