VZCZCXRO0394
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #0551 0471613
ZNR UUUUU ZZH
R 161613Z FEB 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 9688
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS BAGHDAD 000551 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN IZ
SUBJECT: COUNCIL OF MINISTERS APPROVES BUDGET EXECUTION 
REFORMS 
 
¶1.  (SBU) Late 15 February an animated Minister of Planning 
and Development Cooperation Ali Baban told Coordinator for 
Economic Transition Carney that the Council of Ministers 
meeting that day had approved two documents submitted by the 
MoPDC making proposals for reforming and improving Iraq's 
budget execution processes.  He cited new guidelines for 
implementing capital projects generally, and new, 
internationally-discussed rules for capital project 
contracting.  Baban described these documents as important 
accomplishments. (Comment: While we are seeking further 
detail on the substance of the documents, from previous 
discussions we believe they are likely to contain useful 
reforms.) 
 
¶2.  (SBU) Pressed on prospects for early provincial execution 
of the first tranche of 10 percent of the capital budged, 
Baban described most provinces as having no real capacity to 
execute capital projects.  He added that to address this 
deficiency, the MoPDC had proposed establishing MoPDC budget 
execution units in each province consisting of staff with 
relevant expertise (e.g. engineers, lawyers, accountants) who 
will provide technical assistance on capital project planning 
and execution and serve as an interface with the MoPDC. Baban 
said that it will probably take three to six months to 
provide initial training for these teams. Amb. Carney 
suggested that in the interim the MoPDC consider one or more 
mobile units that can provide timely assistance to multiple 
provinces.  Baban agreed that this is a good idea worth 
pursuing. Carney and Senior Consultant to the MoPDC Martin 
both stressed that PRTs would offer their expertise to local 
governments to assist project development.  Baban welcomed 
that prospect. 
 
¶3.  (SBU) Baban also expressed concern about the GOI's 
limited ability to perform government functions generally, 
due to the security situation, to partisan conflicts, to 
sectarian conflicts, to limited remaining skilled personnel 
and to a mindset among both the public and government 
officials that the government should provide everything 
without any expectation of productivity. He estimated that 
the ministries and provinces would probably only be able to 
execute 40-50% of the newly-passed capital budget. While 
pleased with the approval of the budget execution documents, 
Baban noted that they do address these more fundamental 
problems, but are part of an effort that he compared to 
treating a serious illness with aspirin. He said had recently 
become convinced that the only real solution is for the role 
of the government to be dramatically changed so that the 
functions that the government has not been able to provide 
can be performed by other entities such as the private sector. 
KHALILZAD