Identifier
Created
Classification
Origin
09BAGHDAD2023
2009-07-28 15:07:00
CONFIDENTIAL
Embassy Baghdad
Cable title:  

BASRA INVESTMENT COMMISSION CHAIR EXPRESSES

Tags:  ECON ETRD EINV PGOV IZ 
pdf how-to read a cable
VZCZCXRO8362
PP RUEHBC RUEHDE RUEHDH RUEHIHL RUEHKUK
DE RUEHGB #2023/01 2091507
ZNY CCCCC ZZH
P 281507Z JUL 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 4101
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002023 

SIPDIS

COMMERCE: PASS TO SUE HAMROCK MANN

E.O. 12958: DECLAS 07/21/2014
TAGS: ECON ETRD EINV PGOV IZ
SUBJECT: BASRA INVESTMENT COMMISSION CHAIR EXPRESSES
FRUSTRATION WITH BAGHDAD

REF: 09 BAGHDAD 1838

Classified by CNorberg, Economics Officer, reason para 1.4G & H

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002023

SIPDIS

COMMERCE: PASS TO SUE HAMROCK MANN

E.O. 12958: DECLAS 07/21/2014
TAGS: ECON ETRD EINV PGOV IZ
SUBJECT: BASRA INVESTMENT COMMISSION CHAIR EXPRESSES
FRUSTRATION WITH BAGHDAD

REF: 09 BAGHDAD 1838

Classified by CNorberg, Economics Officer, reason para 1.4G & H


1. (C) SUMMARY: In a recent meeting with EMIN, Basra
Investment Commission (BIC) Chairman Dr. Haider Ali Fadhel
voiced concerns over the national government's lack of
progress on a variety of issues affecting the overall
investment climate. Specifically, Fadhel took issue with
the Ministry of Transportation for its lack of focus and
support for the Basra Airport, with the Executive Branch
for its inability to resolve the recurrent problem of land
use issues, and with the National Investment Commission for
its support of the proposed amendment to the National
Investment law which, in Fadhel's opinion, would further
remove authority from the provinces. While Fadhel appeared
frustrated with the many challenges facing the BIC, he
demonstrated a knowledgeable command of the issues and his
commentary was consistent with what we have heard from
other GOI provincial Investment Commission Chairmen. END
SUMMARY

"Our airport is a problem."
--------------

2. (SBU) Discussing Basra's Airport, Fadhel expressed
frustration with the Ministry of Transportation for their
lack of support for a critical piece of Basra's
infrastructure. The airport sees approximately 35 thousand
passengers a year and in Fadhel's opinion, is
underutilized. Referencing a specific proposal for Airport
management/development from Deutsche Land PLC, Fadhel
mentioned that the expectation gap was between MOT and the
company's proposal was large. (Note: Deutsche Land PLC has
proposed an ambitious development plan for the airport
which requests a 50 year concession. Minister of
Transportation Amir Ismail is reported to be willing to
allow for 2-3 years of management for a hotel and business
center, similar to a pending agreement at Baghdad's
Airport, but does not appear interested in the scope of the
Deutsche Land proposal. End Note) In addition, Fadhel
stated that funding for the airport was a problem; among
other items, he noted that the annual budget for
maintenance was 25 thousand USD and the marketing budget
was non-existent. The land issue holding up investment (again)



3. (C) Touching on the familiar theme of land use as a
barrier to investment (Reftel A),Fadhel presented several
examples of hotel and housing projects which were currently
stalled due to lack of clarity on land use and zoning
between the controlling ministries and the BIC. One example
mentioned was a 107 Million USD hotel and entertainment
complex proposal which was held up over land lease delays
with the Ministry of Municipalities (MOM). Another
project, in part held up over the land use issue, was a 900
Million USD multi-use housing project proposed by the
Iranian company. In addition, Fadhel mentioned that the
Basra based, state owned South Oil Company further inhibits
investment activity through its control of the majority of
the land in the province as a whole.

"Killing the Investment Commissions..."
--------------

4. (C) Commenting on the proposed amendment to the National
Investment Law (Reftel A),Fadhel stated that the Amendment
"would kill the Investment Commissions" by further removing
power and control in the provinces. He explained that from
his optic at the BIC, the amendment would place the control
over land for sale or lease in the hands of the National
Investment Commission (NIC),remove the ability of any
Provincial Governor to appoint the Province's Investment
QProvincial Governor to appoint the Province's Investment
Commission Chairman and leave the BIC with little room to
maneuver on investments other than housing and tourism
based endeavors. Fadhel mentioned that the implementing
regulations for the Investment law have not been
distributed to GOI Directors General in Basra Province.
Fadhel also complained of lack of national government focus
on resolving what he characterized as problematic legacy
investment license for a 35 million square meter poultry
farm south of Basra. He noted that the project was
approved under pervious NIC chairman designate Ahmed Ridha
and that the investor lacked appropriate resources to even
begin the project. Specifically, Fadhel was disappointed
with the NIC and the Prime Ministers office for their lack
of focus on resolution of the project, as the land track
designated for use was inhibiting other proposed
investments which could be utilizing the space.

5. (C) When questioned by EMIN on the NIC's proposed role
in land use, Fadel conceded that allowing the NIC control
over land would be an improvement over the current

BAGHDAD 00002023 002 OF 002


situation and that he was supportive and thought favorably
of NIC Chairman designate Dr. Sami al Araji and claimed he
was easy to work with. However, he was not optimistic that
Araji's amendment to the Investment law would pass and
suggested that the NIC would need to study the issue more
closely. In addition, Fadhel also claimed that the BIC had
not received any of its budget allocation thus far in 2009
and that he was funding the Commission and his staff out of
his own pocket. Fadhel minced no words when he stated that
"there is no good relationship between the center (National
Government) and the provinces" and mentioned that Iraqis in
general "ask for the open market, but go with the Soviet
style."

Light on the Horizon? An activist role for investment
commissions?


6. (SBU) Despite his many concerns, Fadhel was generally
upbeat and pointed to the proposed dissolution of the
Ministry of Municipalities at the end of 2009 (MOM) as a
positive move. Fadhel proposed that the responsibility of
the land currently controlled by MOM would probably revert
to the respective cities and provinces and this alone would
allow many investment licenses and proposals to move
forward. In addition, the recent announcement of the GOI
sponsored Basra Sports City Complex (Septel) will require
the BIC to build 3 hotels as part of the complex in the
next 31 months.


7. (SBU) Fadhel also commented on the discussions he
frequently has with other southern Iraq Investment
Commissions and mentioned that they have openly advocated
as a group to not only the NIC, but also the PM's office.
Fadhel mentioned that the group was discussing the option
of bringing suit against the National Government on the
land issue to help resolve the conflicts; when pressed on
the topic, Fadhel would not say more.

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

8. (C) Despite a meeting in which he displayed his
frustrations at length, Fadhel demonstrated a knowledgeable
command of the issues inhibiting progress on investment in
Iraq writ large and his comments are consistent with the
message we receive from other PIC's. Furthermore, he
clearly respects and enjoys working with NIC Chairman Araji
and conceded that while not all to his liking, the
structural aspects of Iraq's Investment Commissions are
showing progress. End Comment.
Ford