THIRD MEETING OF ECONOMIC AND ENERGY JOINT

C O N F I D E N T I A L SECTION 01 OF 03 BAGHDAD 001540

AIDAC
SIPDIS

E.O. 12958: DECL: 06/12/2019
TAGS: ECON EINV ENRG ETRD EPET PREL CVIS IZ
SUBJECT: THIRD MEETING OF ECONOMIC AND ENERGY JOINT
COORDINATION COMMITTEE

REF: A. BAGHDAD 399

B. BAGHDAD 953

Classified By: Econ Minister Counselor Marc M. Wall, Reasons 1.4 b, d.

Summary
--------------


1. (C) The third meeting of the Economic and Energy Joint
Coordination Committee (JCC) met under the Strategic
Framework Agreement on June 10, chaired by Deputy Prime
Minister (DPM) Barham Salih and EMIN Marc Wall, Coordinator
for Economic Transition in Iraq, at which working group
chairs provided updates on their progress and next steps.
DPM Salih also told EMIN that an energy oversight committee
would be formed for petroleum sector development (see
paragraph 9). DPM Salih requested the next JCC meeting for
August. This cable contains market sensitive information,
please protect. End summary.

Third Meeting of Economics and Energy JCC
--------------


2. (SBU) The third meeting of the Economic and Energy Joint
Coordination Committee (JCC) under the Strategic Framework
Agreement (SFA) was chaired by Deputy Prime Minister (DPM)
Barham Salih and Coordinator for Economic Transition in Iraq
(CETI) Ambassador Marc Wall On June 10. Both sides
acknowledged the tragic loss of Terrence Barnich, co-chair of
the New Electricity Projects Working Group, who died in a
bomb attack on May 25. Maged Hussein, co-chair of the
Environment Working Group under the Technology and Services
JCC was killed in the same attack.


3. (SBU) In his opening remarks, DPM Salih applauded the
expansion of the Fulbright program for Iraq. The SFA will
gain more and more focus as the framework for bilateral
cooperation, exchange and initiatives. The SFA is
&important to the stability of Iraq, for the people of
Iraq.8 In expressing condolences for the loss of Terrence
Barnich he said, &The least we can do is double our efforts
and stay the course.8 Ambassador Wall thanked the DPM for
his leadership of the JCC, noting that it is a strategic gain
for both of our countries.

Updates on the Working Groups:
Trade and Investment
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4. (SBU) Working Group co-chairs gave updates on their
respective activities. Dr. Samy Al Araji, Chairman of the
National Investment Commission, gave the update for the Trade
and Investment Working Group noting three primary short-term
goals: an investment conference in the U.S. in October; a
business delegation visit to Iraq (timeframe TBD); and
investment strategy group of think tank members, sectoral and
regional experts to discuss Iraq,s long-term investment
strategy. In addition, Dr. Samy noted that Provincial
Investment Commission training was moving forward with
assistance from the Embassy,s Economic Section, USAID and
the Department of Defense (DoD) Task Force for Business
Stability Operations (TFBSO - Brinkley Group). USAID,s
&Tijara8 program will also support Iraq,s participation in
its third World Trade Organization (WTO) Working Party
meeting in 2009. Dr. Samy also noted that the Ministry of
Trade and the National Investment Commission are forming a
legal group to consider the &New York Convention on the
Recognition and Enforcement of Arbitral Awards8 as a way to
improve the investment climate for international investors.
Dr. Samy also urged the U.S. to find a way to expedite visas
for Iraqi business travelers. DPM Salih said that holding an
investment conference in the fall may be tough with Iraq,s
election season in full swing, but agreed it was a priority.
Qelection season in full swing, but agreed it was a priority.

Public Financial Management and
Financial Issues Working Group
--------------


5. (SBU) The Finance Working Group noted progress in several
areas including a budget strategy workshop in Jordan in May,
which brought together several Government of Iraq (GoI)
participants. The Central Bank of Iraq (CBI) also outlined a
strategic plan in a workshop with Treasury, the Financial
Services Volunteer Corps, and TFBSO. Rafidain and Rasheed
Bank, with assistance from the Department of Treasury, issued
approximately 362,000 Smart Cards for direct deposit of
salaries and pensions. TFBSO assisted AMWAL (a consortium of
Iraq banks creating a network for electronic banking) in

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receiving a Mastercard affiliate license, rolling out
MasterCard debit and credit cards, and deploying point of
sale devices and Automatic Teller Machines (ATMs). (Note:
AMWAL is a limited liability company registered with the
Iraqi Ministry of Trade and supported by CBI. End Note.)
With assistance from the Department of State, the Iraqi Stock
Exchange launched its automated trading platform in April.
The Central Bank,s Money Laundering Reporting Office (MLRO)
attended the Ninth Plenary Meeting of the Middle East North
Africa Financial Action Task Force (MENA/FATF) in Bahrain in
May, learning ideas to improve its anti-money laundering
regime. Next steps and deliverables include a database
development project at CBI, a budget training for provincial
officials, technical assistance for a Treasury Bill market,
tax assistance and a Financial Sector Assessment Team (FSAT)
to review Iraq,s anti-money laundering regime with possible
ideas for training as a follow-up.

Industry and Private
Sector Development
--------------


6. (SBU) Munqueth AlBaker, Advisor to the Minister of
Industry and Minerals, briefed on the Industry and Private
Sector Development Working Group. Small-and-Medium
Enterprise (SME) growth is important to private sector
growth, including improving enabling laws and regulations,
and revitalizing industrial parks to act as SME incubators.
Private sector lending and improved access to commercial
finance through development of new micro-finance mechanisms
is also important. The Directorate for Industrial
Development within the Ministry of Industry and Minerals
could be transformed into an Iraq Industrial Development
Corporation, to include representation from the private
sector. USAID and TFBSO are assisting with a revised
Investor Roadmap, a review of Iraq,s industrial
competitiveness, and state-owned enterprises (SOE)
modernization and rehabilitation including a review of excess
employment. USAID noted that the scope of this working group
had been re-defined under the new Iraqi co-chair.

Electricity Sector
--------------


7. (C) Market Sensitive. The New Electricity Projects
Working Group reviewed current issues, though its work has
not fully resumed following the loss of U.S. co-chair
Terrence Barnich. David Ensign from ITAO noted that there is
ongoing cooperation in training for grid management including
simulator training. Deputy Minister for Electricity Salam
Khazaz was questioned by DPM Salih about the delayed payments
to U.S. company General Electric (GE). Khazaz responded that
it was out of his hands, and that the decision currently
rested with the Council of Representatives for a special bond
issuance to pay for the turbines. DPM Salih expressed
impatience noting, &We should not have made a commitment to
GE without budget authorization. Now we are in a difficult
bind.8

Oil and Gas Working Group
--------------


8. (SBU) The Oil and Gas Working Group Iraq Co-Chair Thamir
Ghadban was out of the country so the U.S. side briefed. The
group continues to make progress and has its next meeting set
for June 22. The Commerce Department,s Commercial Law
Development Program held the first two of four planned
workshops on contracts and licensing, and the economics of
oil field development. The U.S. Department of Interior,s
Minerals Management Service conducted a four-day course in
QMinerals Management Service conducted a four-day course in
Erbil for Ministry of Oil (MoO) staff on international
regulation, lease and tender administration, and dispute
mitigation. The Embassy continues to provide technical
assistance for the petroleum sector, and in response to DPM
Salih,s request, petroleum expert Daniel Johnston will meet
with relevant GOI officials in late June.

Another Oil and Gas Initiative
--------------


9. (C) In a pull-aside after the meeting, DPM Salih expanded
on his mention earlier in the meeting that he had discussed
the GOI approach to petroleum sector development with the PM
and Vice President Adil Abd al-Mahdi before the JCC. Salih
said they had decided to form an "energy oversight" committee
with membership to include the PM, VP al-Mahdi, PPM Advisor
(and ex-Oil Minister) Thamir Ghadban, Oil Minister
Shahristani, and another former oil minister, Bahr al-Uloom.

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The committee would develop a shortlist of six international
oil companies to bid on specific fields. The companies would
likely comprise two U.S. and one company each from the UK,
France, Russia, and Japan. Salih said that, despite the
decision to make this offer directly to a limited number of
companies, the Ministry of Oil bid round process would
continue. He reiterated that he would continue on as DPM,
but that Finance Minister Jabr would be taking a more visible
role on oil and gas issues. (Note: DPM Salih also informed
us that he has offered his resignation, but told EMIN that
his resignation has not been formally accepted, so he
continues to perform his DPM role, in between frequent
election campaign trips to the KRG. End Note.)

Comment
--------------


10. (SBU) It appears DPM Salih, despite offering his
resignation, will continue to chair this JCC for the near
term, and suggested the next JCC meeting be held in August.
Since there is no replacement named for him, we will continue
to work closely with him and his staff to maintain momentum.
Salih agreed that the SFA should be emphasized in Prime
Minister Maliki,s visit to the U.S. perhaps in July. His
remarks in the meetings, along with his plans to stay
involved, underline his commitment to making the SFA serve as
the governing framework for non-security bilateral
cooperation.
HILL