VP ABD AL-MEHDI ON INVESTMENT ISSUES, CORRUPTION,

C O N F I D E N T I A L BAGHDAD 000908

SIPDIS

SIPDIS

E.O. 12958: DECL: 03/15/2018
TAGS: PGOV PREL IZ
SUBJECT: VP ABD AL-MEHDI ON INVESTMENT ISSUES, CORRUPTION,
RULE OF LAW AND SFA/SOFA TALKS

Classified By: Ambassador Ryan C. Crocker for reasons 1.4 (b) and (d).


1. (C) Summary: On Friday, March 14, the Ambassador met with
Vice President Adel Abd al-Mehdi at the Islamic Supreme
Council of Iraq (ISCI) compound in Baghdad. During the
meeting, the Ambassador and Adel discussed a host of issues,
including foreign investment in Iraq, the activities of the
GOI's Investment Board, and the need to move the investment
process forward. The Ambassador and Adel also talked about
issues of corruption and the rule of law, with a particular
focus on the Zamili case. This case, in which charges
against two high-ranking Ministry of Health officials accused
of aiding and abetting the activities of Shia death squads
were dropped due to a lack of evidence, has caused a public
outcry, with the prosecution alleging witness intimidation.
During the meeting, the two also reviewed SFA/SOFA
negotiations, and the Ambassador gave Adel a readout of his
recent discussions with Prime Minister Maliki concerning
these agreements and his suggestions to the PM about how the
GOI should proceed with
both. Before concluding the meeting, the two shared their
opinions on the current situation in Lebanon.

Investment
--------------


2. (C) After exchanging greetings with the Ambassador, Adel
immediately commented on a meeting held the previous day in
preparation for the upcoming Iraq investment conference,
which will be held in May 2008 in Cairo. Adel was pleased
that the USG was helping Iraq plan the event. The Ambassador
noted that Iraq is now at the point where investors are
stepping forward, and it is time for the country to move
forward by facilitating showcase projects. Adel agreed,
insisting the Iraqi Government has "done nothing after five
years," and posited that an airport project to include a
5-star hotel would be an excellent start. The Ambassador
concurred, mentioning that Adel has already met Saudi
Mohammed Bin Issa, who is ready to invest in Iraq. Adel
answered in the affirmative, and remarked that he has also
held talks with Ahmed Heikal, another potential investor.
Adel commented that Najaf could benefit from outside
investment as well, mentioning that although there are
several hotel projects there, more investment was needed. He
also stated that a large supermarket in Baghdad, perhaps in
Karada, would be an excellent project. Continuing on this
theme, the Ambassador remarked that potential investors need
to establish a presence on the ground, as quick trips in and
out of Iraq did not give them a complete and accurate picture
of the country. Perhaps this could be solved if they
identified local partners to work with.


3. (C) Commenting on the Investment Board, the Ambassador
asked Adel if had met with its chairman to discuss the
Board's plans, as well as its strategy for attracting
investors. The Ambassador noted that the Investment Board's
plans and strategy for attracting investment lacked focus, as
evidenced by the inaction seen since the passage of Iraq's
investment law. The Vice President agreed and complained
that Iraq "has no vision and no strategy," and Board staff
are simply interested in collecting their government salaries.


4. (C) Noting that he had recently finished a draft paper on
agriculture, which is now being reviewed by his advisors,
Adel said that he would like to sit down and talk with the
Ambassador and his advisors about agricultural investment
policy. The Ambassador commented that once he has reviewed
the document, EMBASSY officials will meet with Adel's staff
to discuss it. The Ambassador remarked that Iraqi
agricultural policy has the full attention of USAID and the
Department of Agriculture, and that he has pushed them to
include the private sector in their activities, noting the
past success of the private sector in managing Iraq's
agricultural sector.

Rule of Law/Corruption
--------------


5. (C) Turning to rule of law issues, Ambassador Crocker
indicated his displeasure with the Zamili case, in which
charges against two high-ranking Ministry of Health officials
accused of aiding Shia death squads were dropped due to a
putative lack of evidence. This case, in which the
prosecution has alleged witness tampering and intimidation,
has not only been embarrassing to Iraq's nascent judicial
system, but has also shaken the Sunni community's faith in
the government and reconciliation. Remarking that he had been
pleased with the decision of the Chief Justice to remove the
initial trial judge in response to allegations of misconduct,
the Ambassador said he was nevertheless disturbed by the
court's decision to drop all of the charges.


6. (C) The Ambassador also said he has been surprised and
disturbed by the increasing number of warrants and subpoenas
being issued by the Iraqi courts, to which Adel replied that
warrants have become the new method of intimidation. The
Ambassador indicated that he was aware of this, signaling
that intimidation in many shapes and forms has become a major
issue facing Iraqis. Emphasizing that the justice system
cannot be a vehicle for settling scores, the Ambassador said
that it was important for Iraqi officials to address this
issue and demonstrate that there is no role for corruption
and intimidation in Iraq. Labeling PM Maliki's resolve to
fight corruption, as well as Deputy PM Barham Salih's work in
addressing the issue as good steps, he added that more needs
to be done in addressing this issue. He also informed Adel
that a senior State Department officer would be coming out
soon to focus on these issues.

SFA/SOFA Talks
--------------


7. (C) Bringing up the recent visit to Iraq by the UK State
Minister for Defense, Desmond Browne, Adel revealed to the
Ambassador that he had questioned Browne about the SOFA and
SFA, and how things would proceed. In response, Browne told
Adel that it would be up to the Iraqis. Seeking
clarification from the Ambassador, Adel asked him how the
Iraqis should proceed with the negotiations, and whether they
should sign one agreement with the United States, and then
additional documents with other states. The Ambassador
walked Adel through the process as envisioned by the USG,
illustrating how the language of the SOFA allows Iraq and the
U.S. to include third parties in the agreement if both of the
signatory parties agree to a third country's inclusion. As
the Ambassador explained, this was the easiest and simplest
way, though Iraq was also free to sign separate agreements
with other states. Adel commented that there are some
differences with the British, which the Ambassador indicated
he had discussed with Browne the previous day.


8. (C) Expounding on this issue, the Ambassador told Adel
that he had spoken with PM Maliki and explained the
differences between the SFA and the SOFA. Reviewing his
discussions with Maliki, the Ambassador said that he had
recommended to the PM that these negotiations proceed on
different tracks, as they are very different in scope. In
addition, he informed Maliki that while it was perfectly
appropriate for Deputy FM Hamoud's committee to focus on the
SOFA negotiations, it would be extremely difficult for the
same committee to be responsible for both sets of talks, as
Maliki had previously envisioned. In talks with Maliki, the
Ambassador told him that the principals in this discussion
should be from a higher echelon of government than those
involved in the SOFA talks. In the Ambassador's estimation,
Maliki now has a better understanding of the process,
something that the Prime Minister shared with President Bush
during their recent telephone conversation.


9. (C) In discussing the SFA/SOFA negotiations, Adel opined
that Dr. Fadl, Maliki's legal advisor, was not the right
person to proceed with these talks. In Adel's estimation,
Dr. Fadl is not well-versed in international law, whereas
Deputy FM Hamoud is an expert in the field. The Ambassador
commented that though he did not know Dr. Fadl's background,
it did not appear to be international law, and that Iraq
cannot afford a repeat of the Declaration of Principles
negotiations. In reply, Adel remarked that there were now
many individuals within the GOI who were suspicious of the
outside world, and lamented that the success he had
negotiating debt relief agreements when he was Minister of
Finance and could call on outside organizations to assist him
would probably not be possible now if he had to bring in GOI
officials.

Lebanon
--------------


10. (C) Before concluding the meeting, Adel and the
Ambassador discussed the situation in Lebanon. Adel opined
that the different factions are beginning to arm themselves,
and that he felt "50/50" about the situation and the
potential for conflict, stating that it could go either way.
Adel added that he when he was in Cairo attending an Arab
League function, the Syrians had indicated to him that they
could accept Michel Suleiman as President. He concluded by
saying that the issue was up to Lebanon's courts to decide.

CROCKER
CROCKER