VZCZCXYZ0024
PP RUEHWEB

DE RUEHGB #2141/01 1731431
ZNR UUUUU ZZH
P 221431Z JUN 06
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 5245
RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY

UNCLAS BAGHDAD 002141 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ELTN EPET IZ
SUBJECT: INITIAL MEETING WITH THE MINISTER OF HOUSING AND 
CONSTRUCTION 
 
 
¶1. (SBU) SUMMARY:  In a June 20 introductory meeting with 
Deputy EconCouns, IRMO Senior Consultant for Transportation 
and the Gulf Regional Division (GRD) Commander, the new 
Minister of Housing and Construction (MOCH) Bayan Dazai 
expressed her gratitude for U.S. assistance in the 
reconstruction of Iraq, but lamented there is still much work 
to be done.  She was receptive to working closely with the 
USG on housing, housing finance, privatization, and 
anti-corruption, as well as construction projects and 
capacity development, within her Ministry. END SUMMARY 
 
-------------------------- 
Much Work Still to be Done 
-------------------------- 
 
¶2. (SBU) The Minister recounted her shock, when she arrived 
from Irbil to assume her new position, at the lack of 
development outside of the Kurdish Region.  As she stated 
&Baghdad is still living in the seventeenth century.8 
Minister Dazai repeated several times that &so much work has 
to be done.8 
 
¶3. (SBU) The Minister asked about the progress status of the 
Project Partnership Agreement contracts. Of the $75M for the 
five bridge and three road USG contracts under this program, 
the MOCH has to front typically 5-10 percent of the 
individual project costs to cover mobilization and initial 
construction, though the USG reimbursed the MOCH up to a set 
amount. In a meeting on May 12, the MOCH issued warnings to 
contractors onseveral of these projects to fulfill their 
contractual obligations. The GRD Commander mentioned that the 
Baghdad-Kirkuk 2nd Carriageway (North) project was only 
two-four percent complete due to previous issues with the 
contractor. They included currency conversion problems, 
current security threats, and the lack of supply, low 
quality, and price increases of bitumen and fuel that caused 
the fixed price contract to become unprofitable. We note that 
the supply problem is caused by limited production capacity, 
maintenance, infrastructure (pipeline) sabotage.  The supply 
problem experienced by contractors on these USG-funded 
efforts is compounded by the fact that the State Commission 
for Roads and Bridges (SCRB) did not place these projects on 
their master plan which provides projects priority 
procurement of materials at subsidized prices.  We have been 
working with the SCRB, MOCH, and Ministry of Oil to resolve 
this issue. 
 
¶4. (SBU) The Minister affirmed the poor quality of bitumen 
produced in Iraq and stated she wants to import better 
quality bitumen.  The GRD Commander asked Minister Dazai to 
tell the Minister of Oil how important raising the standards 
of crude oil production is to the economic development of 
Iraq (bitumen is a often used interchangeably with 
&asphalt8 and &tar8 and is made from the residue left 
when refining crude oil.) 
 
¶5. (U) The Minister also pointed out that in her previous 
position as Deputy MOCH in the Kurdish Regional Government, 
she was able to sign contracts to import anything her 
Ministry needed, whereas in the Central Government of Iraq, 
she must obtain approval. 
 
¶6. (SBU) The GRD Commander noted the USG programs were never 
designed to &finish everything8, but to start 
reconstruction projects, and we have made significant 
progress in a lot of areas.  The Commander invited the 
Minister to the ribbon cutting ceremony of the Afras Water 
Treatment plant in Irbil in July.  The Minister responded 
positively regarding the ceremony, but commented on the poor 
water quality in Baghdad compared to the Kurdish region. 
 
--------------------------------------------- -- 
Minister Will be a Champion for Economic Reform 
--------------------------------------------- -- 
 
¶7. (SBU) We told the Minister we work closely with Deputy 
Prime Minister Barham Salih, the World Bank, International 
Monetary Fund, United Nations and foreign investors to assist 
Iraq with making necessary fundamental economic reforms.  We 
mentioned the Econ Counselor spearheads the Embassy,s 
anti-corruption efforts and asked to schedule a follow-up 
meeting to discuss anti-corruption, privatization, housing 
and housing finance, and other policy reform priorities.  The 
Minister responded we were welcome to meet again at any time. 
The Minister also positively responded to arranging follow-up 
meetings to discuss project progress and available USG 
assistance. 
 
¶8. (SBU) As Embassy representatives have done in all 
introductory meetings with new Ministers, the IRMO Senior 
Consultant for Transportation presented an Embassy-produced 
Ministerial Transition briefing book to the Minister 
 
highlighting USG assistance in strategic planning, management 
training, technical assistance, public outreach, and 
identifying budget requirements. 
 
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Comment 
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¶9. (SBU) The MOCH Minister told EconOffs in a later 
conversation that she never wanted to be the GOI Minister of 
Construction and Housing, but that she was selected by 
Barzani. The Minister encourages cooperation with the USG and 
seems to be a champion for promoting private sector 
development. We have requested for the Minister,s CV; once 
received we will forward to the Department. 
SPECKHARD