THE NATIONAL INVESTMENT COMMISSIONER WHO NEVER WAS

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003579

SIPDIS

E.O. 12958: DECL: 11/12/2018
TAGS: EINV ECON PGOV IQ
SUBJECT: THE NATIONAL INVESTMENT COMMISSIONER WHO NEVER WAS

REF: A. EMBASSY BAGHDAD O/I 09-22-08

B. BAGHDAD 2811

Classified By: Economic Counselor Michael Dodman, for reasons 1.4 (b,d)
.


1. (C) SUMMARY: The GOI dismissed National Investment
Commission Chairman-Designate Ahmed Ridha the first week
in November. Ridha had become deeply unpopular in senior
Iraqi political circles, and rumors of his possible
removal had been circulating for many weeks. Thamir
Ghadban, head of the PM,s Economic Advisory Board and a
former oil minister, will replace Ridha on an acting,
basis. Despite the improving security situation,
attracting non-oil sector investment remains very
challenging. Most cabinet ministers and investment
commissioners are far more interested in creating or
bending whatever rules necessary to attract big-ticket,
multi-million dollar investments. Indeed, Ridha over
his tenure boasted that the NIC attracted $74 billion
in direct investment, and loudly blamed the GOI for the
fact that only $6 million of that amount had actually
broken ground. If he is to be effective, the new NIC
Chairman will need not only to play nice with the cabinet,
which can still easily delay or quash any project, but
also focus on building a body of regulations and
procedures that facilitate both big-ticket and small
and medium investors. End Summary.

No Longer Acting
--------------

2. (C) On Nov. 2, the Council of Ministers (COM) voted
unanimously to remove Ahmed Ridha from his position as
NIC Chairman-designate. Ridha, who served in an acting
capacity since the PM named him a year ago, had become
increasingly frustrated with the COM,s refusal to confirm
him and perceived GOI inaction in promoting and
facilitating foreign domestic investment in Iraq. Ridha,
who worked as an investment consultant in the UAE before
returning to Iraq to head up the NIC, consistently claimed
to enjoy the PM,s full confidence, and he worked
aggressively
as Chairman-designate to attract FDI. However, he had no
real political constituency and in recent months he had
begun to vent publicly his frustration with government
ministers who he alleged were impeding his ability to do
his job (Reftel A). His public 'calling out' of senior
political leaders culminated at the November 1 US-Iraq
Dialogue on Business and Investment Climate, where he
complained bitterly that the COM,s inaction was holding
up some $68 million of the $74 billion in FDI the NIC
had "attracted" to Iraq over the past 10 months.


3. (C) Ridha,s Nov. 1 speech was apparently the last straw,
and cabinet voted unanimously the next day to fire Ridha
during its weekly meeting. Saeed Jabour, a senior staff
member in the National Security Advisor,s office, told us
that PM Maliki at first defended Ridha, saying he had hired
him based on his resume and his achievements in Dubai,
rather than his "politics." However, the ministers
complained
that Ridha should not have publicly embarrassed the
government
at the US-Iraq Business Dialogue, without first raising these
concerns directly to the COM, Jabour reported. After hearing
ministers' concerns, the PM called for a no confidence vote,
which was unanimous. In the end, contacts at the NIC told us
that Ridha,s actual sacking occurred in much the same way
as his appointment, i.e., little was done officially,
communication was minimal, and Ridha even reported for
work for at least two days after Cabinet had made its
decision.

Too Much Focus on the Big Ticket
--------------

4. (SBU) Ridha,s tenure as Chairman-designate was marked
by a handful of significant successes. He staffed the
NIC office, and he facilitated the standing up of a
Provincial Investment Commission in almost every province
-- a process that often required him to mediate political
infighting among powerful tribal or provincial leaders.
He also drafted implementing regulations for the National
Investment Law, although they still remain stuck in the
COM. These are not meager accomplishments, when one
considers that most Iraqis -- especially in the provinces
-- still define "investment" as a government ministry,s
rolling into town, identifying a perceived need (often
with little local consultation),and paying for a project
that may or may not address it. And, as Ridha learned
through his clashes, it appears many government ministers
are happy to continue to foster that misunderstanding.


5. (C) Still, Ridha was not without his weaknesses. His

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public and private denigration of cabinet ministers
created powerful enemies, and his allegation that their
inaction prevented more than 90 percent of investments
from being implemented was not the whole story. Ridha
displayed a tendency to focus on "big ticket"
investments, frequently boasting about the luxury hotels,
state-of-the-art medical villages and ultra-modern
housing schemes he had brokered. However, by his own
admission, he had to bend rules and make promises that
were clearly not backed by Iraqi law or regulation to
secure these commitments. (At a Paris OECD conference,
Ridha suggested that investors should break their large
investments into smaller "chunks" of $250 million or less
-- this amount being the ceiling for what the NIC could
approve without needing COM approval. While the
suggestion might have quickened the process for certain
big investors, doing so would have violated Iraqi law.)
In addition, Ridha was at times impatient with smaller-
scale investors, and he rarely seem inclined to champion
the regulatory changes and institution building that they
needed.

Ghadban Named New (Acting) NIC Chairman
--------------

6. (C) Thamir Ghadban, head of the PM,s Economic Advisory
Council and a former oil minister, has stepped in to
replace Ridha on a interim basis. (He will continue to
serve as head of the Advisory Council.) Ghadban is an
accomplished technocrat who has established a strong
reputation within the GOI both for his skills and for his
ability to get things done. Ghadban and his staff
currently play a central role on energy issues and
general economic reform, including private sector
development. He has also taken responsibility for
providing policy planning control of International
Compact with Iraq structures. (Comment: It has been widely
rumored that Ahmed Chalabi is lobbying to replace Ghadban
as head of the PM's Economic Advisory Council. It is not
clear yet if Ridha's sacking will bring about a broader
shuffle of sub-cabinet positions that could include bringing
Chalabi back into a senior position.) Several names,
including former Finance Minister Ali Allawi, are currently
in play as possible permanent replacements for Ridha as NIC
Chair. Whomever the PM appoints will have to win
confirmation by the Council of Representatives, a feat no
NIC chairman-designate has yet to accomplish.
CROCKER