VZCZCXRO1388
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #0156/01 0211248
ZNR UUUUU ZZH
P 211248Z JAN 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 1316
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 03 BAGHDAD 000156 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/CIP/BA ALAN GIBBS 
 
E.O. 12958: N/A 
TAGS: ECON ECPS EINT KGIT KWIR TINT TSPL
SUBJECT: GOI ANTIBODIES ATTACKING INDEPENDENT IRAQI TELECOM 
AUTHORITY 
 
REF: A. 07 BAGHDAD 2820 
     ¶B. 08 BAGHDAD 3633 
 
------- 
Summary 
------- 
 
¶1.  (SBU) Five members of the Communications Media Commission 
(CMC) caretaker authority met with EMIN on January 13 to 
discuss the beleaguered commission's challenges and search 
for ways to help the CMC navigate Iraq's treacherous 
political waters.  Provisionally established by CPA Law 65 to 
manage Iraq's frequency spectrum and license and regulate the 
telecommunications sector, the CMC has not yet been 
successful in assuming its responsibilities within the Iraqi 
political or economic system.  Three rival laws formally 
establishing the CMC, the Ministry of Communications (MOC), 
and the overall telecommunications sector structure have been 
slowly percolating through the Shura Council and Parliament 
since 2004.  Harmonizing these three laws has thus far proven 
to be a task beyond the GOI's capability.  The MOC continues 
to battle to assume the CMC's regulatory and licensing 
authority, both to control the revenues and to prevent what 
they perceive as nongovernment control over sovereign issues. 
 There are new indications the Prime Minister is leaning 
towards the MOC view.  With few political allies and process 
momentum running against them, the CMC's future is uncertain 
at best. 
 
 
----------------------------------------- 
CMC Limping Through a Political Minefield 
----------------------------------------- 
 
¶2.  (U) Five members of the CMC caretaker authority met with 
EMIN and Embassy and MNF-I telecom officers on January 13 to 
discuss the beleaguered commission's challenges and search 
for ways to help the CMC navigate Iraq's treacherous 
political waters.  The Prime Minister has never appointed the 
nine commissioners called for under Coalition Provisional 
Authority (CPA) Law 65, which established the CMC in 2004. 
Thus, though endowed with independent authority to manage 
Iraq's frequency spectrum and license and regulate the 
telecommunications sector, the CMC has not yet been 
successful in assuming its responsibilities within the Iraqi 
political or economic system.  The CMC has limped along for 
years with only a Chairman to direct the independent 
regulator's actions and fend off political rivals looking to 
assume the CMC's lucrative regulatory authority.  (Comment: 
For some sense of the lucrative nature of the CMC's licensing 
authority, Iraq's August 2007 auction of mobile 
telecommunications operator licenses fetched USD 3.75 billion 
up front, plus 18.5 percent of monthly gross revenues and 15 
percent of net profits (reftel A). End comment.)  Since the 
CMC Chairman, Dr. Sayemand Othman, resigned in April 2008 
after completing his 4-year appointment, the CMC has been 
rudderless and lost most of its already limited political 
standing.  The CMC caretakers say political opponents, 
primarily in the Ministry of Communications, have taken 
advantage of the opening to try and complete the demise of 
the CMC. 
 
------------------- 
The CMC-MOC Rivalry 
------------------- 
 
¶3.  (U) Three rival laws establishing the CMC, MOC, and 
overall telecommunications sector structure have been slowly 
percolating through the Shura Council and Parliament since 
¶2004.  Harmonizing these three laws has thus far proven to be 
a task beyond the GOI's capability.  CPA Law 65 directed the 
CMC to draft an all-encompassing Telecommunications Law which 
would define the overall sector parameters, including the 
broad strokes of the MOC's responsibilities.  The MOC's draft 
law, in contrast, drafted by the MOC to constitute the 
communications ministry's specific structure and 
Qcommunications ministry's specific structure and 
responsibilities, calls for the MOC to assume several key CMC 
responsibilities, including spectrum management and service 
provider licensing.  The MOC is itself a major service 
provider through its two state-owned internet and telephone 
companies, a role plainly incompatible with the licensing and 
regulatory authority they seek. 
 
¶4.  (U) According to CMC caretaker authority, in an attempt 
to force compromise between the CMC and MOC, the Prime 
Minister's Office (PMO) appointed a committee in 2007, headed 
by the Chief of the Shura Council with members from the PMO, 
MOC, Council of Ministers (CoM), and several other GOI 
agencies.  This committee has twice reported to the PMO 
 
BAGHDAD 00000156  002 OF 003 
 
 
General Secretary that they are unable to find a compromise 
position to harmonize the three laws.  CMC Deputy for Legal 
Issues Omar Ghassan told CETI that the PMO issued a decision 
on January 11 to support the MOC law and return it to the 
Parliament for discussion and vote.  "This could be the end 
for the CMC," he lamented. (Comment:  Embassy independently 
confirmed that in a January 11 press release, the Council of 
Ministers declared their support for most provisions of the 
MOC's version of the law. End comment.) 
 
--------------------------------------------- ----- 
GOI Institutional Fear of an Independent Regulator 
--------------------------------------------- ----- 
 
¶5.  (SBU) Several remarks from members of the CMC caretaker 
committee demonstrated a limited understanding of the concept 
of an independent regulator within the GOI and among CMC 
staff.  Mazin Hashim, CMC Deputy for Administrative Affairs, 
claimed the MOC argued to the PMO and CoM that "the 
government must maintain control of licensing and regulatory 
authority and since the CMC is not part of the government, 
this responsibility should reside with the MOC."  EconOff 
questioned Hashim later whether a CMC Commissioner would be 
considered a government employee:  "No, of course not.  This 
is an independent commission," he responded.  (Comment:  With 
employees of the CMC under the impression they are not 
government employees, it is somewhat more understandable how 
the MOC might convince the PMO and CoM that the GOI could be 
losing sovereign control of their spectrum and licensing 
authority if they give such responsibilities to an 
independent regulator. End comment.)  It is not just spectrum 
control and licensing authority at stake, but also the 
billions of dollars in licensing and services revenue the MOC 
stand to gain control of.  Previously, the MOC told us that 
they far prefer to have these revenues channeled through the 
MOC to the Ministry of Finance (MOF) rather than straight 
from the CMC to the MOF (reftel B). 
 
------------------------------- 
Comment:  Can the CMC be Saved? 
------------------------------- 
 
¶6.  (SBU) With few political allies and process momentum 
running against it, the CMC's future is uncertain at best. 
Lacking commissioners and a Director General, CMC budgeting 
decisions are presently being handled through the MOF.  The 
CMC caretaker authority lacks the authority to hire new 
employees, so as the rank-and-file workers leak away to more 
optimistic employment opportunities, the CMC's fortunes 
spiral downward.  Efforts by the World Bank to influence the 
GOI to establish a strong independent telecommunications 
regulator have waned under the new Minister of 
Communications.  Some members of the Council of 
Representatives, including the Chair of the Services 
Committee, Abdullah Saleh, do appreciate the importance of 
the role of an independent regulator, and may be able to 
check, if only temporarily, the MOC's drive to undermine the 
CMC.  EMIN will meet with Abdullah Saleh and the Minister of 
Communications in the coming weeks to again emphasize U.S. 
support for the independent regulatory authority of the CMC. 
Section VII of the bilateral Strategic Framework Agreement 
(SFA) that came into force this month explicitly calls for 
bilateral cooperation to strengthen the independent 
telecommunications regulator, so the Mission will continue to 
press this issue within the appropriate SFA Joint 
Coordination Committee.  However, with such institutional 
misunderstanding of the CMC's role and no GOI precedent for 
Qmisunderstanding of the CMC's role and no GOI precedent for 
an independent regulator, Iraq may have to learn the hard way 
the importance of having an independent regulator to balance 
the MOC's power as a state-owned service provider. 
 
¶7.  (U) Participant list: 
 
Iraq: 
- Mazin Hashim Al-Haboubi -- CMC Deputy for Administrative 
Affairs 
- Omar Ghassan -- CMC Deputy for Legal Issues 
- Firas Sami - CMC Deputy for Finance 
- Mohammed Al-Gharbawi - CMC Frequency Management Director 
- Ahmed Al-Hameed -- CMC Frequency Management Deputy Director 
 
United States Embassy: 
- Ambassador Marc Wall -- Coordinator for Economic Transition 
in Iraq (CETI) 
- Michael Dodman -- Economic Counselor 
- Julie Chung -- CETI Senior Advisor 
- Michael Uyehara -- Economic Section Infrastructure Team 
Chief 
- Roy Therrien -- ESTH and Telecom Policy Officer 
 
BAGHDAD 00000156  003 OF 003 
 
 
- Shwan Halkurd - Senior Telecommunications Advisor 
- MAJ Jared Voneida -- MNFI CJ6 
- Laurie Driver -- MNFI CJ6 
CROCKER