VZCZCXRO7676
RR RUEHBC RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #0994/01 0920556
ZNY CCCCC ZZH
R 010556Z APR 08 ZDK ZUI RUEHAS 7511 SVC. VOL ALL OTHERS
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 6575
INFO RUCNRAQ/IRAQ COLLECTIVE

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 000994 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR IO/PSC-ECROWE, IO/UNP-EGOLDRICH 
 
E.O. 12958: DECL: 04/01/2018 
TAGS: EFIN PREL PGOV PTER ETTC IZ
SUBJECT: MINFIN SUPPORTS BASRAH HUMANITARIAN RELIEF, WANTS 
HELP WITH IMF ON SBA IMPLICATIONS 
 
REF: BAGHDAD 987 
 
BAGHDAD 00000994  001.2 OF 002 
 
 
Classified By: Economic Minister Counselor Charles P. Ries for reasons 
1.4(b) and (d) 
 
¶1. (C) Summary: In a March 31 meeting, Iraqi Minister of 
Finance Jabr told EMIN that he would make funds available to 
address the immediate humanitarian needs created by the 
violence in Basrah as well as to create short-term employment 
opportunities.  In addition, the GOI supplemental budget 
proposal currently under discussion would include both 
capital and operational expenditure authorizations.  Jabr 
requested USG support in persuading the International 
Monetary Fund that these operational expenditures did not 
violate the terms of its Stand-By Arrangement.  Jabr also 
supported having the Iraqi Government propose that the United 
Nations Security Council amend UNSCR 1518 to broaden the 
definition of those who disturb peace in Iraq so that 
financial sanctions can be taken against them.  On both 
issues -- financial expenditures and the revision of the 
United Nations Security Council Resolution -- Jabr noted that 
he and the EMIN were "on the same page."  End summary. 
 
¶2. (C) EMIN and Treasury Attache met March 31 with Minister 
Jabr to discuss how to meet the needs of those affected by 
the security operations in Basrah while not violating the 
terms of the International Monetary Fund (IMF)-Iraqi Stand-By 
Arrangement (SBA).  Jabr said that the Ministry of Finance 
would pursue "quick projects" to provide financial assistance 
to the residents of Basrah in order to reinforce GOI efforts 
there.  These projects would be designed to "create jobs, 
take care of refugees, clean up the city, and clear canals in 
the region."  Jabr emphasized that these government-funded 
efforts were to be a short-term infusion, particularly with 
regard to employment projects, lest they become a permanent 
drain on the budget. 
 
¶3. (C) EMIN noted that Ambassador Crocker views financial 
assistance as a weapon to create peace and stability.  It is 
important to use the full resources of the Iraqi Government 
to solidify peace and security in the region; spending 
projects are vital to securing the advances made this year. 
EMIN noted the success of similar financial programs in Al 
Anbar Province, and urged the Ministry of Finance to increase 
spending on refugees and internally displaced people as well 
as on assistance to Basrah.  This type of support should be 
incorporated into the proposed Iraqi supplemental budget 
proposal currently under consideration. 
 
¶4. (C) Jabr concurred and requested U.S. Government 
assistance with the International Monetary Fund to help make 
the GOI's case that increasing operational budget 
expenditures for these emergency purposes should not be 
viewed as violating the terms of its SBA.  The Iraqi 
supplemental budget will include both capital and operational 
expenditures.  EMIN observed that the goal of the SBA is to 
avoid new budgetary obligations that offset fiscal 
sustainability in the long term, but that temporary, or 
emergency, spending should not be viewed as incompatible with 
the SBA, especially given the unexpectedly sharp revenue 
growth Iraq has experienced in the past few months.  Jabr 
proposed that the Ministry of Finance and the U.S. Treasury 
Department coordinate closely prior to the upcoming GOI-IMF 
meetings in April.  Jabr added that the budgets for the 
Ministry of Interior and Defense provided for the creation of 
30,000 new police and defense jobs to help provide employment 
for former insurgents who are participating in the Concerned 
Local Citizen programs. Some of these jobs could be offered 
to tribes and others who have stood for stability in Basra. 
 
--------------------------------------------- ------------ 
Updating UNSCR 1518 to Go After More than Just Ba'athists 
--------------------------------------------- ------------ 
 
¶5. (C) EMIN summarized a meeting he had held the previous day 
with National Security Adviser Roubaie (retel), in which he 
had proposed that the GOI request that the United Nations 
Security Council either amend UNSCR 1518 or pass a new 
resolution to identify individuals and organizations that 
disrupt peace and stability in Iraq.  Jabr supported this 
idea and promised to support it with the Prime Minister for 
discussion in the Cabinet.  Broadening the definition of 
those who disturb the peace in Iraq is "a good idea that has 
to be an Iraqi proposal." 
 
------------------------------------------ 
Fighting Corruption by Cutting Back on PDS 
------------------------------------------ 
 
¶6. (C) On a key domestic issue, Jabr said that Ministry of 
 
BAGHDAD 00000994  002 OF 002 
 
 
Trade's Public Distribution System (PDS) needed to be 
reformed in order to fight corruption and to save money. 
Everyone in Iraq was required to be registered with the PDS 
in order to qualify for government services such as passport 
issuance.  However, his office estimated that as many as 
seven million Iraqis do not need the PDS basket of food and 
supplies.  The current structure of the program means that if 
everyone "from the President on down" does not collect their 
PDS basket, the agent in charge is able to keep the food 
products and distribute them on his own. 
CROCKER