JUSTICE MINISTER ON SPENDING $100 MILLION FOR BASRAH

C O N F I D E N T I A L SECTION 01 OF 04 BASRAH 000031

SIPDIS

SIPDIS

E.O. 12958: DECL: 4/16/2018
TAGS: PGOV ECON EFIN IZ
SUBJECT: JUSTICE MINISTER ON SPENDING $100 MILLION FOR BASRAH

REF: A) BASRAH 028 (B) BASRAH 27 (C) BAGHDAD 920

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CLASSIFIED BY: Howell Howard, Director, Basrah Regional Embassy
Office, State.
REASON: 1.4 (b),(d)




1. (C/REL MCFI) SUMMARY: CETI Ambassador Ries, STRATEFF MG
Zamzow and USAID Director Crowley met with Justice Minister Safa
al-Safi in Basrah regarding PM Maliki's $100 million infusion of
aid. Safi judged the Charge of the Knights a success, paving
the way for investment and reconstruction. Safi's program will
create jobs and meet direct, immediate needs for areas/people
affected/harmed by the Charge operation. The main foci are
services such as health, water, garbage as well as schools.
$100 million in "extra" funding will be advanced for this
purpose but will be repaid from the Supplemental expected this
summer. A committee of visiting deputy ministers will determine
the project list, in consultation with the Provincial Council
(PC),Governate, tribes and Basra elites ("the educated").
Project identification is well along, and the approved project
list will be done within a month. Safi's committee will not put
contracts out for tender, but will contract directly with input
from the PC (faster but somewhat troubling on transparency
grounds). Safi said an Iraqi face was essential, and did not at
first want project ideas from us, or any other political entity;
he later warmed to a list of Coalition projects if only to avoid
duplication. He asked for information on Coalition battle
damage compensation programs to similarly avoid duplication. He
asked for help in providing the low cost housing that his
program could not provide. He asked (in his MOJ capacity) that
the USG's (unrelated) Basra Prison renovation get back on track.
END SUMMARY


2. (C/REL MCFI) CETI Ambassador Charles Ries, STRATEFF MG Mark
Zamzow, USAID Director Christopher Crowley, and acting Treasury
Attachi Samantha Vinograd met with Acting Minister of Justice
Safa al-Safi at the Basrah Palace on April 12. Prime Minister
Maliki has charged Safi with oversight of the $100 million
emergency aid package that the PM promised for Basrah. The
all-USG attendees included MNFI Tribal program watcher, Deputy
Pol-Mil Counselor, REO Director and Admiral Edward Winters from
MNFI who has been residing at the Palace. Safi was cordial and
appeared relaxed. The purpose of the meeting was to ascertain
how Safi planned to move ahead with the $100 million project and
what assistance the Coalition could give. Safi acknowledged
that he was in charge of overseeing the $100 million program.

BACKGROUND: CHARGE OF THE KNIGHTS AND ITS SUCCESS
-------------- --------------

3. (C/REL MCFI) At the outset Safi thanked the group for the
Coalition effort in support of the PM's offensive against
militias, the Charge of the Knights (Ref C). He said the
'Charge' had unexpected but very good results. The operation
would now release the pent-up demand for investment and
reconstruction in Basrah province. The 'Charge' showed that the
Iraqi Army (IA) could equip and resupply itself and was ready to
act. It also showed that the State could enhance the peace.
Safi noted that USG air support was decisive. Basrawis were now
showing support for the GOI in a clear way. There were also
benefits for local government: the Provincial Council (PC),
Governor and the Federal Ministries provincial Directors General
(DGs) for the various service sectors were shown they were
expected to cooperate and execute their responsibilities. In
sum, Safi said the Charge has released energy that will be good
for investment in Basrah. Now that the security situation was
under control, Safi was ready to move on the $100 million
program.

THE $100 MILLION PACKAGE
--------------

4. (C/REL MCFI) Safi explained that the $100 million central
government "grant" would be used specifically for the areas in
Basrah most "affected and harmed" by the operation, with a
criterion to meet "direct and immediate" needs. Another
imperative was to create jobs for "a lot" of people. Safi
stressed that he had a vision but would collect all the relevant
information first. Areas to be targeted included all basic
services, but especially roads, bridges, sewers, water, garbage,
schools and health. The assessment process will result in a
list that a committee of GOI representatives will execute.

ASSESSING WHAT IS NEEDED
--------------

5. (C/REL MCFI) Safi noted that his assessment process was
fairly far along and that many projects were ready to go.
There had been and would continue to be a lot of meetings with
the Governor, DGs, all service providers and tribal sheikhs.
Safi noted that he had even had meetings with citizens in areas
under militia control. Hyyaniyah (the greatest JAM stronghold)
with its large population would be a focus.


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CURRENT ASSESSMENT OF WHAT IS NEEDED
--------------

6. (C/REL MCFI) Safi (a Basrawi) said he was surprised that a
lot of needs he thought were being met, were not. Preliminary
assessment indicated that the main foci would be health, water,
schools, general services such as street lights),and garbage
collection. Fixing the city water supply was an immediate
priority as the summer mosquito season was approaching with its
attendant health risks. River branches would be dredged. Safi
said a small part of the funds would go to city parks, as well
as libraries. In his tours of the city, Safi noted that many
health clinics did not have enough medical equipment, including
for examples x-ray and obstetric equipment. (Note: The thorough
and ongoing medical dimension of humanitarian efforts by NGO's,
the UN, the Coalition and GOI have focused on medical supplies
rather than equipment. Ref B. End Note.) There were not enough
schools and some needed repair; many schools were missing desks.
Safi said that he would try to fix the schools that can be
fixed before trying to build new schools.

COMMITTEE TO DECIDE ON THE PROJECTS
--------------

7. (C/REL MCFI) Safi said that committee would make the final
decision on what projects to execute with the $100 million, not
the governate/PC. Safi will chair the committee, which will
include Deputy Ministers from Municipalities, Trade and Finance
(who may have just arrived),as well as two Deputy Ministers
from Housing and Health who are already here. To Ambassador
Ries' question as to whether citizens can bring projects to this
committee, Safi replied yes. Safi continued that he was counting
on the input of the PC, DGs, Tribal Sheiks and the "educated
people" (no mention of the Governor).

TIMELINES
--------------

8. (C/REL MCFI) Safi said that he had asked the Deputy
Ministers to expedite the project decision process and that his
timeline was three months, the meaning of which was vague but
appeared to mean to have contracts committed. Safi said that
the $100 million would be "programmed" within a month, possibly
within the next two or three weeks. Safi continued that $100
million was not enough, but it was enough to be a catalyst for
change and to effect a transformation.

PROCESS FOR PROJECT EXECUTION
--------------

9. (C/REL MCFI) The method as explained by Safi would be to
"summarize" contracts, meaning not to put out tenders for bids
but to let contracts directly. Ambassador Ries asked how Safi
would decide with whom to contract. Safi replied that he was
asking the PC for a list of good companies and suppliers.
(Note: The Basrah PRT has labored mightily to educate the PC
into process-oriented project management and not to try steering
contracts to cronies. Safi's process could violate Iraqi laws
that require a bidding process. End Note.)

HOW WILL THE MONEY FLOW?
--------------

10. (C/REL MCFI) Ambassador Ries inquired as to the mechanism
to disburse the $100 million. Safi replied that the mechanism
was there but it would not be outside normal procedures. The
Deputy Minister of Finance would be in Basrah and able to help
input "equipment." Safi envisioned cooperation with the various
ministries; supervision of a contract would go to whatever
ministry the project logically falls under. Ambassador Ries
asked if the $100 million would come out of the 2008 provincial
budget (and then later paid back from the pending GOI
Supplemental, as we had heard); Safi replied that no, this was
additional and nothing to do with the provincial budget.
However, Safi warned that there would be GOI oversight also in
the spending of the PC's budget. Some of the $100 million would
be used to monitor the provincial budget execution and ensuring
that enough of it went to job creation.

JOB CREATION
--------------

11. (C/REL MCFI) Emphasizing again that a major criterion was
creating many jobs, Safi noted that his plan was already in
motion with 8000 jobs consisting of employment for six months to
a year. He admitted that these jobs, however, were not from the
$100 million but from "ordinary" financing. He continued that
there would be more jobs for the ministries to help administer
the overall program. The Trade Ministry would have an increase
of 2000 jobs and the Ministry of industry 500 jobs.

HOW CAN THE COALITION HELP?
--------------

12. (C/REL MCFI) Ambassador Ries asked how the Coalition could
help Safi with his plan. He explained the breadth of Coalition
projects, including ESF and CERP. He continued with some of the
ideas that the Coalition has floated: to increase trade by
setting up a free trade zone with Kuwait, the Basrah Development

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Commission's (BDC) work to attract investors. Safi cautioned
that the GOI wanted to take the lead: "you can tell us but
please don't publicize." For example, Safi expressed that the
BDC's efforts would be viewed locally as politically motivated
actions by the UK.


13. (C/REL MCFI) Ambassador Ries asked directly if Safi was
open to our ideas. Safi replied no, not ideas from foreign
experts. He continued that the GOI did not want input from
political parties associated with a foreign country (and seemed
to be lumping Coalition ideas in with ideas from Iraqi parties
with ties to other nations). Ries continued his question: do
you want a list of suggested projects from the U.S.? The vague
answer was that political parties were involved. Safi said that
people think both the Americans and British support the
governor; this looked bad and the GOI did not want it. Safi used
the example of ongoing street cleaning (which Admiral Winters
said that the USG had paid for); he would have preferred Iraqis
doing this project instead of the Coalition but it was good that
it was happening.


14. (C/REL MCFI) Though Safi showed no interest at first in any
list of suggested projects that the Coalition might have for
him, he warmed a bit after USAID Director Crowley noted that
many of Safi's ideas, for example school desks, were underway.
Safi admitted that it would be good to avoid duplication.
Crowley continued that Safi should consult with aid agencies, to
which Safi asked that we give him a list. Safi continued the
theme of avoiding duplication by inquiring how the Coalition
paid compensation for injuries/damage during the `Charge.' It
was acceptable that the Coalition pay as appropriate, but
important to coordinate so that Safi's program (designed to help
people affected by the `Charge') would not duplicate Coalition
efforts. It was agreed to exchange information. Safi finished
by saying that USG help had been invaluable and "we will be very
receptive to your ideas."

COALITION COULD HELP WITH HOUSING
--------------

15. (C/REL MCFI) Safi made clear one problem that the $100
million project could not address was the serious lack of
housing in Basrah City. He said some sort of "cookie cutter"
homes would be great, especially in over populated areas like
Hyyaniyah. Meeting the housing needs was a big dollar item, as
in addition to the homes there would have to be the services to
go with them.

BASRAH PRISON
--------------

16. (C/REL MCFI) Safi brought up another area in which the USG
could help, (apparently more from his role as Justice Minister
than in connection with the $100 million),which was getting the
Basrah Prison renovation completed. He noted that the GOI took
comfort when the U.S. Army Corps of Engineers (USACE) undertook
to do it - but they had not done anything yet. He pointed out
that Ambassador Crocker and Safi were going to jointly open the
prison in Nasiriyah in ten days. Ambassador Ries said he would
follow up. (Note: The Basrah Prison renovation was obligated
with INL funding in December 2007. An Iraqi Police battalion was
moved out of the dilapidated prison to make room for the
renovation. An INL assessment team came out January 08; they
found some problems with the contract tender such that the
tender had to be redone. End Note.)

POLIICAL ATMOSPHERICS
--------------

17. (C/REL MCFI) Safi described improvements in local politics
since his time at the Basrah Palace, noting that he met with
Governor Wa'eli every day at 1pm. It was an ironic side benefit
of the `Charge' that it brought the Governor and PC together.
The Governor had been ignoring the PC; Safi claimed that the
Governor had not attended a PC meeting in two years but now was
attending every one. Once Wa'eli's "strength was removed, he
started to cooperate." Safi admitted that the PC in general was
a problem, but that he had met some good people on the Council.
He continued that the citizens were now seeing cooperation and
that money spent would be for the citizens, not for political
parties. Ries stressed that the USG wanted exactly what Safi
expressed, to support democracy not political parties.

HOW SAFI'S TRIBAL PROGRAM FITS IN
--------------

18. (C/REL MCFI) Since Safi is also in charge of the PM's
tribal initiative, he was asked how it fit into the $100
million. Safi asserted that they will get some of the $100
million and that Sheikhs were coming in and giving some good
ideas. He did not specify if money would be used to pay for a
"Sons of Basrah" program along the lines of the Sons of Iraq.
Safi said that the tribal initiative was still changing every
day; currently the tribal committee was devolving into smaller
committees to include more tribal input.


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COMMENT AND ACTION PLAN FOR USG
--------------

19. (C/REL MCFI) Safi made it clear that an Iraqi face on
assistance was of the utmost importance and that he was not
overly interested in our view of what projects the GOI should
undertake. Still, he asked for specific items and was open to
information on what projects the Coalition had in progress so as
at least to not duplicate efforts. We will need to be discreet
and subtle with our input. The USG could:

1. Explore the idea of low-income mass housing.

2. Submit a list of USAID, PRT, J9, USACE and other projects
already in the pipeline. This list could subtly suggest our
development ideas by pointing out gaps, funding shortfalls etc.

3. Provide update on Basrah Prison project.

4. Explain mechanism for any Coalition programs to compensate
citizens for battle damage.

5. Show the JCCI system to Safi as a resource for identifying
trustworthy contractors.


20. (C/REL MCFI) The subject of letting contracts to capable
and honest contractors has been a charged one in Basrah. PC
members have tried to get control of contract awarding from the
DGs in the governate, dating at least from August 2007. The
USACE has spent much effort in using the JCCI system to vet a
series of contractors that meet JCCI standards. The PRT has
likewise made good progress in streamlining the PC's budget
execution progress. Safi's stated intent to use PC advice for
direct contracting without tenders is troubling. We will try to
explain this system and the effort that has gone into it for
identifying contractors and allocating contracts in a fair
manner. While PC members and REO contacts have complained about
the JCCI list (mostly because their favored contractors are not
on the list),Safi (though a Basrawi) may not be aware of some
of the bad apples here.
HOWARD