IMMUNITIES DEMARCHE DELIVERED

C O N F I D E N T I A L SECTION 01 OF 03 BAGHDAD 001487

SIPDIS

DEPT FOR NEA/I AND L

E.O. 12958: DECL: 06/07/2019
TAGS: EFIN PGOT ECON PREL IZ UN
SUBJECT: IMMUNITIES DEMARCHE DELIVERED

REF: A. STATE 50829

B. BAGHDAD 1367

Classified By: EMIN Ambassador Wall, Reasons 1.4 b, d.


1. (C) Summary: In response to reftel demarche, Ambassador
Hill and other Embassy officials delivered the message on
extension of immunities by Executive Order to relevant
Government of Iraq officials. Ambassador Hill delivered the
message verbally, and by letter (see text at paragraph 8
below). In addition, Embassy officials delivered demarche
points to Deputy Prime Minister Issawi, the Prime Minister,s
Legal Adviser, the Finance Minister, the Central Bank
Governor, and the Bureau of Supreme Audit President. End
Summary.

PM Legal Adviser Fadel, Visit Delay
--------------

2. (C) In a meeting on May 28, Embassy Legal Adviser met with
Dr. Fadel Kadhum, the Prime Minister,s Legal Adviser. Dr.
Fadel acknowledged the danger to Iraq,s assets if it does
not act to resolve outstanding claims. In particular, he
noted that some members of Congress have expressed an
interest in removing some of the existing asset protections.
He agreed that demonstrable progress on resolving American
citizen claims against the former Iraqi regime is an
important step in the right direction. Dr. Fadel did not
provide details on Iraq,s plans to resolve sovereign and
commercial debt, though he did accept that they were a
problem that needed to be solved. Overall, Dr. Fadel was
pleased that DFI and Central Bank protections were extended
by the President, but other than by negotiating a settlement
of American citizen claims, he did not offer concrete
suggestions for resolving outstanding liabilities. Dr. Fadel
had planned to lead a team to Washington June 2 to begin
claims discussions, but has now delayed that visit, saying
that the PM is rethinking composition of the negotiating
team. Embassy Legal Adviser has pressed Dr. Fadel to begin
negotiations immediately.
Finance Minister Jabr
--------------

3.(C) Finance Minister Bayan Baqir Jabr Al-Zubaydi formally
thanked President Obama for extending the immunities as
transmitted in reftel B. EMIN and Financial Attache on June 3
thanked the Finance Minister for his letter and delivered
demarche points. EMIN noted that Dr. Fadel's visit has been
delayed, and hoped that the visit will occur soon, as
Congress has been applying pressure on the administration to
resolve outstanding U.S. claims. Jabr responded that he was
unaware of Dr. Fadel's reason for delay, and said that he
would call Dr. Fadel to follow-up. Jabr said, "this is an
issue that we want to close out." Financial Attache also met
with the Minister,s senior advisor, Dr. Aziz Jafaar. Dr.
Aziz said he thought that Dr. Fadel,s visit was still
scheduled and that the DG of Public Debt was approved to join
the delegation. Aziz recognized the importance of settling
these claims and promised to follow up. The Financial
Attache Office also has learned from Ernst and Young
officials that the Finance Ministry had authorized Rafadin
and Rasheed banks to provide information to document any
remaining claims against these institutions.

CBI Governor
--------------


4. (SBU) The Financial Attache presented the demarche to CBI
Governor Shabibi. He was very grateful for the extension of
immunities and recognized the importance of Dr. Fadel,s
trip. He said that the GOI &knows my position well,8 and
promised to raise the importance of settling the claims with
the GOI.

Bureau of Supreme Audit
QBureau of Supreme Audit
--------------


5. (C) Anti-Corruption Coordinator and staff (ACCO) made Ref
A demarche June 4 to Board of Supreme Audit (BSA) President
Abd al-Basit Turki al-Bayati, stressing the need for prompt
action by the GOI to resolve its outstanding financial
liabilities and claims. Abdul Basit was responsive, saying
he fully agreed with the need for the GOI to act
expeditiously and expressing regret that it had not done so
already. He gave assurances that the BSA would do its part
in the GOI,s effort to get its financial affairs in order.
However, Abdel Basit (protect) went on to indicate that
&others in the GOI8 )- which he declined to identify )
might well drag their feet in this exercise out of a desire
to see the immunities protection prolonged. ACCO responded

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that, to build support for prompt action, we were also
demarching, inter alia, the Finance and Foreign Ministries as
well as the Central Bank and the Prime Minister,s Legal
Adviser.

Foreign Ministry
--------------


6. (SBU) The issue will be raised with Foreign Minister
Zebari soon.

DPM Issawi
--------------


7. (SBU) EMIN Ambassador Marc Wall passed a copy of
Ambassador Hill,s letter to PM Maliki to DPM Issawi during a
meeting on June 2, noting these issues may come up during the
DPM,s June 6-13 visit to the United States. Issawi noted
that that the Prime Minister,s Legal Advisor had been
empowered by the most recent Cabinet meeting to negotiate
this issue. (Comment: As far as we know, Dr. Fadel has only
been empowered to negotiate the settlement of AmCit claims,
not sovereign and commercial debt. End Comment.)

Ambassador Hill Letter to PM Maliki
--------------


8. (SBU) Below is the text of Ambassador Hill,s letter to PM
Maliki, dated May 21, 2009.

BEGIN TEXT:

Your Excellency:

It was a great pleasure to meet with you on Tuesday. I look
forward to continuing our regular discussions, which give us
a good chance to properly review the challenges and
opportunities for U.S-Iraq ties.

As we look ahead, addressing some elements of the past will
help us build a sound foundation for the future. The United
States strongly supports Iraq in its desire to put the
actions of the previous regime behind it. As part of this
effort, the United States supported the United Nations
Security Council Resolution 1859, which extended
arrangements, including protections for the Development Fund
for Iraq, for an additional year.

As you discussed recent with President Obama and Secretary
Clinton, those protections have been implemented in the
United States by an Executive Order that would have expired
on May 22 of this year. As I mentioned during our meeting,
the President has extended those protections through May 21,

2010. Notably, these protections go beyond what is required
by the Security Council, such as by including Central Bank
assets. This extension was considered at the highest levels
of my government, and demonstrates our continued strong
support for Iraq at this crucial time in its history.

Taking the steps necessary to alleviate the need for such
immunities and protections is essential for Iraq to
demonstrate clearly its sovereignty and good governance, as
well as to strengthen financial management capabilities.

These protections offer Iraq a chance to resolve outstanding
financial liabilities. The Administration remains under
significant pressure from Congress with respect to the claims
of American victims against Iraq arising from Saddam-era
terrorism and torture. As an example, legislation has again
been proposed in the U.S. House of Representatives that would
ease the claimants, ability to pursue these lawsuits.

The immunities create uncertainty about Iraq,s financial
standing and future in the eyes of the international
financial community. Making progress on resolving debts and
claims will help to improve Iraq,s international financial
credit rating, which will be crucial for Iraq,s ability to
access global financial markets in coming years.

A strong and broad effort to settle remaining Saddam-era
commercial and sovereign debts on Paris Club comparable terms
or better is also in Iraq,s interests, and Iraq can continue
to count on our support in those efforts.
Qto count on our support in those efforts.

We look forward to working with the delegation headed by Dr.
Fadel in early June to Washington with the aim of being able
to show tangible and demonstrable progress. The American
government would appreciate the GOI,s commitment to making
such progress. In this context, announcing progress on this

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issue during your visit to Washington in June will help to
send a positive signal of advancement on this issued.

Sincerely,
//Signed//
Christopher R. Hill

END TEXT.
FORD