SRSG DE MISTURA ON HYDROCARBONS/ARTICLE 140, AND

C O N F I D E N T I A L BAGHDAD 000451 SIPDIS SIPDIS E.O. 12958: DECL: 02/13/2018 TAGS: EAID ECON PGOV PHUM PREF PREL IR SUBJECT: SRSG DE MISTURA ON HYDROCARBONS/ARTICLE 140, AND ICI ANNIVERSARY Classified By: A/DCM C. Ries, Reason 1.4 (b),(d) C O R R E C T E D COPY (REMOVED REF LINE) ¶1. (C) SUMMARY: On February 14 SRSG Staffan de Mistura discussed with A/DCM Ries U.S. and UN approaches toward the GOI to promote movement on the hydrocarbons laws, which will be necessary to open political space for progress on Article 140 issues. Additionally they discussed the upcoming first anniversary of the International Compact with Iraq and whether it would be possible to get the French to host it. END SUMMARY. -------------- Hydrocarbons laws -------------- ¶2. (C) A/DCM Ries opened with a brief on his recent participation at the Chatham House event on Iraq, and noted that Iraqi Minister of Oil Shahristani had made a good, upbeat presentation that gained the attention of participating businessmen when he indicated that Iraq would begin formalizing TSAs and extend the prequalification deadline for international oil companies to February 18 (from January 30). Moreover, Shahristani announced that by April Iraq would start a bidding round for acreage "in conformance with the draft oil law." In contrast, KRG Minister of Natural resources Ashti Hawrami was pugnacious, using a Power Point show to present legal arguments as to why February 2007 the draft oil law was "unconstitutional." (Note: KRG authorities had agreed to this text in February 2007). ¶3. (C) De Mistura said that the Kurds are clearly overreaching, and needed to be helped to become more realistic. Their behavior on the hydrocarbon legislation has forged unity in the South. Progress on hydrocarbons laws will open the way to progress on Article 140 territory issues, de Mistura opined. A/DCM Ries said we have seen signals of greater realism -- noting that PM Barzani had recently reiterated the February text should be the basis for negotiation. The problem is getting the two sides to negotiate given the personalization of the differences between Shahristani and Hawrami. De Mistura replied that the UN could try to move the two sides forward toward discussion on the text, but he underscored that the Barzanis need to hear from everyone that positive movement on hydrocarbons legislation will have a link to movement on Article 140. In fact, de Mistura is tempted to hold a press conference on the issue because he is tired of being publicly accused by the Kurds of dragging his feet on Article 140, which he said was, "almost blackmail." A/DCM Ries counseled de Mistura to make his case first in private and see how the Kurds respond. -------------- International Compact -------------- ¶4. (C) Turning to the International Compact with Iraq (ICI) one year anniversary, de Mistura agreed that it could become a "vessel which can bring along other issues" -- and that donors should work to help the GOI make it a success. Ries asked whether de Mistura had any updates on the venue for the ICI ministers meeting. The U.S., he said, favored Paris, as it would help "unlock the EU on Iraq." The question was how to bring FM Kouchner to agree to host. De Mistura believed that FM Kouchner would be more willing to host the meeting if we were to present it to him as the meeting he wants -- that is, also a "political" meeting that promoted Iraqi national reconciliation. The French may have the false impression that the ICI is only about economic development, he said. De Mistura, who portrayed himself as an "old friend of Bernard," was certain that the right approach, at the right level, would bring him around. But both he and A/DCM were concerned at the possibility that the Quai is intent on killing the idea of Paris hosting the ICI meeting by a strategy of avoidance until it's too late. Amb. Ries responded that we will have to decide in about another week or so whether to continue pressing for Paris or to accept a second choice venue such as Kuwait (back to back with the Neighbors Ministerial). CROCKER