CORRECTED CABLE: DELEGATION GUIDANCE FOR THE

UNCLAS SECTION 01 OF 03 STATE 013703

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON IT IZ DA PGOV PREL
SUBJECT: CORRECTED CABLE: DELEGATION GUIDANCE FOR THE
EIGHTH IRFFI DONORS COMMITTEE MEETING (17-18 FEBRUARY,
NAPLES)

REF: A. 2009STATE12794

B. 2008STATE71896

C. 2008BAGHDAD1615

D. 2008BAGJDAD2162


1. (U) This cable corrects references, background and certain
guidance points appearing in reftel State 12794.


2. (U) This is an action cable for the U.S. delegation to the
eighth formal meeting of the Donors Committee that oversees
the International Reconstruction Fund Facility for Iraq
(IRFFI) to be held in Naples, Italy on February 18 with
pre-meetings on February 17. Paragraph 10 contains specific
points of guidance.


3. (SBU) The delegation is comprised of Ambassador Marc Wall
(Head of Delegation, Coordinator for Economic Transition in
Iraq, Embassy Baghdad),Mark Erickson (Economic Officer,
Embassy Baghdad),Kevin Taecker (Senior Advisor, NEA/I-Econ),
Jeanne Pryor (Deputy Office Director, USAID-ME/IR),Samantha
Vinograd (Iraq Desk Officer, Treasury),Christopher Curran
(Econ Officer, Embassy Rome),and Robert Carlson (Econ
Officer, Consulate Naples).


4. (U) The main purpose of this meeting is to plan for the
close out of the IRFFI by December 31, 2010. The meeting
marks a milestone for Committee members in that they are
becoming as much "partners in" as "donors to" Iraq's future
sustainable economic development.


5. (U) Established in February 2004, the IRFFI has
accomplished its mission of involving a large number of
donors in Iraq's economic reconstruction by providing donors
with an effective multilateral mechanism for identifying
needed projects and administering their contributions. About
85 percent, or about USD 1.55 billion of the total USD 1.85
billion, in IRFFI financial resources have been committed to
projects that are in various stages of completion. In
combination with the bilateral assistance programs of the
United States and other major donors (e.g., Japan, the UK and
Korea),the IRFFI projects help to rebuild Iraqi
infrastructure, support the establishment of a means-tested
social safety net, establish good governance, strengthen
anti-corruption measures and provide assistance to internally
displaced persons and returning refugees. Looking to the
future, once IRFFI closes out, donors will administer their
assistance bilaterally or give directly to purpose-specific
international agencies or non-governmental organizations.
The International Compact with Iraq (ICI - launched in May
2007) has taken over much of IRFFI's earlier role of
coordinating the assistance activities of Iraq's
international partners. In October 2007, the IRFFI Donors
Committee decided that the remaining uncommitted IRFFI
resources should be expended in support of Iraq achieving its
goals under the ICI and National Development Strategy. Under
this arrangement, Iraq will continue to live up to its ICI
commitments for achieving sustainable economic development
while receiving donor/partner support.


6. (U) The IRFFI is comprised of two Iraq Trust Funds (ITFs)
operated by the World Bank (WB) and United Nations
Development Group (UNDG). At this meeting, the WB and UNDG
will present their respective Eighth Progress Reports, which
will give detailed information on completed and ongoing
projects and programs, including amounts committed,
contracted and disbursed. The reports will quantify any
remaining unobligated resources and provide recommendations
for how these resources should be allocated (e.g., to provide
cushions to meet possible unexpected close-out expenses).
Oversight activities, including audits, inspections and other
measures to ensure transparency and accountability of the
ITFs will also be discussed. The WB will present its "Third
Interim Strategy Note," which will lay out its broader plans
for future engagement and programs in Iraq. In August, 2008,
Iraq and the UN Assistance Mission for Iraq (UNAMI) adopted a
joint strategy covering their economic cooperation through

2012.


7. (U) A "Multi-Donor Stocktaking Review" evaluating how the
ITFs have performed against the goals and objectives stated
in IRFFI's Terms of Reference will be presented by the
Norwegian consultancy, Scanteam. By and large, the Scanteam

STATE 00013703 002 OF 003



8. (U) The WB and UNDG have provided a joint "Concept Note"
giving timelines and mechanisms for closing the IRFFI. The
separate ITF operators must abide by their own sets of rules
and regulations governing close-out related activities. Both
concur, however, that the IRFFI should stop collecting new
contributions before July 1, 2009, should complete all final
project approvals before the end of 2009, and finalize all
contract commitments by the end of 2010. The WB and UNDG have
somewhat different procedures for terminating their ITFs, but
both agree that such final steps should be taken before the
end of 2013.


9. (U) Denmark (Ambassador Mikael Winther) has agreed to take
over as Chairman of the Donors Committee for the remaining
lifetime of the IRFFI. Italy (Ambassador Gianludovico De
Martino) will be stepping down, having served as Chairman of
the DC for two years since February 2007. The Chairman of
the IRFFI Executive Committee is the Minister of Planning and
Development Cooperation, Dr. Ali Baban. For a period after
2007, Baban served as Co-Chairman of the IRFFI with the
Italian Ambassador.


10. (SBU) Delegation Guidance:

-- Compliments to the Host and the Minister for their
guidance and contributions in support of IRFFI's successes.
Thanks for this opportunity to plan the closing chapter.

-- Recall that at the last Donors Committee meeting in
Baghdad Deputy Prime Minister Saleh said: "More than your
donations what we seek is your partnership in helping Iraq
develop its capacity to use its resources in an efficient
manner." This meeting will help to chart the course for
Iraq's "donors" to become "partners" in Iraq's future
development.

-- This Eighth Donors Committee Meeting respects that Iraq
has fully regained its sovereignty; it is therefore
appropriate to focus on the orderly closure of the IRFFI.

-- Express appreciation for Scanteam findings that the IRFFI
has accomplished "significant achievements" that have made "a
real and meaningful impact" toward normalizing conditions in
Iraq in such areas as education, healthcare and
infrastructure.

-- Acknowledge the difficulties and added costs associated
with the security situation, but highlight that the security
situation has greatly improved and continues to do so.

-- Note Iraq's recent success in conducting provincial
elections, signifying true progress in both political
reconciliation and general stability.

-- Emphasize that donors can take pride and satisfaction in
how their contributions have been applied. The IRFFI
provides an excellent model and "lessons learned" for future
international cooperation in post-conflict environments.

-- Urge the UNDG and WB to apply the highest standards in
spending the remaining IRFFI funds. Ensure that such
expenditures support the goals of the ICI. Encourage active
discussion involving all DC members to arrive at broad
consensus for how the remaining IRFFI resources should be
spent.

-- Welcome the new UNAMI-Iraq Strategy for Economic
Cooperation and the WB's new "Third Interim Strategy Note"

-- Explain that plans for future U.S. assistance to Iraq will
be developed with respect to the new Strategic Framework
Agreement, which provides Joint Coordinating Committees and
Working Groups in a number of areas.

-- Emphasize that the SFA is designed to work within and
support the framework of the International Compact with Iraq,
and the programs and goals of the World Bank and UNAMI.

-- Encourage Iraq to streamline and update the Joint
Monitoring Matrices of the ICI to take account of recent
changes and challenges in the global economy, including for
the price of oil and the outlooks for the major economies.

-- Recognize the positive value of the new Iraq Partners
Forum as a vehicle for information sharing and coordination
among Iraq and its international partners.

STATE 00013703 003 OF 003


-- Support Denmark's candidacy to take over the Chairmanship
of the IRFFI for its remaining years.
.

11. (U) Questions and concerns in regard to the Eighth IRFFI
DC Meeting should be directed to Kevin Taecker, Senior
Advisor, NEA/I-Econ, TaeckerKR2(at)State.Gov, 1-202-647-6314.
CLINTON