VZCZCXYZ0011
RR RUEHWEB

DE RUEHGB #1944/01 1631734
ZNY CCCCC ZZH
R 121734Z JUN 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 1660
INFO RUEATRS/DEPT OF TREASURY WASHDC

C O N F I D E N T I A L BAGHDAD 001944 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 06/11/2017 
TAGS: ETRD EINV KBCT IZ
SUBJECT: ARAB LEAGUE BOYCOTT STATUS UPDATE 
 
REF: A. STATE 56167 
     ¶B. BAGHDAD 1308 
 
Classified By: Ambassador Speckhard for reasons 1.5 (b) and (d). 
 
¶1.  (C) Summary:  Post continues to engage the Government of 
Iraq (GOI) on the need to end all enforcement of the Arab 
League Boycott, urging officials at all levels to end this 
unfair trade practice.  Deputy Prime Minister for Economic 
Affairs Barham Salih told the Ambassador on June 8 that he 
was committed to closing the Arab League Boycott office at 
the Ministry of Foreign Affairs and to ending enforcement of 
the Arab Leage Boycott (ALB) by the Trademark Office at the 
Ministry of Industry and Minerals.  The GOI's successful 
progress at the first World Trade Organization Working Party 
meeting in Geneva is further evidence that Iraq is moving 
towards a more open and transparent system.  Post also notes 
the report by the U.S. Department of Commerce that just four 
U.S. companies complained of Government of Iraq enforcement 
of the Arab League Boycott in the first quarter of 2007, a 
significant decrease from previous quarters.  Iraq's progress 
is moving in the right direction, but, given the continuing 
complaints and the need for further institutional 
restructuring, post recommends that Iraq remain 'under 
review' in the next Treasury Department listing.  End summary. 
 
-------------------------- 
Need for Structural Change 
-------------------------- 
 
¶2.  (C) Deputy Prime Minister Barham Salih agreed with the 
Ambassador during a June 8 meeting that the Arab League 
Boycott Office at the Ministry of Foreign Affairs (MOFA) must 
be closed and the demands of the Trademark Office at the 
Ministry of Industry and Minerals (MIM) must end.  Noting the 
sensitivity of some of the conservative ministers in the 
Council of Ministers (CoM), DPM Salih believes it will be 
more effective to make changes in key ministries, 
particularly MOFA and MIM, rather than try to push anything 
through the CoM.  DPM Salih, a Kurd, is optimistic that these 
ministers, also Kurds, will be amenable to this idea.  He 
said that his chief of staff, Ahmed Salman, would be 
responsible for this effort forward. 
 
¶3.  (C) Post has met regularly with Ahmed Salman over the 
past few months and emphasized the need to end all 
enforcement of the Arab League Boycott.  Salman reported that 
he heard a similar message during his meetings in Washington, 
DC.  Post has given Salman a Department of Commerce list of 
the complaints from 2006, noting that most reports involved 
the Ministry of Health procurement arm Kamadia, the Trademark 
Office at MIM, and the South Oil Company.  He agreed to 
follow up with the Iraqi organizations directly.  Salman 
understands the importance of the issue, and promised that 
the DPM's office will continue to work on resolving it. 
 
--------------------------------- 
Changes at the Ministry of Health 
--------------------------------- 
 
¶4.  (C) The Ministry of Health's procurement arm, Kamadia, 
was responsible for most of the Arab League Boycott 
complaints in the past.  As noted in ref B, there have been 
several changes at the Ministry of Health, including the 
arrest of the Deputy Minister.  The new minister has yet to 
be confirmed by the Council of Representatives, and ministry 
officials continue to look for ways to reform the procurement 
system.  A USG-funded program to modernize and reform the 
procurement system at the Ministry of Health is in the 
development stage.  These changes at the Ministry of Health 
may be a factor explaining the decrease in ALB enforcement 
complaints. 
 
--------------------------------------------- ------------ 
Trademark Office at the Ministry of Minerals and Industry 
--------------------------------------------- ------------ 
 
¶5.  (C) Another regular enforcer of the ALB appears to be the 
Trademark Office at the Ministry of Industry and Minerals. 
In early May, post and Washington officials raised the issue 
directly with Minister of Industry and Minerals Fawzi 
al-Hariri and Deputy Minister Sami Majoon, focusing on the 
difficulty PepsiCo has had in completing its registration in 
Iraq.  Minister al-Hariri stated his full support of ending 
ALB participation during this meeting.  Post is following up 
with the Minister to ensure that instructions are given to 
the Trademark Office, which has yet to occur.  As noted 
above, DPM Salih is now engaged with the problem, and may 
suggest a restructuring of the Trademark office rather than 
just giving them new instructions.  Post will continue to 
follow up directly with officials from both the DPM's and the 
MIM's staff. 
----------------- 
South Oil Company 
----------------- 
 
¶6.  (C) U.S. companies must be encouraged and able to 
participate freely and fairly in the competition for oil 
contracts in Iraq, as noted in ref A.  Our contacts here 
indicate that the Basrah Oil Refinery was the source of two 
complaints, rather than the South Oil Company as a whole. 
When confronted with these complaints, officials said that 
the contracts were old and no longer up for tender.  We will 
urge the Director General for the South Oil Company to 
resolve any further complaints should they occur. 
 
---------- 
Conclusion 
---------- 
 
¶7.  (C) The GOI has made significant commitments to ending 
enforcement of the Arab League Boycott, particularly at the 
level of the Deputy Prime Minister and senior officials at 
the ministries.  Post will continue to engage with the 
relevant ministries and work with DPM Barham Salih and his 
staff to ensure that GOI offices do not enforce the ALB.  The 
DPM and the Minister of Industry and Minerals welcome 
foreign, and particularly U.S., investment in Iraq and wish 
to ensure that roadblocks are removed.  Post appreciates 
Washington's efforts to raise this issue with Iraqi officials 
during their visits to the U.S., which have underscored the 
importance of ending participation in the ALB.  While the GOI 
has made solid commitments and initial progress in solving 
the problem, ALB enforcement structures remain.  Post 
therefore recommends that Iraq continue to be designated a 
country 'under review'. 
CROCKER