DIPLOMATIC STRATEGY: INTEGRATING IRAQ WITH ITS

S E C R E T SECTION 01 OF 05 BAGHDAD 000630

SIPDIS

E.O. 12958: DECL: 03/09/2029
TAGS: PGOV PREL ECON IR IZ
SUBJECT: DIPLOMATIC STRATEGY: INTEGRATING IRAQ WITH ITS
NEIGHBORS AND INTERNATIONALLY

REF: STATE 21447

Classified By: Charge d'Affaires Patricia A. Butenis for reasons 1.4 (b
) and (d).

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Summary
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1. (S) Iraq is undergoing a fundamental shift. For 50 years,
since the revolution of 1958, Iraq has destabilized the
region, launched two wars, countered U.S. interests and
defied the international community-while brutalizing its own
people. Iraq is now a moderate force for stability in the
region, linked to the U.S. and the West politically,
militarily, and economically. We have an extraordinary
opportunity to solidify this strategic shift through an
energetic diplomatic approach that facilitates Iraqi regional
and international integration.


2. (S) Significant progress has already taken place over the
past year in establishing ties between Iraq and its Sunni
Arab neighbors and in furthering the process of Iraqi
acceptance within the international community. Much more
needs to be done, however, to build upon this beginning and
solidify Iraq's position as a moderate force. As the USG
draws down military forces in Iraq, our diplomatic strategy
should continue to support Iraq's international and regional
integration, balance Iranian influence, and enhance Iraq's
ability to attract essential foreign investment. The pace of
U.S. combat force withdrawal and residual force levels,
consistent with the Security Agreement (SA),our
long-standing ties to moderate Arab governments, and good
will for our new administration, should allow the U.S. to
retain substantial leverage and credibility both within Iraq
and within the region. This, coupled with an Iraq that is
emerging as a strong and independent state with economic
opportunities, will provide new openings for the United
States to further cement Iraq as a long-term partner with
generally shared interests in the greater region. End
Summary.

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The Current situation: Iraq's Approach
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3. (S) "If You Build it ... They Will Come". Growing
regional recognition of Iraq's importance as a moderate force
against Iranian projection of malign influence, catalyzed by
the successful PM Maliki-led GOI campaigns in Basrah, Sadr
City and Maysan against Iranian-backed Shia militias, has
produced significant but still limited progress on
establishing ties between Iraq and its Sunni Arab neighbors.
The past few years have shown that the key to unlocking
support from our Sunni Arab friends (such as Egypt, Saudi
Arabia, Jordan, and the UAE) is an Iraq that is standing up
as a strong, capable, and independent state, which our
friends have chosen first to recognize and then to establish
normalized state-to-state relations (including for most a
diplomatic presence in Baghdad). Iraq's increasing
independence has also changed the dynamic for the better in
its relations with Iran and Syria. And relations with Turkey
are on a very solid track, after nearly falling off course
Qare on a very solid track, after nearly falling off course
entirely in late 2007. U.S. policy
can and should buttress Iraq's overall approach - emphasizing
its independence and sovereignty - to help it further
integrate into a larger regional security and economic
architecture.


4. (S) "Iraq Standing Up to Iran ... But Seeking Neighborly
Ties." PM Maliki has managed relations with Iran relatively
well, balancing deep concerns over Iran's hegemonic
ambitions, destabilizing support for Shi'a militias, and

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heavy-handed political interventions with a "middle course"
that has promoted Iraqi national interests without
precipitating overt confrontation with Tehran. Most notably,
Maliki's leadership in 2008 of the military roll-back of
Iranian-back Shi'a militias and conclusion of the SOFA and
Strategic Framework Agreement - despite strong Iranian
opposition - has constrained somewhat Iranian influence
within Iraq. These trends will need to be sustained. Within
an overall policy of "balancing" Iranian influence, we should
understand Iraq's drive for friendly bilateral relations
between Iran and Iraq (religious, cultural, economic) while
continuing to support Iraq as it presses against Iran's
provision of lethal assistance to violent extremist groups.


5. (S) "Seeking to be a Player in the Region ... and
Beyond." The GOI has managed well improving bilateral
relationships with important regional actors such as Turkey
and the UAE. A start has been made with Egypt, but the Prime
Minister and the Iraqi MFA must come to an agreement about
who the Iraqi ambassador to Cairo should be. Moreover,
Mubarak is reluctant to increase the pace and level of
engagement/representation in Iraq and will need to hear a
strong and consistent message of encouragement (from Baghdad,
the Gulf, and Washington). Iraqi relations with Kuwait are
complex and fraught with historic antipathies on both sides,
but a recent visit ended 20 years of senior-level
estrangement. Here, too, U.S. engagement with both
governments will be essential; we can use Iraq's interest in
moving out from Saddam-era UNSC Chapter VII mandates and
reducing compensation payments to Kuwait as leverage. Beyond
the region, Iraq has reached out to Asia and Europe in search
of economic cooperation and, with the
fall in oil revenue and decreasing production, will continue
to seek economic engagement abroad. Official visits to
Baghdad, such as the recent state visit of President Sarkozy,
have increasingly focused on expanding economic cooperation
and have been very well received by Iraqi leaders of all
communities. Prime Minister Maliki's upcoming travel to
Australia and Russia are also expected to focus on expanding
economic ties, as did President Talabani's recent trip to
South Korea. Iraq seeks to be a respected player on the
international scene, and it relies on close relations with
the United States to buttress its stature and influence.
This will remain an important source of our leverage moving
forward.


6. (S) "Multinational Forums ... Iraq as a Partner Not
Subject." On the multinational level, Iraq has participated
actively in the Iraq Neighbors' process (modeled along the
"contact group" recommended by the Baker-Hamilton report,
this is the only formalized UN-backed forum that brings
together the U.S., Iran, Syria, and Turkey in addition to key
international parties, such as the Arab League, EU, UNSC P-5,
and G8, all at a ministerial level). It has also
Qand G8, all at a ministerial level). It has also
participated actively in the International Compact for Iraq
economic development/investment forum. Both the
International Compact and the Neighbors Process have been
instrumental in establishing and supporting Iraq's political
and economic integration (the last ministerials were held in
Kuwait in April, 2008 and Stockholm in May, 2008
respectively).


7. (S) It is now an open question whether these two forums
should continue in their present form, be expanded, or be
abandoned. In our view, both forums present opportunities
for the U.S. to address common regional problems in
established, internationally-sanctioned forums, and should be
continued, but with an increasing focus on broader regional
issues - not just issues related to Iraq. Any forum focused
entirely on Iraq will not survive the world of increasing
Iraqi sovereignty and independence. The Iraqis have insisted
on holding any future meetings in Iraq, and expanding the
agenda to include common regional issues, such as energy,

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terrorism, and water resources. We agree with this
approach, and would support a Neighbors' and Compact meeting
in Baghdad at an appropriate time, possibly in May. A
ministerial-level meeting in Baghdad in the May timeframe
would send an important message of U.S. commitment to Iraq
and would support and enhance an overall invigorated
diplomatic approach to the region more
broadly. It is an opportunity we should not pass up.


8. (S) "The GCC 3 and Leverage against Iran." We have also
worked successfully to bring Iraq into Gulf security and
political consultative processes through what is now the
GCC 3 (Iraq, Egypt, Jordan) 1 (U.S.) process. Progress on
greater integration is important to us, but is limited by
Saudi (especially) and Qatari antipathy to Shia governance
(we see the issue is atavistic and deeply felt by King
Abdullah regarding Shia/"Persians" in power and is not
limited to dislike for Maliki.) This antipathy will demand
much more intensive political-level U.S. engagement. In its
international relations, Iraq will not join or spearhead any
alignment or alliance -- formal or informal -- directed
against its neighbors and will not publicly confront Iran in
the UN or international fora. Nor should we seek such
outcomes, whose consequences would be negative both for Iraq
and for the U.S. We are also prepared to support DOD-led
efforts to multilateralize the Gulf Security Dialogues (our
bilateral mil-mil relations with Gulf Arab states) with Iraq
becoming a key integrated part. As our military presence
draws down, Iraq is eager to be a long-term normalized
partner with the U.S., including through provision of U.S.
weapons and training. This is a trend we should continue to
encourage and follow through on.


9. (S) "Refugees ... Focus on Returns." Iraqi refugees
abroad are a significant issue with negative impact for
Iraq's relations with Syria and Jordan, and a source of
potential long-term security challenges both to Iraq and the
region. As a former refugee himself, Maliki has been very
resistant to U.S. and international pressure to act more
aggressively on supporting refugees, both seeing the issue as
one that will resolve itself as security and economic
development in Iraq progresses, and deeply skeptical of
international efforts that historically have only encouraged
a permanently displaced refugee class. He has said
repeatedly that he would favor and support any policy focused
on "returns" and we should hold him to his word, recognizing
that the pace and sequencing must be carefully calibrated
given the still fragile security environment and lack of
Iraqi capacity. At bottom, the burden of sustaining the
refugees cannot be borne by either the U.S. or the
international community; Iraq must step up its own actions.
This will require at a minimum continued high-level U.S.
engagement with Maliki; even then, success is far from
assured.

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Integrating the GOI: Recommended Diplomatic Initiatives and
Action Plan
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10. (S) We recommend the USG quickly engage the GOI and key
players in both the GCC 3 1 and the Neighbors'/Compact
processes to signal the new Administration's support for
increased Iraqi integration. As noted, this will need to be
paralleled by efforts to move the Saudis on their opposition
to Maliki and the current governing structures in Iraq. We
should focus on bringing Iraq into Gulf security planning
(our facilitation of Military-to-Military cooperation with
Gulf States, through the Gulf Security Dialogues, and others
will not only increase Iraqi military professionalism and
inter-operability, but will also send an important signal to
Iran). We should also encourage Gulf investment, the most
likely source for short-term capital for Iraq. The

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Neighbors' and Compact processes provide a positive platform
for engagement with Syria and Iran in support of a moderate,
secure Iraq and a means to bring greater EU and UN
involvement (the UN SYG co-chairs both processes) in a
regional context. We must press
often reluctant parties to attend Neighbors' and Compact
events in Baghdad.


11. (S) Vital to success of our efforts to help Iraq
integrate in the region will be confirmation of Iraq's place
squarely on the "right side" amidst growing regional/Arab
polarization between hard-liners
(Syria/Qatar/Iran/Hamas/Hizballah) and the Sunni moderates
(Saudi Arabia, Kuwait/UAE/Egypt, Turkey and Jordan). The USG
should encourage enhanced Arab League engagement with Iraq
(SYG Amre Moussa is already engaged positively on Iraq and
may see "helping" on Iraq as a way of improving his stature
with the new Administration). Iraq is willing in principle
to receive Abu Mazen, and we should keep pushing to
facilitate this contact which will confirm Iraq's support for
Palestinian moderates and further move Iraq into the camp of
"Sunni moderates".


12. (S) While supporting Turkey and the UAE in their efforts
with Iraq, we need to do more to press moderates such as
Egypt, Bahrain and Morocco to expand involvement with Iraq.
In particular, a visit to Iraq by a senior Egyptian official
(possibly the PM) would send a positive signal. Any U.S.
engagement with Syria and Iran should make clear that Syrian
and Iranian cooperation on Iraq is not a concession to the
US, but in Syria, Iran, and Iraq's mutual economic and
security self-interests.


13. (S) The tracks for this recommended diplomatic strategy
would include the following:

-- Invigorate the Expanded Neighbors and International
Compact Process (with Ministerial Level Meetings in Baghdad).
We would recommend a May meeting at the ministerial level in
Baghdad. The focus of the meeting would be common regional
issues, of which Iraq is a part - but not the only subject.
Iraq would be expected to assert a leadership role and we
would be able to help in this regard, with our still ample
leverage and Iraq's desire to regain its historic stature in
the region. In the future we might consider developing the
Expanded Neighbors process as a formalized contact-group of
regional and international actors. The last Kuwait meeting
planted the seeds for this (admittedly ambitious) concept,
which could be further developed at a Baghdad-hosted meeting
in May. The Secretary's presence in Baghdad early in her
tenure would also send a strong signal of commitment and
would help secure any deliverables from the GOI before then,
particularly on refugees and IDPs (see below).

-- Integrate Iraq into a Regional Security and
Economic/Political Architecture (though the GCC 3 and Gulf
Security Dialogues). Through the GCC 3 and the Gulf
Security Dialogues, we should continue to draw Iraq into the
orbit of moderate Sunni Arab states. While avoiding any
Qorbit of moderate Sunni Arab states. While avoiding any
direct threat or provocation towards Iran, such a natural
alliance, and in particular the mil-to-mil cooperation within
a broader security architecture, would help Iraq gain in
strength and stature, support our own military draw-down, and
remain a source of leverage in any direct dealings with Iran.
Foreign Minister Zebari has discussed hosting a GCC 3
meeting in Baghdad in late April - an event that we should
encourage and help facilitate.

-- Formalize a Program for Returning Refugees and IDPs. In
exchange for our diplomatic support for Iraq we should demand
that Iraq live up to its responsibilities with respect to
IDPs and refugees, working with its neighbors, the ICRC, and
the UN, to establish a fair and coordinated return-focused

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program.

-- Continue Trilateral Initiatives. Trilateral engagement
between the U.S., Turkey, and Iraq (including the KRG) should
remain active, both to strengthen bilateral ties between Iraq
and Turkey, avoid provocative Turkish moves against the PKK,
and avoid direct investment dealings between Turkey and the
KRG that could raise Arab-Kurdish tensions. We also should
not shy away from re-engaging Iran on Iraq issues through the
trilateral channel which has remained dormant. These talks
have not proven effective but given Iran's perceived loss of
strategic initiative within Iraq, we should remain open to
renewing these talks should a request be made.

This is an aggressive and energetic diplomatic agenda -- but
one that we believe (1) draws upon and encourages the
positive trends now ongoing inside Iraq, (2) supports the
military draw-down and residual force presence announced by
the President on February 26, and (3) fits within a broader
regional engagement strategy focused on sustained and
vigorous high-level diplomacy.

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Integrating the GOI: Impediments to Integration
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14. (S) In addition to the institutional challenges in Iraq
to this diplomatic engagement strategy we must guard against
external forces encouraging Kurd-Arab tensions (for example
by insisting that states do not pursue independent relations
with KRG that exclude Baghdad) and by allowing the GOI a
measure of independence in its complex relationship with
Iran, while ensuring that any American engagement with Iran
is briefed to the GOI (consistent with briefings we might
provide our other partners) and supports our common efforts
to balance Iranian influence in Iraq. The Iraqis remain
extremely nervous that diplomatic engagement between the U.S.
and Iran will place Iraq on the table as a chip to be traded
for concessions on larger issues. We have sought to dissuade
them of this, but our briefing a few key Iraqi leaders (Prime
Minister and Presidency Council) on any outreach to Iran
would go a long way in cementing Iraq as a strong partner and
ally and dissuading the fears and conspiracy theories that
too often in this region can force our best laid plans and
policies to go awry. Iraq seeks to be a partner and friend
of the United States. Their parliament voted nearly
unanimously and openly for a long-term strategic partnership.
We should hold them to their commitments, while also working
to fulfill ours -- which includes treating Iraq as a full
diplomatic partner.

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Integrating the GOI: The Payoff
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15. (S) The ultimate objective of this strategy is an Iraq
that works with the USG as a strong and reliable partner on a
range of regional and international issues. Most
immediately, Iraq can promote regional stability by
discouraging Iran, Syria and others from support of violent
Qdiscouraging Iran, Syria and others from support of violent
extremists. Through strong ties with its moderate neighbors,
and relations with Iran and Syria that are based on mutual
interests rather than predatory opportunities, Iraq can help
draw the region's intransigents toward the moderate middle.
Iraq will not be on the forefront of the peace process. But
in place of its former belligerent posture on peace, Iraq can
play a role supportive of a moderate approach. We should
focus on ensuring that Iraq leaves behind 50 years of foreign
policy based on hostility and subterfuge, instead relying on
diplomacy, cooperation, and political participation to
promote interests we share.
BUTENIS