VZCZCXRO7527
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK RUEHROV
DE RUEHC #3799/01 1152346
ZNR UUUUU ZZH
R 242339Z APR 08
FM SECSTATE WASHDC
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RUCNDT/USMISSION USUN NEW YORK 1499
RUEHBS/USEU BRUSSELS
INFO IRAQ COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 08 STATE 043799 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID ECON EFIN EINV PGOV PREL IZ
SUBJECT: DEMARCHE: PARTICIPATION IN INT'L COMPACT WITH 
IRAQ MINISTERIAL 
 
REF: A. 08 STOCKHOLM 278 
     ¶B. 08 KUWAIT 435 
     ¶C. 08 USEU BRUSSELS 583 
     ¶D. 07 STATE 47346 
 
¶1.  (SBU) This is an action request.  Please see paragraph 
five. 
 
------- 
SUMMARY 
------- 
¶2.  (U) The first anniversary International Compact with Iraq 
(ICI) Ministerial will be held in Stockholm, Sweden on May 
29, 2008.  The meeting will be hosted by the Government of 
Sweden and co-chaired by Iraqi Prime Minister Nouri Al-Maliki 
and UN Secretary General Ban Ki-Moon. 
 
¶3.  (U) As noted in the ICI invitation, since its launch in 
Sharm El-Sheikh, Egypt, on May 3, 2007, "the International 
Compact with Iraq (ICI) has been a key vehicle for developing 
 
STATE 00043799  002 OF 008 
 
 
a mutually reinforcing dynamic of national consensus and 
international support for Iraq.  The ICI has emerged as the 
main framework for cooperation between Iraq and international 
donors in the major spheres of...governance, reconstruction, 
economic and social recovery and human rights. The Conference 
in Stockholm will provide an opportunity for the participants 
to review the progress made in achieving the objectives of 
the ICI and discuss further steps toward fulfilling its 
objectives.  The Iraq Compact Annual Report is currently 
being finalized."  All invited countries and organizations 
are to receive a copy of the report prior to the Conference. 
 
¶4. (U) The United States Government,s goals for the ICI 
Ministerial are to: 
 
- Solidify and expand international support for the 
Government of Iraq (GoI); 
 
- Consolidate and extend gains made during the first year of 
the ICI, e.g., for budget execution, hydrocarbons sector 
reform, agricultural development, state bank and financial 
sector restructuring and anti-corruption. 
 
- Clarify how the international community will support Iraq's 
reform goals including through meeting prior pledges of 
 
STATE 00043799  003 OF 008 
 
 
financial and technical assistance and debt relief and 
through new offers of assistance and cooperation. 
 
------------------- 
DEMARCHE OBJECTIVES 
------------------- 
¶5.  (SBU) In an effort to lay the groundwork for the ICI 
Ministerial, Department requests action addressees to pursue 
the following objectives with host governments and 
participating international organizations, particularly the 
Arab Monetary Fund, Islamic Development Bank, Arab Fund for 
Economic and Social Development and OECD-MENA. 
 
- Urge all countries and institutions to be represented at 
the ministerial level, particularly members of the ICI 
Preparatory Group (see list in paragraph 8). 
 
- Encourage those attendees that have already pledged 
assistance to come prepared to update the group on progress 
made towards delivering on pledges (see list in paragraph 8). 
 
- Recommend that host government consider announcing 
intentions to work with the ICI Secretariat to identify 
specific technical assistance needs as related to the areas 
covered in the Compact (e.g., for ministerial or provincial 
 
STATE 00043799  004 OF 008 
 
 
capacity development, education, health care, rule of law, 
good governance or human rights). 
 
- Encourage participants to consider showing their support 
for Iraq through multilateral assistance, such as 
contributing for projects such as technical assistance to 
either or both of the UN Development Group or World Bank 
Iraqi Trust Funds, which together comprise the International 
Reconstruction Fund Facility for Iraq (IRFFI). 
 
- Urge creditor countries that have not yet reached bilateral 
debt reduction agreements on Paris Club-comparable terms to 
do so before the end of 2008, so they can start to receive 
payments on schedule in 2009 or before. (See paragraph 9 for 
more details.) 
 
- Suggest to countries that may have little to give by way of 
financial and technical assistance or debt relief that they 
consider contributing with gestures that demonstrate desires 
to establish good and growing relations, including assistance 
for Iraqi refugees, student or teacher exchanges, sister city 
or brother university programs, or offers of medical 
treatment for children and others with special needs for 
common as well as war-related afflictions. 
 
 
STATE 00043799  005 OF 008 
 
 
- Urge Iraq,s neighbors and friends to strengthen their ties 
through the reopening of embassies and consulates and the 
appointment of ambassadors. 
 
------------------ 
REPORTING DEADLINE 
------------------ 
¶6. (U) Posts are asked to report on their progress with this 
demarche by cable to NEA/I no later than Monday, May 12. 
 
---------- 
BACKGROUND 
---------- 
¶7. (U) The ICI Conference is part of a series of very high 
level conferences intended to provide Iraq with the 
international coordination and support it needs in order to 
address its most pressing internal and external issues.  The 
Secretary of State will lead the U.S. delegation.  The full 
 
SIPDIS 
list of those accompanying the Secretary will be provided to 
Embassy Stockholm and the conference organizers separately 
when it becomes available. 
 
---------------------- 
COUNTRY REPRESENTATION 
---------------------- 
 
STATE 00043799  006 OF 008 
 
 
¶8. (U) At the May 2007 launching of the ICI the following 
countries and organizations were represented by ministers or 
equivalent: Armenia, Bahrain, Bulgaria, China, Denmark, 
Egypt, Estonia, Germany, Greece, Italy, Kuwait, Korea (ROK), 
Lithuania, Macedonia, Oman, Poland, Qatar, Romania, Saudi 
Arabia, Sweden, Turkey, United Arab Emirates (UAE), United 
Kingdom, European Union, Islamic Development Bank, League of 
Arab States, and Organization of the Islamic Conference. 
 
-- The members of the Preparatory Group for the ICI were 
Iraq, United Nations, World Bank, International Monetary 
Fund, Arab Fund for Social and Economic Development, Islamic 
Development Bank, European Union/Commission, Japan, South 
Korea, United States, Canada (as former IRFFI Chair), United 
Kingdom, Germany, France, Italy, Spain, Saudi Arabia, Kuwait 
and the United Arab Emirates. 
 
-- The following countries pledged financial or technical 
assistance at Sharm el-Sheikh:  Australia (over $20 million), 
China ($6.5 million in new assistance, plus debt reduction on 
Paris Club terms), Denmark ($35 million), Korea 
($200 million), Spain ($20 million), and the UK 
($400 million). 
 
-- The following countries have substantial amounts of 
 
STATE 00043799  007 OF 008 
 
 
unsettled outstanding Iraqi debt:  Brazil(est. $427 million), 
China (est. $6-$9 billion), Egypt (est. $800 million to 
$1.3 billion), Greece (est. $231 million), Jordan (est. 
$2 billion), Kuwait (est. $8 billion), Morocco (est. 
$11 million), Pakistan (est. $83 million), Poland (est. 
$786 million), Qatar (est. $5 billion) , Saudi Arabia (est. 
$16-$39 billion), Turkey (est. $2 billion) and the UAE (est. 
$4 billion). 
 
--------------------- 
New Debt Arrangements 
--------------------- 
¶9.  (U) Iraq has been a responsible debtor country and has 
made good faith efforts to reach debt agreements with its 
creditors.  For the creditor countries that have not yet 
reached debt reduction agreements, however, by the end of 
2008 Iraq intends to set up a suspense account, setting aside 
funds for future debt payments for agreements negotiated 
after 2008.  These payments will be calculated on Paris Club 
terms and will be available for disbursement after bilateral 
agreements are concluded.  Countries that have signed 
agreements will start receiving interest payments in 2009 and 
principal payments in 2011.  Thus, it is in the interest of 
the outstanding creditor countries to conclude bilateral debt 
reduction agreements with Iraq before end-2008.  Some 
 
STATE 00043799  008 OF 008 
 
 
countries might be able to receive lump-sum cash payments at 
10.25 cents on the dollar rather than payments over time, and 
these payments could be made in 2008. 
 
----------------- 
POINT OF CONTACT 
----------------- 
¶10. (U) Questions or concerns about this demarche or the 
Conference should be directed to Kevin Taecker, NEA/I/ECON, 
 1-202-647-6314, TAECKERKR2-AT-STATE.SGOV.GOV or 
TAECKERKR2-AT-STATE.GOV. 
RICE