SRSG AND AMBASSADOR KHALILZAD DISCUSS IRAQI

C O N F I D E N T I A L BAGHDAD 003931 SIPDIS E.O. 12958: DECL: 12/02/2018 TAGS: PGOV PREL IZ SUBJECT: SRSG AND AMBASSADOR KHALILZAD DISCUSS IRAQI CHAPTER 7 AND UNAMI'S FUTURE Classified By: Ambassador Ryan C. Crocker for Reasons 1.4 (b) and (d). ¶1. (C) Summary: UNAMI SRSG Staffan de Mistura and U.S. Permanent Representative to the UN Ambassador Zalmay Khalilzad strategized ways to assist Iraq with Chapter 7 status as well as UNAMI's future in Iraq at a December 2 meeting. Ambassador Khalilzad pointed out three separate issues with Chapter 7: security concerns; Iraq's desire to return to pre-Kuwait invasion status without restrictions and the protection of Iraqi assets from pending lawsuits. The GOI is concerned that with the price of oil dropping, it will not have the resources it needs for developing its economy. It does not want money held in the Development Fund for Iraq to be used to settle claims. Both agreed it would be useful if Russia could take the lead on pressing the UN to keep Iraq under Chapter 7 status with regard to protecting its financial assets against lawsuits. De Mistura then went on to describe UNAMI's future as concentrating on elections, disputed internal boundaries, rule of law, women's issues, detention and torture, disarmament, demobilization and reconciliation, and the constitutional process. End Summary. ¶2. (C) On December 2, UNAMI SRSG Staffan de Mistura met with U.S. Permanent Representative to the UN Ambassador Zalmay Khalilzad. Much of the discussion centered on developing a strategy to assist Iraq with Chapter 7 issues. Ambassador Khalilzad sought de Mistura's advice on what Iraq needs to do to get out from under Chapter 7. Iraq wants to return to pre-Kuwait invasion status regarding sanctions and does not want to be viewed as a continuing threat. Ambassador Khalilzad emphasized that the U.S. was trying to help Iraq normalize and that he could provide a team to work with a UNAMI team to assess the various sanctions and how Iraq has overcome the need for them. He then separated out the financial protections of Chapter 7 that Iraq still wanted to remain intact. He said Iraq was concerned that its $60 billion in the Development Fund for Iraq (DFI) would be subject to Saddam-era lawsuits. Iraq is especially concerned since the price of oil has dropped and its ability to provide services and even security from its oil revenue is in jeopardy. Ambassador Khalilzad suggested that Russia take the lead in pushing the Security Council to allow Iraq to continue to protect its assets. ¶3. (C) De Mistura opined that the best way for Iraq to get out from under Chapter 7 was to let it lapse. He said this method would preclude either side from having to take affirmative action, either to renew it or to end it. He said that because Chapter 7 was part of the UNSCR that is set to expire at the end of the year, doing nothing would automatically allow it to end. As to the financial issue, the Iraqis would need to submit a very narrow, very targeted letter requesting protection of the funds in the DFI from lawsuits. The letter should include an acknowledgment of legitimate claims, the desire to further investigate other claims, and the need for Iraq to use the DFI money for development. The request for protection should be limited to one year to give time for Iraq to investigate the claims against it. De Mistura also agreed that Russia take the lead in the Security Council, but stated the Iraqis must make their case to the Russian, not the U.S. or the UN. ¶4. (C) De Mistura then turned the discussion to UNAMI's future in Iraq. He said that in the next six months the focus would be on elections. He listed the many election events that could possibly occur in Iraq -- provincial Qevents that could possibly occur in Iraq -- provincial council elections in January, the Basrah region formation referendum, Kirkuk's provincial council elections, status of Kirkuk referendum, KRG elections, KRG constitution referendum, and district elections. De Mistura commented that while it was doubtful all events would take place in the next six months, it does indicate that 2009 will be the year of elections. ¶5. (C) Ambassador Khalilzad queried the SRSG as to where UNAMI will be able to do more. De Mistura listed rule of law, women's issues, detention and torture issues, public sector reform, constitutional issues and disarmament, demobilization and reconciliation. Ambassador Khalilzad commented that the reconciliation effort was the most important. He also asked if there had been much progress on constitutional reform. De Mistura replied that nothing had really been done, despite the recent discussions in the Council of Representatives on holding a constitutional referendum soon. De Mistura expressed concern over the future of the PRTs and UNAMI's ability to expand. Ambassador Crocker assured the SRSG that the embassy and MNF-I were both committed to sustaining the PRTs. CROCKER