GOVERNOR ANNOUNCES THE FORMATION OF THE BASRAH INVESTMENT

C O N F I D E N T I A L BASRAH 000074

SIPDIS

E.O. 12958: DECL: 8/26/2018
TAGS: EINV EPET ENRG ECON KCRM IZ
SUBJECT: GOVERNOR ANNOUNCES THE FORMATION OF THE BASRAH INVESTMENT
PROMOTION AGENCY

CLASSIFIED BY: Ramon Negron, Regional Coordinator, Regional
Embassy Office, Department of State.
REASON: 1.4 (b)


1. (U) In early-July, Governor Muhammed Waeli announced the
appointment of the first Basrah Investment Promotion Agency
(BIPA) board. BIPA was established under the National
Investment Law (No 13 of 2006),which mandates the setting up of
a National Investment Commission (NIC) and regional or
governorate level investment commissions with powers to grant
investment licenses, identify strategic investment
opportunities, and promote foreign investment. Although
organizationally BIPA falls under the NIC, the agency is under
the oversight of the Provincial Council (PC) and reports
directly to the Office of the Governor. BIPA also has approval
authority for provincial investment projects valued between USD
1 million and USD 250 million.


2. (C) Following the Governor's announcement, REO met with Hamed
Abud al-Dhalmi, member of the Provincial Council, to discuss the
newly formed investment board. When asked about reports
criticizing specific appointments, Dhalmi characterized the
selection process as too partisan, adding that members of the PC
were more concerned with political affiliation than competencies
needed to effectively promote and guide investment. According
to Dhalmi, the BIPA board consists of ten members who serve
seven-year terms. Five were nominated by Waeli's Fadhila party
and the Iraqi National Accord, including the board's chairman
Haydir Ali Fadel. Four others were nominated by PC members
representing a consortium of opposition parties including the
Islamic Supreme Council of Iraq (ISCI),Prime Minister Maliki's
Dawa party, Badr, and Hezbollah. Dhalmi said a tenth member was
added by the PC Chairman.


3. (C) According to Dhalmi, Waeli expected that the appointments
would be politically driven and was fully prepared to work with
a "less-than-perfect" board, since the Governor's principal
objective was to get enough buy-in from the PC to establish the
agency and expedite its ability to serve as a functioning body.
Moving forward, however, Dhalmi said Waeli plans to replace
several board members with others who are more Fadhila-leaning.
Dhalmi believes Waeli will argue that two members should be
removed due to a conflict of interest, since they are also
members of the PC, which has limited oversight of BIPA
responsibilities. In deposing other members, Waeli may cite
their lack of experience in business development and investment
promotion.


4. (C) Ihsan Abdul Jabar Ismaeel, advisor to governor Waeli,
offered a contrasting view to the REO during a separate
conversation regarding the makeup of BIPA's board. He said
that, other than the two PC members, the other members are
private sector professionals including PhDs, engineers, lawyers,
MBAs and one Director General (Captain Salah, of the port of Umm
Qasr).


5. (C) Comment: It appears unlikely that the central
government, acting through the NIC, will allow BIPA to act
independently on investment issues that could potentially affect
the entire country. On this issue, Dhalmi told REO in
confidence about Baghdad's intent to dismiss a good number of
BIPA board members. Whether BIPA's independent powers are
realized or not, it certainly seems to be the perception from
local officials that they will be real. Although the board has
not held its first meeting, the perception within the Basrawi
local government and business community is that BIPA will take
the lead in directing the province's future investments. More
importantly, the underlying belief is that BIPA board members
(and the PC members who nominated them) will have significant
influence in joint ventures, contracts, and employment
opportunities. When Dhalmi spoke of Governor Waeli's intent to
replace some BIPA members for lack of qualifications, we believe
his real intention is to replace them with Fadhila-leaning
officials. End Comment.

NEGRON