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TO RUEHC/SECSTATE WASHDC IMMEDIATE 3187
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INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
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C O N F I D E N T I A L SECTION 01 OF 03 BAGHDAD 000765 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 03/08/2016 
TAGS: ECON KBCT PGOV PREL IZ
SUBJECT: MFA CONFIRMS ITS ROLE IN ENFORCING THE ARAB LEAGUE 
BOYCOTT 
 
REF: A. 2005 BAGHDAD 4893 
     ¶B. 2005 BAGHDAD 3132 
     ¶C. 2005 BAGHDAD 2972 
 
Classified By: Deputy Chief of Mission David M. Satterfield for reasons 
 1.4 (b) and (d). 
 
¶1. (U) Please see para 11 for an action request. 
 
¶2.  (C/REL GBR AUS) SUMMARY: On March 2, Emboffs met with 
Ministry of Foreign Affairs (MFA) officials, including the 
director of the MFA Arab League Boycott (ALB) Office, to 
discuss the MFA's role in the enforcement of the boycott in 
Iraq.  The MFA argued that the continued operation of its 
Boycott Office is based on a law passed in 1956 that was 
not/not amended or repealed by subsequent CPA orders.  We 
told the MFA officials that Iraq's continued enforcement of 
the ALB will be problematic for acceding to the WTO and 
encouraging foreign investment.  They are aware of our 
concerns but said they view the problem primarily as 
political and one that the GOI is not yet ready to address. 
Enforcement of the ALB tends to be inconsistent, and large 
firms that do business with Israel are operating here. 
Nevertheless, even ad hoc enforcement is unacceptable and the 
Embassy continues to press the GOI at all levels to stop 
enforcing the ALB (reftels).  END SUMMARY. 
 
¶3.  (C/REL GBR AUS) On March 2, Econoff and Embassy Legal 
Advisor met with Deputy Foreign Minister Hamoud Bidan, Dr. 
Srood Najib (Head of the International Organizations and 
Multilateral Cooperation Department), and Hikmat Alani 
(Director of the Arab League Boycott (ALB) Office within the 
MFA).  The MFA's Boycott Office employs four to five 
individuals and is part of the MFA's Arab League Office. 
 
--------------- 
Role of the MFA 
--------------- 
 
¶4.  (C/REL GBR AUS) The MFA's Boycott Office is the primary 
conduit for boycott-related information between the ALB main 
office in Damascus and other Iraqi ministries.  According to 
Hikmat, Iraqi ministries are the primary enforcers of the 
boycott; the MFA merely transmits requests for verification 
from Iraqi ministries to the ALB office in Damascus. 
Operationally, Hikat told us it works as follows:  Ministries 
who have questions as to whether the boycott applies to a 
particular company send the name to the MFA, which then asks 
Damascus.  Once the MFA receives a response from Damascus, it 
forwards the response back to the requesting ministry.  The 
MFA also receives regular blacklist reports from the Damascus 
office, but it is unclear how much of that information the 
MFA disseminates to Iraqi ministries that have not requested 
the information specifically. 
 
¶5.  (C/REL GBR AUS) In response to our point that CPA Orders 
repealed certain ALB laws, Hikmat asserted that it is 
incumbent upon each ministry to comply with relevant law.  If 
a ministry asks for boycott-related information, the MFA will 
furnish the answers but will not examine the legality of the 
ministry's request, Hikmat added.  Hikmat noted that, as 
recently as the day before, the MFA had transmitted a list of 
companies from the Ministry of Industry and Minerals (MIM) to 
Damascus for verification on whether certain companies are on 
the ALB blacklist. 
 
-------------------- 
Arab League Meetings 
-------------------- 
 
¶6.  (C/REL GBR AUS) The MFA's Boycott Office continues to 
send delegates to the biannual ALBB meeting held by the Arab 
League (AL) in Damascus.  Hikmat said that AL members have 
been quite pleased that Iraq continues to attend even after 
the end of Saddam Hussein's regime.  Hikmat noted that the 
MFA and the Ministry of Trade (MoT) each sent two delegates 
to the last ALB meeting in November 2005; the next meeting is 
scheduled for April or May 2006.  (NOTE: AL countries that no 
longer enforce the boycott, such as Jordan, Egypt and 
Bahrain, do not attend these meetings.  END NOTE.) 
 
¶7.  (C/REL GBR AUS) In preparation for the next ALB meeting, 
both the MFA and MOT have requested formal guidance from the 
PM's Office on how to respond to questions about Iraq's 
compliance with the boycott since there are blacklisted goods 
and companies already in Iraq.  (NOTE: Notwithstanding the 
MFA's role in enforcing the ALB, several companies that do 
business with Israel already operate inside Iraq, including 
 
BAGHDAD 00000765  002 OF 003 
 
 
Royal Jordanian Airlines and General Electric.  END NOTE.) 
According to Hikmat, since 2003, the GOI has denied at the 
ALB meetings that there are any blacklisted goods or 
companies in Iraq.  Hikmat said that he does not wish to 
misrepresent Iraq's compliance with the boycott at the next 
meeting nor does he want to cause tension between Iraq and 
the other AL countries.  This is why, he explained, his 
office has made official requests for guidance from the PM's 
Office.  Hikmat noted, however, that the PM has yet to 
respond to queries that the MOT submitted three months ago 
and the MFA more than one month ago. 
 
------------------------ 
ALB Laws and Regulations 
------------------------ 
 
¶8.  (C/REL GBR AUS) All three MFA interlocutors confirmed 
that Law No. 34 of 1956 is the foundational legislation for 
ALB implementation in Iraq.  (NOTE:  Law No. 34 states, "His 
Majesty the King may take the measures necessary to ratify 
the Unified Law on the Boycott of Israel Regulations," and 
stipulates that it is the duty of Ministers "to implement 
this Law."  END NOTE.)  The MFA interprets Law No. 34 as 
mandatory and in effect.  In addition, according to the MFA, 
there are other regulations that remain valid despite CPA 
orders that attempted to dismantle ALB enforcement.  (NOTE: 
CPA Orders 39 and 80 effectively repealed ALB provisions in 
the areas of company registration and trademark registration 
but did not directly address Law No. 34.  END NOTE.)  One 
particular regulation, about which the MFA officials did not 
provide specific details, requires all ministries to verify 
with Damascus, via the MFA, that every company with which a 
ministry contracts is not on the ALB blacklist. 
 
¶9. (C/REL GBR AUS) NOTE: The Arab League Boycott often is 
characterized as having primary, secondary, and tertiary 
aspects.  These are generally understood as follows: the 
primary boycott prohibits the import of Israeli products or 
direct trade with Israel; the secondary boycott prohibits 
transactions with companies that invest in or do business 
with Israel; and the tertiary boycott prohibits transactions 
with companies that do business with secondary boycott 
companies but that do not have any direct investments or 
business with Israel.  Law No. 34 of 1956 clearly imposes 
both primary and secondary boycotts.  (Several elements of 
the statute, including language cited below in para 9, 
illustrate the primary boycott.)  With regard to the 
secondary aspect of the boycott, the law states, "foreign 
companies and institutions that have interests, subsidiaries 
or general agencies in Israel shall be considered as being in 
the category of entities and persons with which dealing is 
prohibited..." 
 
¶10. (C/REL GBR AUS) NOTE CONT'D: It is less clear to us 
whether this particular law imposes a tertiary boycott.  The 
law also provides that "all persons, whether natural or 
legal, are prohibited from making, whether directly, 
indirectly or through an intermediary, any covenant with 
entities or persons resident in Israel, belong to it by their 
nationality, work for its account, or who act in (Israel's) 
interest, wherever they may reside."  This wide provision 
could perhaps be construed to cover tertiary aspects of the 
boycott depending on how terms and phrases like "covenant" 
and "acting in (Israel's) interest" are interpreted, but such 
a construction is not obvious.  In addition, MFA officials 
intimated that there are other regulations issued by the 
Damascus office.  It is plausible that some of these 
subsequent regulations could clarify the applicability of the 
tertiary aspect of the boycott.  END NOTE. 
 
¶11. (C/REL GBR AUS) ACTION REQUEST: Post would appreciate any 
clarification from Washington agencies, such as the 
Department of Commerce, as to how the Arab League imposes the 
tertiary aspect of the boycott.  END ACTION REQUEST. 
 
------------------------ 
Stopping ALB Enforcement 
------------------------ 
 
¶12.  (C/REL GBR AUS) Najib emphasized that stopping 
enforcement of the ALB would require the repeal or suspension 
of Law No. 34, although he and his colleagues indicated that 
official instructions from the Prime Minister may be 
sufficient.  (COMMENT: Although it is likely a PM order would 
be followed by the ministries, it could be challenged as long 
as Law No. 34 remains on the books, on the grounds that the 
PM does not have the authority to unilaterally amend valid 
legislation.  END COMMENT.)  Bidan and Najib said they both 
 
BAGHDAD 00000765  003 OF 003 
 
 
recognize that continued enforcement of the ALB deters 
foreign investment and would hinder Iraq's accession to the 
WTO.  According to Bidan, the ALB issue is a "political one." 
 Najib concurred, explaining that although the GOI intends to 
slowly dissolve the MFA's Boycott Office, the issue is not 
being focused on right now. 
 
------- 
COMMENT 
------- 
 
¶13.  (C/REL GBR AUS) COMMENT: Actual enforcement of the ALB 
in Iraq has been ad hoc and inconsistent.  Not every ministry 
requests ALB verification for contracting companies, and 
requests for certification of boycott compliance in the 
company registration process appear to have ceased.  We have 
not seen any listing of blacklisted ships in the official 
gazette since late 2004.  Companies that have business 
relationships with Israel, including Royal Jordanian 
Airlines, General Electric, and Caterpillar, do operate in 
Iraq despite the ALB.  The mission will continue to urge the 
GOI vigorously at the highest levels to dismantle ALB 
enforcement as well as the ALB legal framework in Iraq 
(reftels).  END COMMENT. 
KHALILZAD