VZCZCXRO2039
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #4063/01 3481247
ZNR UUUUU ZZH
P 141247Z DEC 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 4845
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 004063 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID PREL IZ REL UK
SUBJECT: Weekly Update: Chalabi's Provision of Services Committee - 
December 11 Meeting 
 
¶1. SUMMARY: The December 11 Baghdad Services Committee meeting 
reviewed previous recommendations, briefly mentioned an oil report 
to be discussed more thoroughly at an upcoming meeting and reviewed 
GoI contracting procedures. It was attended by representatives from 
the Ministries of Defense, Trade, Transportation, Health, 
Electricity and Education as well as the Baghdad Operation Command 
(BOC), a representative from the National Security Advisor (NSA), 
the Chief of the Public Integrity Commission, the chairman of the 
Joint Planning Commission and the Major General of the Iraqi 
Reconciliation Committee. END SUMMARY. 
 
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Committee Reviews Previous Recommendations 
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¶2. The Health IG and the Minister of Trade debated the November 13 
suggestion to allow the Ministry of Health (MoH) to inspect all PDS 
food items before storage and/or distribution. The Ministry of Trade 
(MoTrade) was concerned that the MoH inspection process would 
further complicate an already broken system. Chalabi instructed the 
MoH and MoTrade to form a subcommittee to address this matter. Both 
ministries are to appoint representatives to this subcommittee by 
next week's meeting. 
 
¶3. The Minister of Trade requested that Abu Ghraib and Sawha 
councils approach the ministry directly regarding PDS concerns. 
(Note: Both qadas attended the November 27 meeting where they 
detailed their service needs. Among them were PDS issues. End Note) 
Chalabi acquiesced, but insisted that the Minister provide an 
appropriate point of contact for those councils. The Minister 
provided names to Chalabi's staff. 
 
¶4. The MoH again noted that the Ministry of Finance (MoF) was 
holding up needed funds to pay overtime to doctors and other medical 
staff who are on call and work in 24-hour clinics. Chalabi said he 
will send another letter to the MoF urging them to release the 
funds. The MoH also claimed that 24-hour clinics were now open in 
three Baghdad neighborhoods. 
 
¶5. Deputy Minister of Electricity complained that the Iraqi Army had 
not yet secured the electrical transformers in Baghdad, a November 
13 decision. The BOC previously agreed to do this, but also 
requested a list of MoE personnel authorized site access. (Note: It 
is not clear whether MoE held up this end of the bargain. End Note) 
Chalabi reminded the MoD and the BOC of their obligation to fulfill 
this request. 
 
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Preliminary Report: Privatizing Oil Distribution 
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¶6. Without the Ministry of Oil (MoO) present, Dr. Chalabi postponed 
the discussion on a report submitted by the MoO regarding oil 
distribution privatization. He shared the report to the committee 
members. (Note: We are translating the report. End Note) The report 
is to be discussed at the next meeting. 
 
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Minister of Trade Attends Meeting for the First Time 
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¶7. The Minister detailed the points of corruption in the PDS 
distribution process: goods are switched before reaching the 
ministries storage facilities, they are often switched at the 
ministries depots, and PDS agents are switching goods before 
distribution. The Minister also said that corruption plagues Um Qasr 
port, where drivers must pay a large "fee" to gangs controlling the 
ports simply to pick up the goods. He noted a shortage of trucks and 
fuel. 
 
¶8. The Chief of the Public Integrity Commission was present and 
discussed his organizations recommendations on PDS: cancel direct 
purchase; allow continuous contracting at market price; authorize 
the MoH to inspect and certify all food items; assign inspection 
teams to ensure quantity and quality; compensate local agents for 
missing items; and regularly inform the public about ration item 
shortages. The Minister responded with concerns about outstanding 
payments to retailers dating back to 2004 which has greatly limited 
their ability to import. 
 
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Contracting Woes 
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¶9. Dr. Chalabi initiated the conversation about contracting 
procedures in Iraq. He stressed the difficulties with letters of 
credit and Iraq's tax policy which he saw as a deterrent to foreign 
investment. The Deputy Minister of Electricity pointedly said that 
"the Integrity Commission was not doing its job." The IG of Health 
offered an alternative plan to reviewing contracts. He suggested 
that a joint committee be formed to conduct an initial review. If 
there were no concerns with the contract, then it should proceed 
 
BAGHDAD 00004063  002 OF 002 
 
 
without visibility by the Integrity Commission. However, if there 
were concerns, then it should be reviewed by the Commission. No 
decision was taken on this suggestion. The Ministry of 
Transportation complained that the laws and regulations regarding 
contracting were cumbersome and constantly changing. 
 
¶10. The Public Integrity Commission head described the challenges 
facing his office. He said that 80 to 90 percent of the calls they 
receive on their anti-corruption hotline are fraudulent, making it 
difficult to sift out the actual corruption cases. He noted that 
over 350 Iraqi government officials have been jailed and then 
released because of actions they had taken in procurement or 
contracting. During the Chalabi committee meeting he cited a 
Ministry of Electricity tender as an obvious example of real 
corruption because it required successful bidders to be 
knowledgeable regarding specific French-manufactured electrical 
equipment. The Deputy Minister of Electricity responded by saying 
that the contract was for the purpose of finishing installation of a 
project which had been started but left incomplete by an incompetent 
Syrian contractor. The French equipment was on site and needed to be 
installed by someone who understood it. 
 
¶11. Dr. Chalabi tasked the committee members to develop issue papers 
or fact sheets regarding the contracting process, particularly its 
impact on service delivery. He intends to submit a unified paper to 
the Econ Committee and finally to the I-ESC. 
 
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Ministry of Education Attends 
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¶12. The Deputy Minister of Education noted that the ministry, under 
the direction of 115 engineers, had built 454 schools in the last 
2.5 years. He compared this to the 515 schools which have been built 
by the Ministry of Construction and Housing, which employs 4,500 
engineers. He commented that the ministry did not have the staff or 
resources to be in the business of building schools and suggested 
that perhaps the Ministry of Construction and Housing was better 
suited. The NSA Secretariat noted that at a recent I-ESC, a decision 
was made to establish a committee to review which ministry should be 
responsible for school construction. 
 
¶13. At the conclusion of the meeting, the Health IG handed an 
emergency action plan to enhance school health services to the 
Minister of Education. (Note: On November 20, the MoH warned of 
further cholera outbreaks, particularly in Baghdad Schools because 
the MoEd was not allowing the MoH to test school drinking water. End 
Note) 
 
 
 
Butenis