VZCZCXYZ0016
OO RUEHWEB

DE RUEHGB #1568/01 1321308
ZNY CCCCC ZZH
O 121308Z MAY 06
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4396
INFO RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE

C O N F I D E N T I A L BAGHDAD 001568 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS TO NEA, EB, L, TREASURY, COMMERCE/BIS/OAC, AND 
USTR 
 
E.O. 12958: DECL: 05/11/2016 
TAGS: KBCT EINV ECON PGOV PREL ABLD IZ
SUBJECT: IRAQ: IMPLEMENTATION OF ARAB LEAGUE BOYCOTT 
STATUTES 
 
REF: A. SECSTATE 66895 B. BAGHDAD CLASSIFIED O-I: 
 
     4/5/2006 C. BAGHDAD SBU O-I: 4/25/2006 D. 
     BAGHDAD SBU O-I: 11/28/2005 E. BAGHDAD 
     CLASSIFIED O-I: 1/26/06 F. 2006 BAGHDAD 765 
     ¶G. 2005 BAGHDAD 3411 H. BAGHDAD CLASSIFIED 
     O-I: 1/24/06 
 
Classified By: Deputy Chief of Mission David M. Satterfield for reasons 
 1.4 (b) and (d) 
 
¶1.  (C) Summary.  In response to the Department's request for 
information regarding Iraq's practices to harmonize 
implementation of U.S. laws (ref A), Post provides the 
following summary of previous reporting on the Arab League 
Boycott (ALB).  Although Iraq's enforcement of the ALB is 
inconsistent and ad hoc, Iraq does have an Arab League 
Boycott Office in the Ministry of Foreign Affairs and a 
boycott law from 1956 that remains on the books.  Post will 
engage the incoming government regarding this issue.  End 
summary. 
 
-------------------------------------- 
PARTICIPATION/COOPERATION WITH THE ALB 
-------------------------------------- 
 
¶2.  (C) Ref A asked Post to determine whether Iraq requires 
participation in or cooperation with the ALB or other 
international boycotts.  We determined that there has been 
sporadic enforcement of the secondary aspects of the ALB by 
some Iraqi ministries.  Most cases have been resolved, but 
Post is aware of two current unresolved cases. 
 
¶3.  (C) Pepsi has been trying to register its trademark since 
2003 at the Ministry of Industry's Trademark Office.  In 
November 2005, Pepsi made another follow-up visit to the 
Trademark Office but was still unable to register its 
trademark because, despite CPA Order 80's suspension of ALB 
provisions in Iraq's trademark law, the Trademark Office's 
procedures ask for an Arab Boycott Declaration.  New 
information (ref B) indicates, however, that the Ministry of 
Industry and Minerals (MIM) is developing operating 
instructions for the Trademark Office that omit explicit 
reference to the Arab League Boycott.  MIM plans to present 
these instructions to the Council of Ministers Economic 
Committee for a decision shortly.  However, given that the 
government is in a state of transition, it is unclear how 
long it will take the committee to act once MIM has presented 
it with the new instructions. 
 
¶4.  (SBU) Post recently learned of a second case of secondary 
enforcement of the ALB (ref C) involving problems that Eli 
Lilly USA is having with Kimadia, a Ministry of Health (MoH) 
state-owned enterprise and main drug supplier in Iraq. 
Kimadia has barred Lilly's participation in a recent $10 
million insulin tender because Eli Lilly does business with 
Israel.  Post will raise this issue with the new Minister of 
Health at the earliest opportunity, once government formation 
is complete. 
 
¶5.  (SBU) General Electric has resolved enforcement problems 
with the Ministry of Oil relating to one of its supply 
contracts.  Although the Ministry of Oil initially insisted 
on including ALB language in the contract, it later agreed to 
remove the language (ref D).  In November 2004, the Ministry 
of Trade published several decisions adding or removing ships 
to/from an ALB blacklist of ships banned from Iraqi ports 
because they had docked in Israel.  This appeared in the 
Official Gazette, but Post is unaware of any similar list 
having been published since 2004. 
 
--------------------------------------------- ---- 
STATUS OF SUPPLIERS OR VENDORS COMPLYING WITH ALB 
--------------------------------------------- ---- 
 
¶6.  (SBU) Post requested a waiver for 2006 of Section 565 of 
the Foreign Relations Authorization Act, Fiscal Years 1994 
and 1995 (Public Law 103-236) (ref E, Note:  This O-I item is 
SBU, but was sent with the BAGHDAD Classified O-I on 
01/26/06).  Section 565 prohibits the Department of State 
from entering into any contract which expends funds 
appropriated to the Department of State with a foreign person 
that complies with the Arab League Boycott of Israel.  Post 
requested this waiver as a precautionary matter, given the 
unsettled status of ALB implementation in Iraq, to ensure 
that there is no obstacle to carrying on diplomatic functions 
of the embassy. 
 
-------------------------------- 
 
EXISTENCE OF BOYCOTT LAW IN IRAQ 
-------------------------------- 
 
¶7.  (SBU) Post provided the Department with a copy of Iraq's 
boycott law in April 2005 via e-mail to NEA/I and L.  This 
basic law for ALB implementation in Iraq is officially known 
as Law No. 34 of 1956 ratifying the Unified Law on the 
Boycott of Israel Regulations.  CPA Orders 39 and 80 
effectively repealed ALB provisions in the areas of company 
registration and trademark registration but did not directly 
touch upon Law No. 34. 
 
------------------------------------------ 
EXISTENCE OF AN ARAB LEAGUE BOYCOTT OFFICE 
------------------------------------------ 
 
¶8.  (C) Iraq's Arab League Boycott Office is located in the 
Ministry of Foreign Affairs (MFA) (ref F).  This office 
employs four or five individuals and is part of the MFA's 
Arab League Office.  The Director of the Arab League Boycott 
Office is Hikmat Alani.  The MFA's Boycott Office is the 
primary conduit for boycott-related information between the 
ALB main office in Damascus and other ministries.  In a 
meeting March 2, 2006, Hikmat told EmbOffs that the MFA 
merely transmits requests for verification from Iraqi 
ministries to the ALB office in Damascus.  Enforcement is 
left up to the ministries. 
 
--------------------------------------------- ----- 
STEPS THE GOI HAS TAKEN TO CORRECT ALB ENFORCEMENT 
--------------------------------------------- ----- 
 
¶9.  (C) The GOI has resolved several cases of ALB 
enforcement, including the removal of ALB language in General 
Electric's contract (as referenced in para 5).  In addition, 
companies that have business relationships with Israel, 
including Royal Jordanian Airlines, General Electric, and 
Caterpillar, do operate in Iraq without legal hindrance. 
Also, HSBC, which opened branches in Iraq last year, has 
branches in Israel as well.  However, there has been little 
follow-through in the unresolved trademark issue involving 
Pepsi, despite at least seven meetings with the GOI on this 
issue.  In one instance, Trade Minister Abd al-Basit Kareem 
(ref G) noted he would send instructions requesting 
non-enforcement of the ALB to the Council of Ministers (CoM), 
but he failed to provide Post a copy of these instructions or 
to inform the Embassy of the CoM decision on this issue. 
This issue has been raised by the Ambassador and Deputy Chief 
of Mission with the highest levels of the GOI during the past 
year (ref H), but there has been little follow-through on the 
part of the GOI.  Most recently (ref B), as noted in para 3 
above, the MIM has taken some steps to draft operating 
instructions to omit references to the Arab League Boycott. 
Post plans to keep engaging the GOI on the Pepsi trademark 
issue, as well as on the newly reported problems that Eli 
Lilly is having with Kimadia and the Ministry of Health. 
KHALILZAD