VZCZCXRO2498
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #1475/01 1211914
ZNR UUUUU ZZH
R 011914Z MAY 07
FM AMEMBASSY BAGHDAD
TO RUCNRAQ/IRAQ COLLECTIVE
RUEHC/SECSTATE WASHDC 0990
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 BAGHDAD 001475 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL ECON EFIN IZ
SUBJECT: INTERNATIONAL COMPACT, UPDATE FROM BAGHDAD 
 
REF: BAGHDAD 1464 
 
¶1.  (SBU) Summary:  Against the backdrop of intense diplomacy 
on the Neighbors' Conference and a difficult political 
environment, the Government of Iraq (GOI) has done a good job 
of getting international support for the Compact lined up. 
Given the relatively short lead time following the decision 
to launch the Compact on May 3, various parts of the GOI 
deployed in a generally well-coordinated effort to secure 
high level attendance and the greatest possible debt relief. 
They have set the stage for what should be a successful 
Compact event.  Overall, the Compact is a good document and a 
solid plan for Iraq's future economic course, supporting 
progress in the political and security tracks.  The Iraqis 
have gradually moved away from selling the Compact to their 
public as a way to get additional donor commitments to 
presenting the Compact as an abiding vehicle for 
international support for Iraq through the continuing 
difficult transition to a prosperous, pluralistic future.  In 
this cable we underscore the message that should be shared on 
the importance of the Compact, highlight the recent steps the 
GOI has taken, and suggest follow-on actions.  The goal is 
for the GOI and the Compact process to build on this 
encouraging progress of the last few weeks. End Summary. 
 
------------------------- 
Significant Step for Iraq 
------------------------- 
 
¶2.  (U) The mission of the International Compact with Iraq is 
to 'build a secure, unified, federal and democratic nation, 
founded on the principles of freedom and equality, and 
providing peace and prosperity for its people.'  In this 
document, Iraq has committed to the core economic reforms 
that will promote an open economy integrated with the 
regional and international community.  This commitment will 
immediately improve bilateral Iraqi relations with several 
countries, and lay the groundwork for normalizing its 
financial relationship with the rest of the world.  In 
signing this document, the international community commits to 
supporting Iraq as it rebuilds and reforms its economy, by 
way of debt relief, technical assistance, capacity building 
training, and high-level representation at the launch on May 
¶3.  The partnership reflected in the International Compact 
with Iraq is critically important because it shows that even 
under tremendously stressful circumstances this year-old 
government has the ability to commit to an economic framework 
that will facilitate its political and security goals, with 
significant regional and international support. 
 
-------------------------------------- 
Overview of GOI's Coordinated Outreach 
-------------------------------------- 
 
¶3.  (SBU) Over the last week the GOI has made a number of 
efforts to engage the international community in advance of 
the launch of the International Compact on May 3 in Sharm 
el-Sheikh.  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. 
For detailed information on the specific outcomes of this 
efforts on a country and institutional basis please see 
reftel.  Overall, 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).  Progress lining up specific commitments to debt 
relief or new concessional lending that can be announced on 
May 3 has also been made, most notably with Saudi Arabia. 
Bulgaria, Turkey, and Poland have indicated to DPM Salih that 
they may be ready to make a contribution.  Additionally, an 
agreement with the Arab Fund for Economic and Social 
Development is within reach.  Negotiations with Egypt and 
Russia, however, do not seem close to completion. 
 
------------------------- 
Follow-on Recommendations 
------------------------- 
 
¶4.  (SBU) Embassy Baghdad suggests that during discussions at 
Sharm el-Sheikh Principals should emphasize the importance of 
the International Compact as the foundation for further 
cooperation between Iraq, its neighbors, and the 
 
BAGHDAD 00001475  002 OF 002 
 
 
international community in promoting stability and economic 
revitalization.  Momentum from the launch should be used to 
press the UN and other donor countries to increase the UN 
presence in Baghdad, which will assist the implementation 
process of the Compact.  For European partners of Iraq, part 
of the Compact implementation will require not only a 
functioning secretariat but also sufficient UN and World Bank 
expertise to help the GOI with putting the Compact priorities 
into practice. Ambassador Crocker has raised this issue with 
the UN Special Advisor on Iraq Gambari and the UN Ambassador 
to Iraq Qazi.  We request continued engagement with Egypt as 
the host to press for a lasting contribution to the Compact 
effort. 
 
¶5.  (SBU) We also suggest USG highlight the GOI's outreach 
efforts on behalf of the Compact with Iraq's regional 
partners, whose support for the Compact process is needed and 
which goes beyond debt forgiveness and reparations issues. 
Getting strong Gulf support for the Compact is an important 
element in the overall regional outreach strategy.  The 
Compact has been a success story, and that message should not 
be obscured by any media focus on the Neighbors' conference 
and Iran's role. 
 
----------------------- 
Public and Media Themes 
----------------------- 
 
¶6.  (U) The adoption of the Compact resolution is a 
significant step for the Government of Iraq.  The May 3 event 
represents an important opportunity to highlight this 
commitment for U.S., Iraqi and international audiences, and 
serves as a roadmap for future progress. We suggest 
emphasizing the following themes. 
 
 - The launching of the International Compact with Iraq 
represents a major step forward for Iraq and its relations 
with its neighbors and the world. 
 
 - The International Compact with Iraq is built on a firm 
economic foundation, but its mission goes much further - to 
'build a secure, unified, federal and democratic nation, 
founded on the principles of freedom and equality, and 
providing peace and prosperity for its people.' 
 
 - Given the tremendous challenges that Iraq has faced, with 
a government that has only been in power for one year, the 
Compact is a significant achievement.  A united Iraqi front 
is committing to specific, practical economic objectives that 
will support its political and security goals. 
 
 - In this document, Iraq has committed itself to core 
economic reforms that will promote an open economy integrated 
with the regional and international community.  This 
commitment will immediately improve bilateral Iraqi relations 
with a number of countries, and lay the groundwork for 
normalizing its financial relationship with the rest of the 
world. 
 
 - In return, the international community has stated its firm 
commitment to support Iraq as it rebuilds and reforms its 
economy, through debt relief, technical assistance, and 
capacity building training. 
 
 - High-level participation in this event demonstrates the 
importance of Iraq for the entire world, and the commitment 
of their nations to provide serious, sustained support to the 
Government and citizens of Iraq. 
CROCKER