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UNCLAS SECTION 01 OF 05 STATE 060123 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID IR IZ PGOV PREF PREL SW EUN
SUBJECT: ICI ANNUAL REVIEW CONFERENCE - STOCKHOLM, MAY 29, 
2008 
 
REF: STATE 43799 
 
¶1. (U) Posts may draw upon this report as needed in their 
discussions with host governments about Iraq. 
 
¶2. (U) Summary:  In a meeting that most participants and 
commentators agreed helped to improve international 
perceptions of Iraq, eighty-four countries and twelve 
international organizations met in Stockholm on May 29, 2008 
to mark the first anniversary of the International Compact 
with Iraq (ICI), complete the first annual Ministerial 
Review, and chart the way ahead.  Nearly all delegations 
acknowledged that Iraq has made real progress over the year 
with all three of the ICI "pillars" of security, political 
reconciliation / democracy building and economic development. 
 Yet nearly all noted much work remains to be done.  All 
agreed that continued success depends on Iraq marshaling its 
own substantial financial, human and physical resources. 
Participants noted that Iraq's international partners will 
need to contribute technical assistance for institutional 
capacity building, measures to reduce barriers (e.g., 
avoiding restrictive visa policies), and greater engagement 
to promote economic and political re-integration, regional 
cooperation and greater trade and investment. 
 
¶3. (U) Summary continued:  Iraq and its major partners 
pressed remaining creditors to reduce Saddam-era debts on 
Paris Club terms.  Iraq also pressed for canceling its 
remaining compensation and reparations obligations, and 
called for continuing the immunities that protect its 
financial assets from legal attachment.  The UN, Sweden, 
Jordan and France mentioned the need for more humanitarian 
assistance for refugees and displaced persons.  Iraqi 
officials pointed to programs within Iraq for helping 
displaced persons and to USD 40 million given for refugees in 
neighboring countries.  The conference concluded with the 
adoption of the "ICI Stockholm Declaration" that elaborates a 
set of principles for development cooperation that center on 
Iraqi ownership of the process, points to possible future 
co-financings, records agreement to hold the ICI ministerial 
reviews annually for the remaining life of the Compact 
(through 2012), and extends an invitation from the Government 
of Iraq to host next year's ICI ministerial in Baghdad.  End 
summary. 
 
¶4. (U) With unsurpassed hospitality and efficiency Sweden 
hosted the First Annual Review at the ministerial level of 
the International Compact with Iraq (ICI) on May 29, 2008. 
Welcoming remarks were delivered by Swedish Prime Minister 
Fredrik Reinfeldt, Iraqi Prime Minister Maliki and UN 
Secretary General Ban Ki-Moon.  The results of the First 
 
STATE 00060123  002 OF 005 
 
 
Annual ICI Review Report were presented by Deputy Prime 
Minister Barham Salih.  All pointed to the real progress made 
since the launching of the ICI on May 3, 2007, in the three 
key areas ("pillars") of security, political reconciliation, 
and economic reconstruction and development.  DPM Salih said, 
"it pains Iraqis" that the progress Iraq has made is not 
adequately understood or appreciated abroad, and not 
reflected in foreign media reporting on Iraq. 
 
¶5. (U) All noted the improvements in the capabilities of 
Iraq's security forces and the important contributions that 
the Iraqi people are making to their own security.  They 
underlined the progress toward political reconciliation as 
reflected in the strong stand the Maliki government has taken 
against sectarian extremism and illegal armed groups, and for 
key legislation such as the laws for the Independent 
Electoral Commission, Justice and Accountability, Amnesty, 
Provincial Powers, and Pensions.  All favorably noted Iraq's 
accession to the UN Convention against Corruption and steps 
to establish a National Institute for Human Rights and a 
strong and independent judiciary.  Both Maliki and Salih 
noted the progress being made at the provincial level and 
said that the provincial development strategies would be 
taken fully into account. 
 
¶6. (U) In a marked improvement in tone from a year ago, many 
delegates remarked on the notable progress that Iraq has made 
on both the political and economic fronts and the 
significance of re-integrating Iraq within its region and the 
rest of the world.  UK Foreign Minister Miliband remarked 
pointedly on the favorable change in tone, and Finland's 
Foreign Minister Stubb noted that Iraq soon will be on the 
border of Europe (referring to Turkey's bid to join the EU). 
 
¶7. (U) Cited often were the indicators that describe the 
economic progress that Iraq has made since last year, 
including the reductions in inflation and unemployment, and 
gains in budget allocations and execution, oil exports and 
GDP growth. 
 
¶8. (U) The European Commission (EC) and the individual 
European states were of one voice in expressing their support 
for Iraq and their intention to increase engagement.  The 
European Union has budget Euros 90 million (about USD 135 
million at current exchange rates) for technical and 
humanitarian assistance in 2008.  This is in addition to the 
Euros 829 million (about USD 1.1 billion at then prevailing 
rates) disbursed from 2003 through 2007.  EC representative 
Hugues Mingarelli added a strong exhortation to Iraq to 
strengthen its structures for implementing ICI measures. 
France pledged to uphold this engagement when it takes over 
the EU Presidency in June.  The UK, Denmark, Spain and 
Germany said their bilateral assistance programs would 
continue.  Greece pledged to "soon" overcome hurdles and 
honor its commitment made at the ICI's launch a year ago to 
reduce Iraq's debt. 
 
STATE 00060123  003 OF 005 
 
 
 
¶9. (U) Japan reviewed its substantial development assistance 
contributions including its grants and soft loans, and noted 
that it has hosted two conferences for top Iraqis to promote 
the process of political reconciliation.  Korea reaffirmed 
its ICI launch pledge of USD 200 million in assistance and 
soft loans and intentions to remain deeply engaged in Iraq 
through its PRT in Erbil. 
 
¶10. (U) China made a new assistance pledge of about USD 7.2 
million on top of the USD 17.3 million it has already 
delivered.  It said that it has already canceled Iraq's 
sovereign debt (about USD 6 million), and will work with Iraq 
to settle the amounts owed to China's state-owned enterprises 
(perhaps USD 8 billion). 
 
¶11. (U) Also making new pledges were Hungary (USD 100,000 for 
scholarships), and Australia -- which more than doubled its 
assistance program with a new pledge of AUSD 150 million, 
including funding for 100 scholarships and a program for 
Iraqi agricultural development. 
 
¶12. (U) Russia pointed to its agreement to reduce Iraq's debt 
by about USD 12 billion and its new bilateral agreement with 
Iraq for trade, investment, education and technical 
cooperation. 
 
¶13. (U) The new Foreign Minister of Georgia, Ms. Eka 
Tkeshelashvili, delivered a strong message of political 
support and complimented Iraq on the improvements in 
security. 
 
¶14. (U) While railing against "the occupier," Iranian Foreign 
Minister Mottaki acknowledged the progress Iraq is making and 
described the elements of Iran's bilateral cooperation for 
tourism, reconnecting railroads, adding nine electricity 
transmission lines and improving health care.  Perhaps the 
biggest project will be for dual pipelines to take crude oil 
from Iraq to the Abadan refinery in Iran, and then to return 
refined products (e.g., kerosene).  Mottaki reconfirmed 
Iran's offer of USD 1 billion in soft loans and intentions to 
provide USD 10 million to the International Reconstruction 
Fund Facility for Iraq (IRFFI).  He said Iran will help 
"rebuild" the holy sites in Najaf and Karbala.  Border 
officials from Iran and Iraq have agreed to meet to discuss 
issues of common concern.  Mottaki pointed to the good that 
is coming from the Iraq Neighbors Process, and wants 
particularly for the Neighbors working groups to continue. 
 
¶15. (SBU) In reference to the pledge Saudi Arabia made when 
the ICI was launched a year ago to reduce Iraq's Saddam-era 
debt on Paris Club terms, Saudi State Secretary Mr. Madani 
bin Obeid said the Saudis had sent an "offer letter" to Iraq. 
 However, in a meeting on the margins of the conference 
Iraq's Finance Minister Bayan Jabr said that no "offer 
letter" had been received. 
 
STATE 00060123  004 OF 005 
 
 
 
¶16. (U) Several international organizations presented their 
ongoing and planned assistance efforts for Iraq.  The OECD is 
actively engaged in helping Iraq to develop its National 
Investment Commission.  The Islamic Development Bank 
reaffirmed its pledge to provide up to USD 500 million in 
financing assistance, reported progress working with Iraqis 
in the agricultural sector, and appealed to Iraq to establish 
more flexible mechanisms for coordinating and approving donor 
assistance.  The Arab Monetary Fund is making progress to 
reschedule Iraq's Saddam-era debt as a final step toward 
restoring Iraq to full membership.  The AMF will offer its 
training programs to Iraq on a priority basis.  The IMF 
reaffirmed its supportive relationship with Iraq noting that 
Iraq is on track to obtain the third segment of Paris Club 
debt relief at the end of 2008.  On the World Bank was vague 
regarding its future plans for working with and supporting 
the Iraqi government, perhaps reflecting that decisions are 
needed about staffing in Baghdad. 
 
¶17. (U) There was noteworthy progress for greater diplomatic 
engagement.  Brazil will open an embassy in Baghdad before 
year-end. Turkey is opening a consulate general in Basra and 
joining with the UK and Iraq to open a free trade zone on the 
Kuwaiti border.  Germany announced it will open a consulate 
in Erbil. 
 
¶18. (U) The levels of representation at the event were 
generally good.  At least thirty delegations were headed by 
ministers, heads of organization, or their senior deputies. 
Among Iraq's immediate neighbors, Iran, Turkey and Jordan 
were represented by their foreign ministers.  Iraq's Gulf 
neighbors, however, were represented at relatively low 
levels.  None sent their foreign ministers; only one (Saudi 
Arabia) sent a minister of state; the rest were represented 
by division chiefs. 
 
¶19. (U) In the spirit of openness and transparency, the ICI 
documents and reports, and information about the Stockholm 
ICI event can be found on-line at: www.IraqCompact.org, 
www.UNIraq.org/ici.asp, and www.Sweden.gov.se/sb/d/7010. 
 
¶20. (SBU) Comment: The ICI First Annual Review Report was 
aptly subtitled, "A New Beginning."  This theme -- that Iraq 
is succeeding in achieving a genuine new beginning -- 
resonated through all of the speeches.  Maliki and Salih 
emphasized that Iraq needs partnerships -- not financial aid. 
 But as noted by UK Foreign Minister Miliband and others, 
Iraq must keep up its end of the ICI bargain to follow 
through with key reforms.  For their part, Iraq's ICI 
partners must continue their support in the form of technical 
assistance for capacity development and, increasingly, for 
private sector trade and investment.  Success will reflect 
that the leading edge for international engagement will have 
progressively less to do with a sense of obligation, and more 
to do with developing mutual opportunities.  As DPM Salih 
 
STATE 00060123  005 OF 005 
 
 
noted, "Iraq's resources can help to alleviate needs the 
world over."  To be credible, between now and the next ICI 
ministerial, Iraq must meet the challenges of passing the 
Hydrocarbons Laws and other key legislation while improving 
the effectiveness of ICI implementation.  Iraq needs to do a 
better job at inter-ministerial coordination and become more 
adept and flexible at coordinating relations with its ICI 
partners.  End comment. 
RICE