LAND ISSUES HALTING INVESTMENT IN IRAQ,S PROVINCES

C O N F I D E N T I A L BAGHDAD 001822

SIPDIS

E.O. 12958: DECL: 07/06/2014
TAGS: ECON EFIN EINV PGOV
SUBJECT: LAND ISSUES HALTING INVESTMENT IN IRAQ,S PROVINCES

REF: 08 BAGHDAD 3682

Classified By: Classified By: PRT Team Leader Bradley Lynch for Reasons
1.4 (b) and (d).

This is a PRT Muthanna reporting cable.


1. (SBU) The Muthanna Provincial Investment Commission (PIC)
is one of the most active and dynamic economic development
organizations in Iraq. Since its inception in late summer
2008, Muthanna,s PIC has issued seventeen (17) licenses
worth some 363 million dollars to a broad array of businesses
from neighboring countries and major economic powers alike.
Many of their efforts focus on Muthanna,s raw material
endowments, such as cement, bricks, and salts. (Note: Unlike
some of its provincial neighbors, Muthanna does not have
proven oil/natural gas fields that could be exploited at the
present time. End note.) The PIC has also issued licenses
for commercial and tourism ventures, in an effort to maintain
a balanced approach to development.


2. (SBU) Previous reporting (reftel) noted that land
acquisition was, potentially, a substantial obstacle to these
economic development efforts. Given its centralized history,
most of the available land is owned or otherwise controlled
by the Government of Iraq, either by way of the Ministry of
Finance or the Ministry of Municipalities and Public Works.
Over the past several weeks, Embassy Baghdad,s Treasury
Attach office has been working with a local consultancy firm
known as &CCC8 in an attempt to help negotiate land leases
between one of the ministries -- initially the Ministry of
Municipalities -- and the PIC/investor to break this logjam.
Treasury has won the support of Deputy Prime Minister Rafa
Al-Eissawi, who has signed a letter authorizing CCC to
negotiate directly with the ministry on land issues.


3. (SBU) While high-level political support would presumably
provide the impetus for action on this issue, recent
experience has been surprisingly negative. In three separate
test cases brought by the Muthanna PIC to Treasury/CCC, the
Ministry of Municipalities has found a number of excuses to
block the land leases. While the Iraqi investment law number
13 of 2006 spells out general provisions of land leases for
investment projects, the ministry claims that this law may
conflict with laws from the previous regime, specifically one
from 1986 and possibly another from earlier. The ministry,
therefore, has not been interested in proceeding further with
land lease negotiations.

COMMENT
--------------

4. (SBU) PRT COMMENT: Muthanna,s PIC has done all that it
can and should do in terms of encouraging investment from
outside the country. The inability of the PIC to facilite
land leases will halt most foreign direct investment into the
province. Indeed, of the seventeen (17) licenses issued to
date, only four (4) have been able to break ground because
all of the other licensed projects require land to proceed.
The PIC tells the PRT that Chairman Adel Dakhel Mohammed
Al-Yasiri has decided against signing any more licenses until
the land issue is resolved. The PRT fears that absent a
political or legislative solution in Baghdad, little can be
done in the foreseeable future on this important issue.
HILL