DELIVERING A CLEAR MESSAGE ON IRAQ'S BUSINESS

C O N F I D E N T I A L SECTION 02 OF 02 BAGHDAD 001897

SIPDIS

USDOC FOR 4350/ITA/MAC/IIRTF/KREICHERT/SHAMROCK

E.O. 12958: DECL: 07/12/2014
TAGS: EINV ETRD PREL PGOV IZ BEXP
SUBJECT: DELIVERING A CLEAR MESSAGE ON IRAQ'S BUSINESS
CLIMATE TO PM MALIKI

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BAGHDAD 00001897 002 OF 002


highlight to potential investors. (Note: The amendment had
its first of three required readings in Parliament on July 9.
End Note) Maliki should be encouraged not only to make
passage of the bill a priority, but also to ensure that the
National and Provincial Investment Commissions have his
personal support and are empowered to implement these and
other provisions of the Investment Law and overcome the
opposition of the ministries that currently own most Iraqi
land.

Message Three: Ratify the Bilateral Agreements
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4. (C) U.S. investors have less of a history in Iraq than
those of other countries. Both countries need to work
together on measures that will address investors, concerns.
While GOI moves to improve the investment climate are most
important, there are other measures that can be taken in the
sort term. Ratification of the OPIC Investor Incentive
Agreement is a potential quick win. Signed in 2005, the
agreement required parliamentary ratification in Iraq, but
the GOI has ignored the agreement, seeing it as too difficult
to pass given sensitivities over bilateral security
agreements. Our message to Maliki should be that this is a
non-controversial agreement and that a small investment of
political capital in advance of the October investment
conference would give the GOI delegation a concrete new
achievement to entice U.S. investors. Maliki should also be
encouraged to bring to ratification the other two bilateral
agreement pending from 2005: the Trade and Investment
Framework Agreement (TIFA) that would be the first step
towards a future Bilateral Investment Treaty, and the
critical Bilateral Assistance Agreement (BAA). The BAA is
necessary to ensure continued delivery of USG assistance to
Iraq. This assistance directly supports development of the
business climate (for instance, the National Investment
Commission receives significant technical assistance) and
underpins many of our common goals in the Strategic Framework
Agreement. Should the USG need to reduce or phase out
bilateral assistance because the BAA is not enacted, among
the many negative impacts would be the signal this sends to
potential investors already nervous about GOI commitments.

Message Four: Stay on Course for WTO
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5. (C) Investors are looking for signs that the GOI is
committed to meeting international standards. Membership in
the World Trade Organization (WTO) would provide such
assurances, in addition to the benefits it would offer Iraq
in supporting trade and international integration. Although
Maliki and other cabinet officials have expressed support for
Iraq's joining the WTO, the accession process has stalled and
is unlikely to get back on track without a direct
intervention from the PM. The USG has provided extensive
technical assistance to help the GOI meet legislative
drafting requirements and compile its Initial Goods and
Services Offers. However, a lack of leadership and in some
cases opposition to some WTO requirements from certain
ministries have prevented timely submissions of information
to Geneva and could delay Iraq's Third Working Party for
another year or more (Reftels B,C). Until Al-Maliki and
those government ministers who support WTO accession elevate
their level of hands-on involvement in the process, it will
not move forward. Discussions with the PM's staff in Baghdad
Qnot move forward. Discussions with the PM's staff in Baghdad
lead us to believe that Maliki is open to making a public (or
at least private) expression of support for WTO membership.
We should take advantage of that opportunity to press him to
turn his rhetoric into direct leadership.
HILL