AMBASSADOR KHALILZAD BRIEFS VP HASHIMI ON IRAQI

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003852 SIPDIS E.O. 12958: DECL: 12/09/2018 TAGS: PREL PGOV IZ SUBJECT: AMBASSADOR KHALILZAD BRIEFS VP HASHIMI ON IRAQI ASSET PROTECTION Classified By: Ambassador Ryan Crocker for reasons 1.4 (b) and (d). ¶1. (C) On December 2, U.S. Representative to the United Nations Zalmay Khalilzad told Iraqi Vice-President Tariq al-Hashimi that Iraq must request a new United Nations Security Council (UNSC) resolution to extend Chapter VII protection over its financial assets. Claiming that "no one is satisfied" with the PM's leadership, Hashimi said that Iraq,s political situation needs to change and that Iraq's leaders need to work together to develop a common vision for the country. Noting the continuing drop in oil prices, Hashimi also expressed concern about that Iraq could face serious future economic problems. End Summary. -------------- GOI Must Act Quickly to Protect Iraqi Assets -------------- ¶2. (C) On December 2, Iraqi Vice-President Tariq al-Hashimi hosted a luncheon for the U.S. Ambassador to the United Nations Khalilzad, Ambassador Crocker, MNF-I Commanding General Odierno, and NSC Sr. Director Brett McGurk at his International Zone (IZ) residence. ¶3. (C) Ambassador Khalilzad told Vice-President Hashimi that the U.S. was committed to working with Iraq to protect its financial assets. Commenting that there were substantial number of claims against Iraq, Khalilzad warned that that the "whole oil income of Iraq could be at risk." To extend Iraq's asset protection under Chapter VII of the UN Charter, Ambassador Khalilzad said that it is imperative that Prime Minister Maliki quickly submit a request to the UN Security Council outlining the compelling rationale and justification for an extension on Iraq's resolution. He also told Hashimi that it is essential that the U.S. and Iraq work together to line up support for this resolution among other members of the Security Council, including Russia and Libya, and suggested that Iraq take the lead in these efforts. Hashimi opined that Iraq could reach out to the Libyans through the Kurdish leadership, to which Khalilzad remarked that the Libyans could play an influential role with the Russians. He also remarked that the PM might be able to bring the Russians on board, having recently received an invitation to Moscow. -------------- "Political Situation Needs to Change" -------------- ¶4. (C) Turning the conversation away from the SoFA, Hashimi told Khalilzad that the political situation in Iraq needed to change. Though he acknowledged that security had improved significantly since the surge began, Hashimi decried the sectarianism that now dominated Iraqi politics, which he warned could ultimately destroy the country. When asked by Khalilzad whether anything could be done in the short-term to change the situation, Hashimi replied that this would take time, noting that despite the security gains of the last eighteen months, sectarian fears and distrust still remain. To counter this, Hashimi brought up the "national accord" that he has championed in the past and suggested that Iraq's leaders work together to develop a common vision for the country, based not on sectarianism but on a common Iraqi identity. He also urged that the U.S. press the GOI to move forward on constitutional review. ¶5. (C) Responding to Khalilzad's query about the possibility of a non-sectarian, nationalist bloc emerging on the political landscape, Hashimi noted that this was indeed a possibility, but then proceeded to launch into a criticism of the PM. Claiming that "no one is satisfied with his Qthe PM. Claiming that "no one is satisfied with his leadership," Hashimi alleged that the PM governs in an exclusionary fashion, noting that even during the SoFA debate he dismissed the requests of several parties who sought a greater role within the government. Hashimi also called the GOI's attitude towards Iraqi exiles, many of which are Sunnis and whom he believes could play an important role in rebuilding the country, as extremely troubling. -------------- "Future Economic Situation Troubling" -------------- ¶6. (C) Noting the rapidly decreasing price of oil on the global market, Hashimi warned that this could have a debilitating effect on Iraq's economy (Note: According to Hashimi, the GOI's budget is based on a ppb of $62; the current ppb is $47). Given the GOI's current budget surplus, Hashimi said that the effects of this drop would not likely be felt in 2009, but he appeared extremely worried about the effects that continued low prices would have on the 2010 budget. Claiming that expenditures were consuming a large BAGHDAD 00003852 002 OF 002 share of the GOI budget, Hashimi said that by 2010 the situation could be bleak. He also noted that the GOI is doing nothing to support the private sector. Though he mentioned that he had written a letter to the PM and other leaders calling on the GOI to bring in experts to address this issue, he did not seem convinced that the GOI realized the potential gravity of the situation. When asked by Ambassador Crocker if these issues had been addressed by the Five Committee talks, and in particular the economic committee which Hashimi heads, Hashimi acknowledged that they had, but cautioned that he did not know what the results of the committee's work would be. CROCKER