MINFIN SUPPORTS BASRAH HUMANITARIAN RELIEF, WANTS

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 000994 SIPDIS SIPDIS STATE FOR IO/PSC-ECROWE, IO/UNP-EGOLDRICH E.O. 12958: DECL: 04/01/2018 TAGS: EFIN PREL PGOV PTER ETTC IZ SUBJECT: MINFIN SUPPORTS BASRAH HUMANITARIAN RELIEF, WANTS HELP WITH IMF ON SBA IMPLICATIONS REF: BAGHDAD 987 BAGHDAD 00000994 001.2 OF 002 Classified By: Economic Minister Counselor Charles P. Ries for reasons 1.4(b) and (d) ¶1. (C) Summary: In a March 31 meeting, Iraqi Minister of Finance Jabr told EMIN that he would make funds available to address the immediate humanitarian needs created by the violence in Basrah as well as to create short-term employment opportunities. In addition, the GOI supplemental budget proposal currently under discussion would include both capital and operational expenditure authorizations. Jabr requested USG support in persuading the International Monetary Fund that these operational expenditures did not violate the terms of its Stand-By Arrangement. Jabr also supported having the Iraqi Government propose that the United Nations Security Council amend UNSCR 1518 to broaden the definition of those who disturb peace in Iraq so that financial SANCTIONS can be taken against them. On both issues -- financial expenditures and the revision of the United Nations Security Council Resolution -- Jabr noted that he and the EMIN were "on the same page." End summary. ¶2. (C) EMIN and Treasury Attache met March 31 with Minister Jabr to discuss how to meet the needs of those affected by the security operations in Basrah while not violating the terms of the International Monetary Fund (IMF)-Iraqi Stand-By Arrangement (SBA). Jabr said that the Ministry of Finance would pursue "quick projects" to provide financial assistance to the residents of Basrah in order to reinforce GOI efforts there. These projects would be designed to "create jobs, take care of refugees, clean up the city, and clear canals in the region." Jabr emphasized that these government-funded efforts were to be a short-term infusion, particularly with regard to employment projects, lest they become a permanent drain on the budget. ¶3. (C) EMIN noted that Ambassador Crocker views financial assistance as a weapon to create peace and stability. It is important to use the full resources of the Iraqi Government to solidify peace and security in the region; spending projects are vital to securing the advances made this year. EMIN noted the success of similar financial programs in Al Anbar Province, and urged the Ministry of Finance to increase spending on refugees and internally displaced people as well as on assistance to Basrah. This type of support should be incorporated into the proposed Iraqi supplemental budget proposal currently under consideration. ¶4. (C) Jabr concurred and requested U.S. Government assistance with the International Monetary Fund to help make the GOI's case that increasing operational budget expenditures for these emergency purposes should not be viewed as violating the terms of its SBA. The Iraqi supplemental budget will include both capital and operational expenditures. EMIN observed that the goal of the SBA is to avoid new budgetary obligations that offset fiscal sustainability in the long term, but that temporary, or emergency, spending should not be viewed as incompatible with the SBA, especially given the unexpectedly sharp revenue growth Iraq has experienced in the past few months. Jabr proposed that the Ministry of Finance and the U.S. Treasury Department coordinate closely prior to the upcoming GOI-IMF meetings in April. Jabr added that the budgets for the Ministry of Interior and Defense provided for the creation of 30,000 new police and defense jobs to help provide employment for former insurgents who are participating in the Concerned Local Citizen programs. Some of these jobs could be offered to tribes and others who have stood for stability in Basra. -------------- -------------- Updating UNSCR 1518 to Go After More than Just Ba'athists -------------- -------------- ¶5. (C) EMIN summarized a meeting he had held the previous day with National Security Adviser Roubaie (retel),in which he had proposed that the GOI request that the United Nations Security Council either amend UNSCR 1518 or pass a new resolution to identify individuals and organizations that disrupt peace and stability in Iraq. Jabr supported this idea and promised to support it with the Prime Minister for discussion in the Cabinet. Broadening the definition of those who disturb the peace in Iraq is "a good idea that has to be an Iraqi proposal." -------------- Fighting Corruption by Cutting Back on PDS -------------- ¶6. (C) On a key domestic issue, Jabr said that Ministry of BAGHDAD 00000994 002 OF 002 Trade's Public Distribution System (PDS) needed to be reformed in order to fight corruption and to save money. Everyone in Iraq was required to be registered with the PDS in order to qualify for government services such as passport issuance. However, his office estimated that as many as seven million Iraqis do not need the PDS basket of food and supplies. The current structure of the program means that if everyone "from the President on down" does not collect their PDS basket, the agent in charge is able to keep the food products and distribute them on his own. CROCKER