NETHERLANDS/IRAQ: DPM SALIH MAKES GOOD IMPRESSION

UNCLAS THE HAGUE 000095 SIPDIS SENSITIVE SIPDIS STATE FOR EUR/WE, EUR/ERA, NEA/I COMMERCE FOR 4212/USFCS/MAC/EURA/OWE/DCALVERT E.O. 12958: N/A TAGS: PREL ECON PINR NL IZ SUBJECT: NETHERLANDS/IRAQ: DPM SALIH MAKES GOOD IMPRESSION REF: 07 THE HAGUE 1930 SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. ¶1. (SBU) SUMMARY: MFA Iraq desk officer Dirk Jan Wierenga told poloff that Deputy PM Salih made a "good impression" during his visit to the Netherlands January 21-22. Dutch agreement to a trade mission to northern Iraq later this year was a highlight of the visit. END SUMMARY. ¶2. (SBU) Salih saw PM Balkenende and Shell officials on January 21, and participated in an economic seminar and Ministry of Economic Affairs meetings on January 22. According to Wierenga, the most prominent success from the visit may be a trade mission to northern Iraq later this year. "Serious companies" are interested in the mission, whereas last year,s proposed mission to Irbil was canceled. Reviewing reports of the bilateral, Wierenga said Balkenende and Salih had a "good meeting," a 30-45 minute "courtesy call." Salih gave a "professional and sympathetic impression" and "clearly had warm feelings for the Netherlands." Salih appeared to be a "rational decision-maker." ¶3. (SBU) During the bilateral, Balkenende emphasized the need for improved security and continuing reconciliation. He emphasized that the PKK is a terrorist group, and that Iraq and Turkey should work together to resolve the issues. The Dutch parliament is concerned about the situation of minorities in Iraq, and Balkenende urged Salih to improve the situation. In the future, an open economy would help Iraq. ¶4. (SBU) Salih noted the presence of a large Kurdish community in the Netherlands, and thanked the Netherlands for supporting the liberation of Iraq. Salih invited Balkenende to visit Baghdad. Regarding security, Salih said the situation was improving, though Iraq was benefiting from a cease fire rather than peace. Salih agreed the PKK was a threat but "completely rejected" the attacks by Turkey. There is not a military solution to the PKK problem. Iran is a security concern and a negative influence, but Iraq must have relations with its neighbor. Iraq is looking for a long-term security agreement with the United States. On the political situation, it,s key to involve Sunnis. The current process is not inclusive. With such a heterogeneous population, federalism and local authority is key. ¶5. (SBU) On the economy, Salih sees improvements. Iraq wants to reach an economic and trade agreement with the EU soon. Salih hopes for "soft loans" from Italy and Japan. Iraq is looking also for capacity building for both the private sector and government in Iraq. It,s possible that Dutch companies might assist in developing the harbor in Basrah. ¶6. (U) The Dutch trade relationship with Iraq is highly varied and centered around oil products. In 2006, the Netherlands imported 434,000 tons of oil and oil products from Iraq, down from a five year (2001-2006) high of 2,178,000 tons in 2002. According to official figures, the Dutch exported no products to Iraq in 2006, after exporting 8,000 tons of oil and oil products in 2005 and 5,000 tons of non-oil products in 2004. ¶7. (SBU) Although not one of the Netherlands' 36 official development assistance partner countries, Iraq receives significant amounts of Dutch aid. Over the 2006-2007 period, the GONL provided 3.7 million euros (USD 5.3 million) to the UN and various NGOs for their operations in Iraq, including support for internally displaced persons and the medical sector. The Dutch also supported Iraq indirectly, providing USD 57.1 million over 2006-2007 to the UN Central Emergency Response Fund, which allocated USD 9.7 million to the region, and USD 37.1 million in 2006 to the UN Children's Fund, which allocated USD 2.2 million to Iraq (see reftel for additional details). In 2006, the Dutch agreed to forgive 80 percent of Iraqi debt -- in line with Paris Club terms -- and totaling 256 million euros (USD 366.7 million). Gallagher