IRANIAN TRADE AND ECONOMIC INFLUENCE IN ERBIL

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 000196

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E.O. 12958: DECL: 01/25/2019
TAGS: ETRD ECON PGOV PREL IR IZ
SUBJECT: IRANIAN TRADE AND ECONOMIC INFLUENCE IN ERBIL

Classified By: Classified By Political-Military Minister-Counselor Mich
ael Corbin for reasons 1.4 (b) and (d).


1. (C) Summary: A range of contacts from Karim Sinjari,
Kurdistan Regional Government (KRG) Minister of State for the
Interior, to small business owners and residents of Erbil's
Ainkawa neighborhood indicated to Iran Watcher during a visit
January 20-22 that Turkish goods are more plentiful and
popular than lower-quality Iranian products in Erbil. In an
effort to expand the market for Iranian goods, senior Iranian
diplomats visited Erbil on January 24 and met with Iraqi
Kurdistan leader Massoud Barzani, according to Tehran's Fars
News Agency (FNA). End Summary.

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Kurds have ties, not trust, with Iran
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2. (C) Karim Sinjari, Minister of State for the Interior,
Kurdistan Regional Government met with Iran Watcher and RRT
Erbil officials on January 21. He admitted to natural ties
existing with Iran, especially cultural ties to the Kurds in
northern Iran, and noted the importance of maintaining a good
relationship with this neighboring state. But Sinjari said
the Kurds don't trust Iran. He added that due to the
distance, there is less Iranian economic influence in Erbil
than in Suleymaniyah.

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Iranian Companies Come with Iranian Intelligence
-------------- ---


3. (C) Sinjari claimed there is more trade with Turkey in
Erbil than with Iran. Local citizens believe Turkish
products are better quality than Iranian products, he said.
Until this month, Iranian trucks could not cross the border
into the KRG and had to unload their trucks at the border,
transferring goods into Iraqi trucks; yet Turkish trucks are
able to cross the border and continue into Iraq. Sinjari
suggested there are only a few Iranian companies in Erbil,
compared with many Turkish companies, and no Iranian banks in
the KRG. He does not like Iranian companies because "they
come with Iranian intelligence." He added a plea for more
U.S. companies to come to the KRG, because they bring along
good business practices, training for employees, and solid
investment. There are virtually no exports from Erbil into
Iran.


4. (C) Noting that the KRG shares a 400 km common border with
Iran, Sinjari stressed the inevitability of trade and
visitors from Iran. The Iranian Consulate in Erbil remains
open, but closed its consular section and moved visa services
to the border. Erbil may also increasingly serve as a
transit point for Iranian pilgrims. According to Sinjari, an
Iranian Deputy Foreign Minister recently proposed increasing
the number of pilgrims traveling between Iran and Najaf,
suggesting Iranian pilgrims travel by bus to Erbil and fly
from there to Najaf. While Suleymaniyah is closer to the
Iranian border, there are fewer flights between Suleymaniyah
and Najaf. However, despite the potential economic
advantages, Sinjari said, "We don't want them or their money."

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Turkish Goods Preferred
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5. (C) In separate discussions, two Erbil locals agreed that
Turkish products such as food and consumer products are more
popular than Iranian goods in Erbil. A young shop keeper
proudly displayed products from the U.S., Europe, and Turkey,
stating only a very small percentage came from Iran. He also
Qstating only a very small percentage came from Iran. He also
reiterated that Turkish goods are of higher quality than
Iranian goods. A middle-aged domestic employee, originally
from Baghdad, agreed there was far less Iranian economic
influence in Erbil than south of the Green Line.


6. (C) Comment: Only two days after Minister Sinjari told us
"We don't want them or their money," Tehran's FNA reported
that Barzani hosted a delegation of senior Iranian diplomats
to discuss the promotion of economic ties and an increase in
the presence of Iranian investors in the KRG. The Iranian
delegation does not mean that Barzani, notoriously wary of
Iran, is courting Tehran. But he can't afford to actively
antagonize the Iranian government either, particularly when
his relations with PM Maliki are so acrimonious. Regional
geo-politics, and the rewards of cross-border business for
both Kurds and Iranians, will encourage continued trade
flows, even if Turkey is the KRG's primary business partner.
End Comment.

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