FOREIGN ASSISTANCE BUDGET PRIORITIES FOR IRAQ

UNCLAS BAGHDAD 000316

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAGR EAID ECON IZ PGOV PREL
SUBJECT: FOREIGN ASSISTANCE BUDGET PRIORITIES FOR IRAQ

REF: BAGHDAD 286


1. (U) Summary: U.S. assistance to Iraq has changed
substantially, moving from "bricks and mortar" projects to
improving Iraq's ability to govern effectively and
democratically. Our assistance will help the GOI meet the
needs of its citizens, preserve security, reform its
economy, and foster political reconciliation. At this
critical juncture, our assistance will reinforce our
message of continued support and demonstrate that we want
to shift emphasis over time from security to economic and
humanitarian cooperation. Providing the building blocks to

sustainment, capacity-building, and responsibility will
ensure the Iraq government is truly accountable to its
people. Our focused assistance, as outlined in this cable
for FY2009 and FY2010, will allow us to get the job done
and build upon the significant gains we have made in Iraq.
End Summary.


2. (SBU) U.S. assistance to Iraq has changed
substantially. Originally, we focused heavily on Iraq's
security and reconstruction needs. With an improving
security environment, we are moving from "bricks and
mortar" projects to improving Iraq's ability to govern
effectively and democratically. Our assistance is designed
to help the GOI meet the needs of its citizens, preserve
security, reform its economy, and foster political
reconciliation. Our assistance is still necessary. Last
year's temporary spike in oil prices raised the question:
were U.S. dollars essential to oil-rich Iraq? The answer is
yes - and not just because oil prices have declined,
limiting Iraq's 2009 budget. U.S. foreign assistance funds
remain essential to a democratic and stable Iraq. This
will be especially important as we reinforce our message of
continued support and demonstrate that we want to shift
emphasis over time from security to more economic and
humanitarian cooperation. It is time for Iraqis to invest
more in their own future as we transition to a strong
bilateral partnership and strategic engagement in the
region.


3. (U) Our funding is critical for three key reasons.
First, it increases Iraq's ability to govern itself
effectively and take control of its future. Efforts will
focus on building institutional capacity at national and
provincial levels and to strengthen the role of civil
society in partnership with the Iraqis to empower them to
sustain and expand the work that we have begun. Second, our
assistance also gives us the ability to respond quickly to
local needs, which is why our Quick Response Funds used by
our Provincial Reconstruction Teams (PRT) and USAID's
Community Action Program must be robust. Democratic
governance does not begin and end in Baghdad; we need to
build governing capacity at the provincial and local level
to ensure improving the lives of all Iraqis. Third, our
assistance helps Iraq pursue the long-term reform essential
to a healthy economy, full utilization of its natural
resources, and the health of its citizens. We have made
significant gains in the past five years, and as we move
forward from this critical juncture, we seek assistance in
key priority areas as outlined in this cable.

Democracy and Civil Society
--------------

4. (U) Democracy and civil society programs are at the
core of our objectives to strengthen an open and democratic
system. This includes USAID's follow-on election support
and the Legislative Strengthening Program supporting the
Council of Representatives (COR) in targeted areas of the
legislative process. Law-making, oversight and
Qlegislative process. Law-making, oversight and
representative functions of the COR require our expertise
and assistance. The Access to Justice program will support
critical institutions that provide citizens an alternative
to violent resolution of disputes and improve the legal
framework of civil and criminal codes. DRL's programs
through the National Democratic Institute (NDI) and
International Republican Institute (IRI) will also
strengthen democracy-building.

Rule of Law and Anti-Corruption
--------------

5. (U) Our assistance to Iraq will ensure an
accountability to laws that are enforceable and
independent. Rule of Law programs include legal education,
support of lawyers and the Iraqi bar, and civil justice
programs that will provide the Iraqis the building blocks
to gain confidence in a fair, transparent legal system.
This is closely tied to anti-corruption initiatives,
particularly training provincial councils on
anti-corruption strategies, investigations, and
enforcement. Funding to civil society organizations to
conduct watchdog activities and provide technical
assistance to law faculty and students through the
Constitutional and Legislative Development Project will
reinforce the rule of law fundamentals throughout the
country.

National Capacity Development and PRTs
--------------

6. (U) USAID's Tatweer project emphasizes building the
capacity of provincial Directors General from line
ministries as part of a comprehensive approach to enhance
the linkages between local, provincial, and central
government structures. This technical assistance will
institute transparent systems for civil service
regulations, service delivery to provinces, and budget
designs. Tatweer will also shift its focus to more
sector-specific capacity development. Infrastructure
sustainment through O&M support will enable Iraqis to make
full use of the infrastructure projects we have built for
them. Building this culture of maintenance and
accountability to its people will be critical as Iraq
assumes full responsibility for providing essential
services to its people. Assistance to PRTs and local
governments through the Quick Response Funds and USAID's
Community Action Programs also follow this line of
strategic assistance.

Capital Development and Financial Markets (PEG)
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7. (U) Oil and the public sector will likely continue to
play dominant roles in the economy. The prospects for
employment creation and growth rest predominately with the
private sector. Working together with partners in the
international community, the Provincial Economic Growth
(PEG) program will assist the GOI to improve the policy and
institutional environment to stimulate private sector
investment and employment to further Iraq's integration
into the global economy. By providing coordinated policy
and capacity building support, we will assist Iraq's
efforts to gain accession to the World Trade Organization.
Economic Growth and Legal and Regulatory Reforms programs
will help sustain these efforts.

Agriculture private sector development
--------------

8. (U) Agriculture private sector development through the
Inma program aims to reverse the effects of decades of
command and control policies in Iraq's largest non-oil
economic sector. Our assistance will help create a
functioning agricultural credit system among private Iraqi
banks, improve crop productivity through better water
management, provide access to improved genetics, and expand
value-added processing and access to markets. These
advances contribute to increased farmer income, greater
rural employment, and improved stability in traditionally
volatile areas of the country.

Investing in People
--------------

9. (U) Iraq's education system has been battered by more
than two decades of war and underinvestment. The FY2010
budget will initiate a program to help strengthen Iraq's
education system so that it serves as a source of skills
critical for employment, democratic participation, and
peaceful conflict resolution, rather than becoming
institutions of anti-Western ideology and sectarian
extremism subject to the influence of hostile, violent
ideologies. A long-term program in education will help
diminish the underlying conditions that terrorists seek to
exploit. Assistance to health professionals and the public
health infrastructure will also aid these efforts.

Anti-Terrorism Assistance (ATA) training and demining
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10. (U) Support for ongoing contracts for humanitarian
demining, mine risk education, victim assistance,
unexploded ordnance removal, and capacity building of
indigenous humanitarian demining NGOs will help Iraqis
rebuild the security and humanitarian structures in this
critical area. In addition, our ATA program will support
the integration of 500 Iraqi Police and Security Forces
into the Embassy's dignitary protection operations. Vital
installations security, terrorist crime scene
investigations, and border training will strengthen this
corps and reduce reliance on private security companies.
International Military Education and Training (IMET) will
also continue to be a small and essential part of our
normalization efforts to strengthen Iraq's professional
military.

Treasury's Office of Technical Assistance (OTA) for budget
execution
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11. (U) Office of Technical Assistance (OTA) through the
Department of Treasury will strengthen capacity for budget
execution efforts that ensure budgeting for operating and
maintenance expenditures, medium-term planning, and a
banking system with IT structures to handle government
transfers and letters of credits for budget procurements.
Responsible budget planning and execution will allow Iraqis
to better strategize their long term needs and priorities.

Internally Displaced Persons and Returnees
--------------

12. (SBU) Per reftel, successful reintegration of Iraq's
displaced is critical to the stability of Iraq and the
region. Adequate funding will be necessary to create
conditions for the voluntary return of refugees and support
these communities for long term stability. Assistance will
be essential to support returns with shelter, health,
education, water sanitation, and psycho-social counseling.

CROCKER
CROCKER