TUWAITHA BUYER UPDATE: POST PARIS MEETING

S E C R E T BAGHDAD 000591

SIPDIS

SIPDIS

NEAI: RSCHMIERER
NEA/I: PM: TBETTS
ISN/RA:KKESSLER
S/I:KNUTT
L/NPV:THISCH
DOE: JSELLEN
JS: SNORWOOD
OSD: TBENNET

E.O. 12958: DECL: 02/24/2018
TAGS: ECON ENRG PARM PREL POL EXEC
SUBJECT: TUWAITHA BUYER UPDATE: POST PARIS MEETING

REF: A. STATE 163968

B. BAGHDAD 4126

C. STATE 169324

D. BAGHDAD 2454

E. BAGHDAD 1787

F. BAGHDAD 734

G. BAGHDAD 004227

H. BAGHDAD 00410

I. BAGHDAD 00427

Classified By: Ambassador Charles Ries for Reasons 1.4 (B),(D) and (H
)

1.(S) Summary: Ambassador Ries met with Minister of Science
and Technology (MOST) Raid Jahid (FAHMI) on February 22, 2008
at the Al Rasheed Hotel. Fahmi debriefed his Paris meetings
with the three potential yellowcake buyers, Cameco, Areva and
GE-Hitachi. Cameco and GE bid on the material. Cameco, the
higher bid, set Feb. 29 as the date by which MOST must accept
the deal or lose the price and conditions. GE provided its
written bid but Areva will not be ready until mid-March.
Fahmi wants the Areva bid by Feb 25 so he will have three,
avoiding the need for a waiver of the GOI procurement
requirements and preserving the Cameco bid option. Ries cited
US costs of $55 M to date for Tuwaitha and estimated that the
cost share should be $24M. Citing an independent cost study
that the entire project should be about $17 M, Fahmi said he
could not make a case to the Council of Ministers (COM) for
that amount. Fahmi asked if the US could meet Cameco's
required delivery date of May 30, 2008. Ries and the MNF-I
representative confirmed the US could meet the date. Fahmi
asked for Ries help to develop a long-term nuclear energy
relationship with the US. Ries recommended that the GOI raise
the issue in the on-going U.S.- Iraq Long-term Security
Relationship discussions. End Summary

Paris


2. (S) Fahmi openly discussed the discussions he had had with
each of the prospective buyers in Paris, naming Cameco as the
best bid, GE as low and the conversation with Areva as "only
ten minutes on the deal." In addition to accepting key
conditions the GOI requested, such as staged payments and an
agreed fixed price, Cameco also followed up quickly with a
written proposal detailing the Paris meeting results. Cameco
set Feb. 29 as the time limit for MOST to accept the deal as
outlined in Paris. After the 29th, both the price and
conditions would need to be re-negotiated. Fahmi described
the GE bid as low, commenting that GE called itself a big
company in the world and, in regard to staged payments, "did
not do it that way." MOST has asked GE to submit its best
offer. Note: MOST confirmed later in the day GE did submit
its bid. End Note) Fahmi believes that the difference in bids
between Cameco and GE is based on Cameco being a producer, GE
a trader. Cameco can buy and hold the yellowcake whereas GE
is looking for a quick sale. Areva reportedly said it would
take two weeks to finalize and provide its bid. Fahmi,
primarily focused on preserving the Cameco option, has asked
Areva for its proposal by Feb. 25. His goal is to have all
the bids in hand and go to the COM by Feb 29.

Cost Sharing/Committee Decision/Council of Ministers


3. (S) Ries commented that the situation today looked better
than it had a month ago. Even though the GE bid is low, Fahmi
can go to the COM with two and possibly three bids. Now the
US is ready to discuss cost sharing. Handing Fahmi a one
page summary, Ries noted that US costs to date were $55 M and
that did not include the air transportation of the material
to a buyer. Fahmi responded that he had an independent
assessment done of the cost for the entire project which,
using Iraqi labor, totaled $17 M. Fahmi cannot go to the COM
arguing that even half that sum is going to the US in cost
sharing. Ries stated that $24 M would be an amount sufficient
to satisfy Washington and pointed out that MOST was receiving
additional funds from the US. He had just approved $300 K to
help Iraq select a replacement capability for the irradiators
removed in January. Fahmi said he would discuss the amount of
cost share with his Committee. Regarding how to make the
payment to the US, Ries and Fahmi agreed that either the
buyer could pay the US or the funds could be deducted from
the DFI.


4. (S) Fahmi asked if the US could meet the Cameco May 30,
2008 delivery date to Canada. A key part of his briefing to
the COM will be to state that the US can support the delivery
date. Col Henderson, MNF-I, outlined several steps necessary,
such as an interim move from Tuwaitha to Slayer near the
Baghdad Airport, that would both save funds, reduce the
security risks and speed delivery to the buyer. Fahmi agreed
with the steps outlined and Ries stated that the US could
meet the delivery date. Fahmi reiterated that his goal is to
discuss the bids with his Committee on Tuesday, Feb. 26 and
to brief the COM by Feb. 29. Ries urged Fahmi to move quickly
and assured him that if he could brief the COM by Feb. 29,
then he would work with Washington to finalize cost sharing
and push for the necessary steps to deliver the material to
the buyer.

Long-term U.S.-Iraq Nuclear Cooperation


5. (S) As he has in previous discussions, Fahmi asked about
establishing a long-term nuclear relationship between the
U.S. and Iraq, stressing how important this is to the GOI.
Ries responded that the GOI may wish to raise this as an
issue in the U.S.-Iraq Long Term Security Relationship
dialogue, although he noted that nuclear cooperation
agreements can take an extended period of time to negotiate.

Access to Tuwaitha Area B


6. (S) Fahmi stated that the Iraqi Ministry of Agriculture
had collected a number of radiation sources and MOST needed
access to the Tuwaitha site to properly store them. They are
now in temporary storage and MOST would like to move them as
soon as possible. Parks responded that the US will provide
suggested procedures for access next week. Those procedures
should allow for relatively quick access based on
coordination with Col Ra'ad at the site. Fahmi thanked Parks
and reiterated it was important to move the sources into the
site soon.

Status of MOST Senior Deputy Minister Dr. Samir Attar


7. (S) MOST Senior Deputy Minister Dr. Samir (ATTAR) was
wounded in an IED attack on his vehicle en route to work at
MOST on Wednesday, Feb. 20, 2008. Immediately afterwards,
AMB. Ries authorized US treatment for his wounds and he was
admitted to US Combat Support Hospital in the International
Zone for initial treatment and medically evacuated to the
USAF Hospital at Balad to treat his left eye. He has been
released and is expected to recover sight in the injured eye
almost fully within six months. Fahmi was very thankful for
the help provided by the US. He stated that the attack on
Attar was targeted and that others in MOST had received death
threats during the week. Ries stated that he hoped Dr. Attar
would recover quickly and that he was glad the U.S. could
assist.

Next Steps


8. (S) Ries and Fahmi agreed to talk via telephone over the
next few days to finalize cost sharing and other issues as
necessary.

Attendees

GOI
Raid Jahid Fahmi, Minister of Science and Technology

U.S.
Ambassador Charles Ries, Minister for Economic Affairs
Edgar Parks, Energy Attach, U.S. Embassy
Robert Boudreau, NNSA Representative, U.S. Embassy
Col James Henderson, USA, MNF-I
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