This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 BAGHDAD 004990 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958:  N/A 
TAGS: ECON ETRD IZ
SUBJECT: IRAQI BUSINESS EXPATRIATES-WATCHING AND WAITING IN 
JORDAN 
 
SENSITIVE BUT UNCLASSIFIED - GOVERNMENT DISTRIBUTION ONLY 
NOT FOR INTERNET DISTRIBUTION 
 
 
¶1.  (SBU) SUMMARY: Iraqi business expatriates in Amman 
assess opportunities in Iraq to be uncertain at present. 
They focus on 1) getting Iraqi businesses involved in doing 
reconstruction, 2) improved security and stability to permit 
investment, and 3) opening of competitive opportunities via 
privatization and/or elimination of State Owned Enterprises 
(SOEs).  The recent referendum approving the Constitution 
was assessed favorably for stimulating possible provincial 
competition in tax and investment environments. Economic 
diversification, especially in agriculture and tourism was 
flagged as necessary to secure more balanced economic 
development.  Other necessary incentives to secure a return 
of expatriate business interests include improved education 
and stable, market-oriented, legislation. END SUMMARY 
 
¶2. (SBU) Three Iraqi business contact roundtables were 
hosted in Amman on November 30 for visiting Baghdad Econoff 
by Embassy Amman Econ section.  Iraqi attendees included 
members of the banking, insurance, and financial 
communities, women entrepreneurs, construction 
representatives and real estate operators.  The goals of the 
meetings were to determine concerns of the Iraqi expatriate 
business community, their views on appropriate actions to 
enhance economic growth in Iraq, and what barriers needed to 
be removed to entice expatriate Iraqi investment back to 
Iraq. 
 
Key Concerns 
------------ 
¶3. (SBU) For their part, the Iraqi business expats focused 
on getting the Iraqi businesses involved in USG 
reconstruction work, as opposed to third country firms using 
expatriate labor, improving the security and stability of 
communities so investment could safely occur and people 
could work without fear of kidnapping, injury, or death, a 
pressing need for administrative and legislative stability, 
and privatization and/or elimination of State Owned 
Enterprises to permit competition. 
 
¶4. (SBU) High unemployment was seen as related to the 
support of the insurgency - offering a pool of young men for 
recruitment. The business people felt that increased 
permanent employment, and not short-term hiring, would 
alleviate much of the desperation and unrest in Iraq.  They 
also emphasized that there was great anger over the hiring 
of non-Iraqis for Iraqi projects, while they alleged that 
Iraqi firms could operate much more efficiently and cheaply. 
The participants also claimed that money earned by the non- 
Iraqi expatriates did not go back into the Iraqi economy to 
employ other Iraqis, but was instead for other activities 
abroad. A telling comment, "Don't waste dollars on security, 
hire Iraqis," was repeated in the discussions. 
 
New Opportunities in Decentralization 
------------------------------------- 
¶5.  (SBU) Decentralization of the government and the 
enhanced role provided to the provinces and regions under 
the new Constitution were seen as encouragements to 
investments.  Participants suggested that local approvals 
for business ventures also were much easier to obtain than 
is normally the case in dealing with approving authorities 
at national ministries.  Some additionally suggested that 
fewer levels of corruption would be encountered. 
 
¶6.  (SBU) Local taxation policies were also discussed, with 
our Iraqi contacts saying that the provinces would be in 
competition for investments with each other in the future. 
The provinces that were smartest would offer favorable 
incentives for investors, and other areas of the country 
would soon realize the advantages of enticing investors to 
their regions. The payoff to the local communities and 
regions for good investment climates would be seen in terms 
of new jobs and expanded employment for the local populace. 
 
Economic Transition still Required 
---------------------------------- 
¶7.  (SBU) Diversification of the Iraqi economy was 
considered a requirement for a growing economy. 
Participants emphasized the roles of agriculture and tourism 
as being key to balance over-reliance on oil production. 
They also suggested the religious tourism cities of Najaf 
and Karbala should be starting points for encouragement of 
the tourist industry, while also flagging tourist interest 
in ancient sites such as Ur.  The agriculture sector was 
suggested to have the potential to become the largest 
employer in Iraq.  Participants strongly advocated USG 
support to the sector, to include micro lending, training in 
marketing, assistance for purchase of U.S.-origin equipment 
and opening of markets for Iraqi products in the U.S., EU 
and Middle East. 
 
¶8.  (SBU) State Owned Enterprises were denigrated by the 
roundtable attendees as inefficient and as a major source of 
corruption.  They recommended privatization of viable firms 
via auction and closure of the remainder.  Concern for the 
future unemployed workers was discussed, as was the need for 
the private sector to expand to provide jobs for those who 
would become unemployed as the state owned firms were 
downsized and streamlined.  The primary concern and 
emphasis, however, was to remove the government from 
business and get rid of corruption--"get the government out 
of business". 
 
¶9.  (SBU) Import and export specialists complained of 
multiple sets of regulations put in place via bilateral 
trade agreements and favored more general rules to ease 
international commerce. 
 
Importance of Ordinary Issues - Safety and Good Schools 
--------------------------------------------- ---------- 
¶10.  (SBU) Many of the participants said they were 
incubating ideas and projects for future investment in Iraq; 
however, the lack of security was slowing down their 
implementation.  One woman, who is the general manager of a 
construction company, said she had been kidnapped and her 
family was required to pay a $500,000 ransom for her return. 
She said this lack of security made her move to Amman and 
put many of her construction projects on hold.  Another 
participant (a banker) said he was holding up a decision to 
invest $34 million in the banking sector in Kurdistan.  The 
banker said he would weigh his potential investment in Iraq 
against alternatives elsewhere, balancing expected returns 
and risks. 
 
¶11.  (SBU) Iraqi investments in education were advocated by 
several participants.  Those with children or grandchildren 
of school age were concerned with the education their 
children could obtain in Iraq.  One woman with two small 
children said she would not move back to Iraq because her 
children could not get a good basic education.  Another 
gentleman suggested asking the Jesuits to return to Baghdad 
College.  He stated that it had been known as the best 
educational institution in the country.  He said that the 
nation of Iraq needed better college opportunities to entice 
the better educated Iraqi expatriates to return to Iraq. 
All participants, including a recent Iraqi college graduate, 
said there needed to be additional emphasis on support for 
youth and opportunities for them in Iraq.  There were no 
organized sports for the young adults and teenagers to play, 
and no place safe for them to socialize. And despite the 
private business activities of our interlocutors, many 
maintained that the government needed to provide jobs for 
new college graduates, so that they would stay in Iraq. 
 
¶12.  (SBU) There was also concern about the lack of 
expertise in the Iraqi government regarding business. 
Ministerial personnel and those running for office in this 
week's national election were seen as having little or no 
experience with free markets.  This failing was seen as 
possibly hindering the introduction of market-opening 
measures in Iraq. 
 
Comment 
------- 
¶13.  (SBU) Our Iraqi attendees were delighted to share their 
views and provide input on what they wanted in the economic 
future of Iraq.  Most, but not all, desire to return to Iraq 
to live, but will not do so until the security situation 
improves.  Those with dual passports intend to maintain dual 
citizenship as a hedge against continued poor security and 
instability.  All participants were carefully monitoring the 
ongoing election campaign in Iraq, and had specific parties 
and candidates they were backing.  Finally, they emphasized, 
"Iraqis were willing to follow the West.  Please don't lose 
patience."