VZCZCXRO1340
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #1464/01 1201553
ZNR UUUUU ZZH
R 301553Z APR 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 0974
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 BAGHDAD 001464 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PREL IZ
SUBJECT: DPM SALIH REVIEWS COMPACT DEALS 
 
¶1.  (SBU) Deputy Prime Minister Barham Salih described to 
Treasury Attache on April 29 the results of a number of GOI 
efforts to engage the international community in advance of 
the launch of the International Compact on May 3 in Sharm 
el-Sheikh.  These efforts have produced good progress 
securing agreements to send ministerial-level delegations 
from most of the countries targeted apart from Russia (and 
Japan, because of a prior commitment to meet with Russia on 
May 3).  Some progress lining up specific commitments to debt 
relief or new concessional lending that can be announced on 
May 3 has also been made.   During the last week, Prime 
Minister Maliki visited Egypt and Kuwait (King Abdullah of 
Saudi Arabia declined Maliki's request for a meeting), 
Central Bank Governor Shabibi and UN Special Representative 
Gambari visited the UK, Kuwait, Bulgaria and Brussels and 
Foreign Minister Zebari visited Iran and Turkey. Deputy Prime 
Minister Barham Salih made calls to or met with ambassadors 
from the EU/EC, Italy, Russia and Turkey, among others. 
Finance Minister Jabr met with China's ambassador, directed 
Iraq's ambassador to Russia to engage Russia's Ministry of 
Foreign Affairs and wrote to Egypt's Minister of Finance. 
The status of these key countries and institutions is now as 
follows: 
 
¶2.  (SBU) Russia: Despite some potentially encouraging 
signals reported by Iraq's ambassador in Russia, Foreign 
Minister Lavrov has most recently indicated that he will not 
attend the May 3 meeting, nor has Russia signaled any greater 
willingness to sign a long completed bilateral debt agreement 
implementing its agreement to the November 2004 Paris Club 
Agreed Minute. 
 
¶3.  (SBU) China: In a meeting on Saturday with DPM Salih, 
China's ambassador to Iraq confirmed that newly named Foreign 
Minister Yang Jiechi will attend on May 3. Apart from a 
suggestion last week that China might be willing to cancel 
100% of "governmental" debt claims totaling only $3-7 
million, China has not given any indication that it is 
prepared to accept debt reduction consistent with Paris Club 
terms (i.e., 80%) for the estimated $7  billion in 
"commercial" debt claims. 
 
¶4.  (SBU) Turkey: Following his trip this week to Ankara, 
Foreign Minister Zebari reported that Foreign Minister Gul 
told him that while he will not be able to attend due to the 
upcoming elections, another minister will lead Turkey's 
delegation. (In light of this, Zebari also asked Gul to 
persuade Syria to also send a minister.) Although DPM Salih 
told us that Zebari's briefing materials included points on 
debt relief, we have not been able to confirm if Zebari 
raised the issue or what Turkey's response was. However, DPM 
Salih reports receiving generally cooperative signals on 80% 
debt relief. 
 
¶5.  (SBU) Egypt: The Foreign Minister's attendance has been 
known for some time. On debt relief, Iraqi Minister of 
Finance Jabr sent Egyptian Minister of Finance Boutros-Ghali 
a letter seeking to confirm agreement on a proposal the two 
discussed the previous week in Washington by which Egypt 
would agree to cancel 100% of its debt claims in exchange for 
Iraq agreeing to repay 50% of the principal of some non-debt 
claims stemming from the Saddam regime's theft of remittances 
by Egyptian laborers working in Iraq.  As of April 29, Jabr 
had not been able to reach Boutros-Ghali to follow up, and 
reporting from other channels indicates that the deal Jabr 
and Boutros-Ghali discussed in Washington may not be 
supported at higher levels of the Egyptian government.  Jabr 
told Treasury Attache that he will now ask DPM Salih or Vice 
President Abdul Mahdi to follow up on the matter. Jabr 
indicated that the GOI is prepared to make a make a more 
generous offer on the worker remittance claims (perhaps 
agreeing to pay up to 100% of the worker remittance claims) 
in the interest of reaching agreement with Egypt on a 
settlement that could be announced on May 3. 
 
¶6.  (SBU) Bulgaria: Ambassador Crocker confirmed in a 
separate meeting that Bulgaria's Foreign Minister will 
attend.  DPM Salih reports that he has received generally 
positive signals on debt relief consistent with Paris Club 
terms, and the Ministry of Finance's debt advisers have 
confirmed that in technical discussions Bulgaria has appeared 
seriously interested in an arrangement by which they would be 
able to sell a bilateral agreement granting 80% debt relief 
for cash. However, we have no specific information at this 
time about the commitment that Bulgaria intends to announce. 
 
¶7.  (SBU) Poland: Following a meeting with Poland's 
ambassador to Iraq, DPM Salih reported that Poland's Foreign 
Minister will attend. He reported positive signals on debt 
relief but could not say whether Poland is prepared to 
announce debt relief consistent with Paris Club terms. 
 
 
BAGHDAD 00001464  002 OF 002 
 
 
¶8.  (SBU) Saudi Arabia: The Foreign Minister's attendance has 
been known for some time.  Saudi Arabia's willingness to 
cancel 80% of its debt claims was reported in the press last 
week and subsequently confirmed through other channels. 
However, on Friday it emerged that one or more officials 
within the Finance Ministry were raising questions about 
whether Saudi Arabia had in fact offered to cancel 80% of all 
debt claims, what the total size of those debt claims is and 
whether Iraq was prepared to accept a Saudi offer to cancel 
80% of its debt (vs. the 100% cancellation that Iraq has long 
asked for). When these questions were brought to DPM Salih's 
attention by TreasAtt, DPM Salih reaffirmed that Prime 
Minister Maliki had overruled those within the GOI arguing 
for holding out for debt relief more generous than Paris Club 
terms and taken the decision to accept an 80% offer from 
Saudi Arabia. Salih said he would make sure that all of the 
relevant parties within the GOI understood that the PM's 
decision was authoritative. TreasAtt received a similar 
assurance from an adviser to Vice President Adil Abdul Mahdi. 
As for the amount of the debt, press reporting suggests that 
Saudi Arabia's current estimate of the Saudi claims is $15-18 
billion, which is broadly consistent with the Iraqi technical 
team's belief that the amount is $15.7 billion. (A Saudi 
announcement of 80% debt relief at Sharm el-Sheikh can be 
made subject to more detailed reconciliation of the debt 
claims.) 
 
¶9.  (SBU) Arab Fund for Economic and Social Development: In 
their initial meeting with the Arab Fund in Kuwait, Governor 
Shabibi and UN Special Advisor Gambari received general 
statements of support but were told that the Arab Fund would 
not announce a specific amount for a new concessional lending 
program until Iraq agreed in writing to a plan to repay its 
arrears to the Arab Fund. The Prime Minister subsequently 
announced publicly that Iraq will honor its obligations to 
the Arab Fund. Shabibi now plans to go back to the Arab Fund 
with the Prime Minister's statement. TreasAtt has also asked 
DPM Salih if it is possible to have the arrears clearance 
agreement signed before May 3. 
 
¶10.  (SBU) EU/EC: Governor Shabibi reports that Solana will 
attend. While he believes they will make a supportive 
statement on May 3 (possibly including encouragement for 
creditors to consider converting some or all of the 20% 
remaining debt into equity), he did not have any specific 
information about the commitments that will be announced. 
 
¶11. (SBU) Information on key messages for the International 
Compact and suggested follow-on actions will be included in 
septel. 
CROCKER