A TALE OF TWO TRADE SHOWS

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003818 SIPDIS SENSITIVE E.O. 12958: DECL: 12/05/2015 TAGS: ETRD ECON PREL EINV PINR IZ IR SUBJECT: A TALE OF TWO TRADE SHOWS Classified By: A/EMIN Michael Dodman, Reasons 1.4 (b,d). ¶1. (C) SUMMARY: Over back-to-back weeks in November, the Iraqi Ministry of Trade (MOT) hosted two dramatically different trade shows. The six-day International Investment and Reconstruction Workshop (IIRW),aimed at both entrepreneurs and the average Iraqi consumer, showcased Iraqi products and an encouragingly wide array of international goods and services. The IIRW was a precursor to the resumption of the Baghdad International Fair, an event much like a State Fair which has not taken place since 2002. Meanwhile, the first-ever "Iran Expo 2008" was a more subdued event, featuring only Iranian producers who were mainly seeking to find Iraqi partners or distributors. It was sparsely attended but enjoyed the patronage of an Iranian provincial governor and Baghdad's governor, and several Iraqi businesses did reportedly ink agreements with Iranian suppliers. While elements of the Iranian government use economic ties to strengthen their influence in Iraq, legitimate Iraq-Iran trade can be good both for Iraqi consumers and for regional stability. And while their products lack the appeal and quality of western goods, Iranian exporters are pro-actively seizing opportunities here. END SUMMARY. Baghdad Trade Fair Returns to Life -------------- ¶2. (U) The Iraqi MOT hosted its IIRW at the Baghdad Fair Grounds November 10-15. Until 2003, the MOT hosted and annual Baghdad International Fair -- something like a state fair without the animals and carnival rides -- that aimed both to bring commercial suppliers and distributors together and to raise brand and product awareness among the average Iraqi consumer. In recent years, poor security and political issues prevented the MOT from hosting this event. The IIRW was the MOTs dress rehearsal for the resumption of the Baghdad International Fair, planned for 1-10 November ¶2009. The head of MOTs State Company for Iraqi Fairs (SCIF) was delighted with this year,s success. One hundred and eighty businesses from 16 countries filled four full pavilions. Public attendance was also significantly improved compared to Similar events held in the city over the past year, thanks to Security and consumers' interest in the ever-wider array of new products available in Iraq. The goods and services on display ranged from crafts and traditional Iraqi herbal medicines to computer networks and Internet providers, high-end vehicles, and electric generators. Many of these included cutting-edge products from western household names such as Caterpillar, Toyota, Nokia, IMB, Hewlett-Packard and Seimens. ¶3. (U) GOI and other entities that promote economic activity were also present. Iraq's National Investment Commission put together an informative booth that featured its "one-stop shop" concept for foreign and domestic investors; several international trade ministries or chambers of commerce (Sweden, Germany, Brazil, Japan and many from the region) staffed booths; and even the Iraqi Public Distribution System (PDS),which administers the largest food ration program in the world, displayed the eye-catching new packaging in which it delivers milk, cereals, cooking oil and other consumables to virtually every Iraqi family. Our random conversations with various exhibitors suggested that they shared the MOT's enthusiasm regarding the public turnout and, more generally, the business opportunities that are emerging in Iraq. Iran Expo 2008 -------------- ¶4. (C) A week after the successful IIRW, the MOT hosted "Iran Expo 2008" -- clearly a very different kind of trade Q"Iran Expo 2008" -- clearly a very different kind of trade fair. The first event of its kind in Iraq, Iran Expo took place not at the Fair Grounds but at the Monsour Hotel November 16-19. Mohammad Javad Mohammadizadeh, governor of the Iranian Province of Korasan Alrazavih opened the fair. MOT officials told us that Baghdad Governor Tahan, reportedly a friend of Mohammadizadeh, lobbied them hard to sponsor the event. The 44 Iranian exhibitors who participated offered an interesting mix of goods and services, including foodstuffs, pharmaceuticals, housewares, and a heavy sampling of engineering and construction services. Iran Expo was focused far less on the Iraqi consumer and far more on bringing Iranian producers together with potential Iraqi partners or distributors. Indeed, overall attendance was sparse, but those who did go were typically established businessmen looking to begin or expand existing import operations from Iran. PRT employees who visited the fair noted that the Iranian products were generally not high-quality and that only a handful of the products and services were BAGHDAD 00003818 002 OF 002 truly unique to the Iraqi market (those that were included high quality Iranian carpets, electrical infrastructure equipment, and some of the engineering services). However, Iraqi domestic production of many consumer goods has plummeted over the past there decades; Iranian producers are eager to fill the void, and Iran Expo apparently produced several business partnerships. Revitalized State Company for Iraqi Fairs -------------- ¶5. (U) SCIF, relatively inactive since 2003, has developed a rather ambitious schedule over the next year. Hashem Hatim, the Director General of SCIF, planned a series of events culminating in the official re-opening of the Baghdad International Fair in November 2009. These include similar events planned in Baghdad and Basra. In February/March SCIF is hosting what Mr. Hashem calls a "shopping festival month" at the fairgrounds. This event will be a sort of international bazaar, where companies will have designated areas based on the country they represent. Iraqi citizens can purchase goods at cost and duty-free. Comment -------------- ¶6. (SBU) The Iran trade show is only one of the recent indications that Iran is pushing to increase economic ties with Iraq. Iranian officials have also recently touted plans for free-trade zones on the border, increased airline flights between the countries, and other trade and investment schemes (although these plans have yet to be initiated or confirmed). Whether motivated by an interest in increasing Iranian influence or diversifying the Iranian economy, the plans also respond to a genuine commercial interest in meeting Iraqi demand for imported products and services. Legitimate Iraq-Iran trade could have a positive impact on regional stability -- although whether that proves to be the case or not, Iraqi consumer demand for Iranian products will likely remain high until such time as business conditions improve and Iraqi domestic production can begin to fill the gap. And while few of the products on offer at Iran Expo could match the quality or consumer appeal of those showcased at the IIRW, Iranian firms are obviously seeking opportunities in Iraq aggressively. End Comment. CROCKER