VZCZCXRO0046
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #2368 1870740
ZNR UUUUU ZZH
P 060740Z JUL 06
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 5535
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS BAGHDAD 002368 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EINV IZ
SUBJECT: COMMUNICATIONS MINISTER LUKEWARM ON PRIVATIZATION; 
MOBILE SERVICE CONTRACTS EXTENDED 
 
¶1.  (SBU)  SUMMARY.  Communications Minister Muhammad Allawi 
informed us that the current contracts for Iraq's mobile 
telephone service providers have been extended through the 
end of September, delaying the opening of the market to 
outside competitors.  He said he supports privatization 
conceptually but stressed there are potential pitfalls, and 
outlined a range of other challenges facing his Ministry, 
especially corruption.  END SUMMARY. 
 
¶2.  (SBU)  Minister for Communications (MOC) Muhammad Tawfiq 
Allawi, only one month into his job, met June 28 with senior 
IRMO consultants and Econoff to discuss his Ministry,s 
priorities and his vision for Iraq,s telecommunications 
industry.   He noted that the licenses for the three mobile 
service providers in Iraq have been extended through the end 
of September.  (COMMENT: This will push back the timetable 
for bringing in outside (including foreign) investors to 
create more competitive market conditions.  END COMMENT) 
 
==================================== 
CMC Relationship Needs Clarification 
==================================== 
 
¶3.  (SBU)  The Minister has yet to meet with the director of 
the independent Communications and Media Commission (CMC, 
formerly called the National Communications and Media 
Commission), which regulates radio frequencies, underscoring 
the problematic relationship between the agencies.  Allawi 
looks to the draft telecommunications law to clarify the 
Ministry,s role, and resolve on-going territory disputes 
over mobile telephone regulations with the CMC, as well as 
over IT services with the Ministry of Science and Technology. 
  Allawi added that the Ministry receives a large number of 
complaints about current mobile providers abusing their 
monopoly positions, particularly in pricing. 
 
============================================= 
Hesitation on Privatization; Other Challenges 
============================================= 
 
¶4.  (SBU)  Allawi noted that he supports the concept of 
privatization, but stopped short of laying out specifically 
what might be privatized and at what pace.  He cautioned 
that, in the Iraqi context, poorly executed privatization 
could lead to the development of privately-held monopolies in 
place of the current public ones, which would not serve 
consumer interest.  He said he was more inclined to support 
some kind of partial privatization of elements of the 
Ministry's business operations, with some operations 
privatized, but others remaining under Ministry ownership. 
Allawi did not specify which companies would be prioritized 
for privatization.  The Ministry of Communications currently 
owns the Iraqi Telephone and Postal Commission (ITPC), which 
operates the country's landline telephone system and 
switching services, as well as the postal system.  Allawi's 
reference to partial privatization would likely include 
splitting the telephone and postal functions.  The Ministry 
also owns the State Corporation for Internet Services (SCIS), 
Iraq's primary internet service provider. 
 
¶5.  (SBU)  The Minister highlighted the many other challenges 
the Ministry faces, including modernizing the postal system, 
training for MOC engineers, and rebuilding facilities damaged 
by Coalition forces.  IRMO has numerous active projects to 
facilitate these goals.  Working with IRMO's engineering 
resources, he hopes to explore the possibility of using a 
wireless local loop (WLL) to provide cheaper telecom 
services.  Allawi lamented that corruption continues to drain 
Ministry resources and compromise its ability to provide 
effective services.  He raised the example of local telephone 
technicians who refuse to provide repair services without 
receiving bribes, but declined to comment on higher-level 
official corruption. 
SATTERFIELD