VZCZCXRO8175
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #0351/01 0420824
ZNR UUUUU ZZH
P 110824Z FEB 09 ZFF4
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 1643
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BAGHDAD 000351 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR EINV ENRG EPET ETRD IS IZ PGOV PREL
SUBJECT: WAITING ON BAGHDAD; KRG SHARES ECONOMIC VISION AND 
EXPRESSES FRUSTRATION WITH THE NATIONAL GOVERNMENT DURING 
RECENT BUSINESS SUMMIT 
 
¶1. (SBU) Summary: Accompanying a U.S. Chamber of Commerce 
delegation during a February 3-4 visit to Erbil, EMIN met 
with Kurdistan Regional Government (KRG) officials to discuss 
private sector development in Iraq and underscore the 
importance of transparency and the rule of law.  KRG PM 
Nechervan Barzani expressed the KRG's desire to tap western 
expertise and assistance in developing the KRG economy, and 
outlined the KRG's focus on attracting foreign direct 
investment (FDI) and developing the KRG,s agriculture sector 
in the coming year.  Expressing frustration with the national 
government on the slow progress of national economic issues, 
KRG officials repeatedly mentioned that "Kurdistan is the 
gateway to Iraq" and that on national economic issues, the 
KRG was tired of "waiting on Baghdad."  U.S. businessmen 
highlighted the need for greater transparency and a 
functioning independent judiciary to address contract, trade 
and business concerns.  End Summary. 
 
All on Message 
-------------- 
 
¶2. (SBU) Accompanying a U.S. Chamber of Commerce delegation 
during a February 3-4 visit to Erbil, EMIN met with Kurdistan 
Regional Government (KRG) officials to discuss private sector 
development in Iraq and underscore the importance of 
transparency and the rule of law. 
 
¶3. (SBU) During the meetings, KRG PM Nechervan Barzani, 
Acting Deputy Minister of Finance Bayiz Talibani, Minister of 
Planning Osman Shwani, and Minister of Trade Muhammad Rauf 
all echoed the same messages: 
 
-- The KRG views its region as the "gateway to Iraq," and a 
stepping stone for international investment into Iraq as a 
whole.  In their view, the Kurdistan region is ahead of the 
rest of Iraq in creating an investor friendly climate. 
 
-- The KRG is "ready for help."  Officials clearly 
communicated their desire that the KRG benefit from Western 
business expertise. As an example, PM Barzani touted the 
KRG's recent initiative to hire Price Waterhouse Coopers to 
conduct an internal KRG study to improve and modernize its 
procurement, budgeting, and financial reporting practices. 
 
-- The KRG is tired of "waiting on Baghdad" to catch up with 
them on economic development initiatives. KRG officials, 
frustration with the progress of the GOI was palpable 
concerning issues such as perceived Baghdad intransigence on 
the hydrocarbons law, and lack of progress on investment 
regulations that promote foreign investment. 
 
-- The KRG will focus on developing its agricultural sector 
in 2009.  Highlighting its successes in public infrastructure 
over the past 3-5 years, Minister of Trade Muhammad Rauf 
announced that 2009 would now be the "Year of Agriculture." 
Citing public frustration with the perceived low cost and low 
quality of agriculture imports (largely from Iran and from 
China, via Iran), Rauf announced plans for a KRG hosted 
Agricultural Conference in early March that would highlight 
public and private efforts to invest in Iraqi agriculture and 
help 'brand' Iraqi quality products. 
 
Planning Priorities 
--------------------- 
 
¶4. (U) Minister of Planning (MOP) Osman Shwani and his staff 
provided a comprehensive overview of the KRG economic vision. 
 Shwani noted the KRG's improved relationship with Turkey, 
describing it as a "strategic partner" in its current 
economic growth. He also relayed his ministry,s priorities 
in making progress on land registry, increased cooperation 
between the national and provincial investment councils, and 
Qbetween the national and provincial investment councils, and 
continued development of the banking sector. Shawni further 
stressed the importance of IOs such as the 
World Bank and the IMF in helping build efficient and 
transparent financial structures, and noted that his two 
highest priorities within MOP were public administration 
reform and the promotion of investment in the KRG writ large. 
 
Private Sector Concerns 
----------------------- 
 
¶5. (SBU) In meetings with KRG officials, US Chamber 
delegation members (including Hunt Oil, Raytheon, Marshall 
Fund, BAE systems, and Vulcan Power), expressed support for 
the U.S.-Iraqi business relationship and thanked KRG 
officials for their continued support of a business-friendly 
investment climate.  As an honorary member of the delegation, 
KRG Representative to the U.S. Qubad Talabany (son of KRG 
President Jalal Talabani) echoed the Chamber,s concerns 
 
BAGHDAD 00000351  002 OF 002 
 
 
about the negative impact that slow U.S. visa processing was 
having on business and sought a change to the U.S. Travel 
Advisory to recognize KRG and other regions that were safer 
than the rest of the country. 
 
¶6. (SBU) In an RRT arranged meeting with American and 
international businesses in the region, revealed operational 
difficulties in the KR.  In addition to routine "facilitation 
fees," one investor described the practice of obliging 
businesses to allow KRG companies to take equity stakes in 
companies (usually affiliated with either the Barzani or 
Talabani clan), as a  more sophisticated, shakedown. 
Others mentioned the KRG,s inefficient bureaucracy that 
"never does something the same way twice," and general 
concern over the professionalism and independence of the KRG 
judiciary.  In short, while many private investors feel that 
the potential rewards to doing business in the KRG are great, 
the risks associated remained relatively high as well. 
 
¶7.  (U) Also of note, the local independent newspaper Hawlati 
conducted an exclusive interview with EMIN on 4 February and 
published the interview on 8 February.  In it, Hawlati 
accurately conveyed EMIN,s comments on the economic progress 
that the KRG has fostered and the importance of a diverse and 
transparent private sector. 
CROCKER