VZCZCXRO3977
RR RUEHBC RUEHDA RUEHDE RUEHKUK
DE RUEHIHL #0022/01 0681308
ZNR UUUUU ZZH
R 091308Z MAR 09
FM REO HILLAH
TO RUEHC/SECSTATE WASHDC 1157
INFO RUCNRAQ/IRAQ COLLECTIVE
RUEHIHL/REO HILLAH 1230

UNCLAS SECTION 01 OF 02 HILLAH 000022 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV IZ
SUBJECT: BABIL BUSINESS CONFERENCE: AN OPPORTUNITY FOR "NEW 
CONVERSATIONS" 
 
HILLAH 00000022  001.2 OF 002 
 
 
¶1. (U)  Summary:  Babil PRT held a Business Environment 
Conference February 26 to develop an Iraqi-led process to help 
guide and inform the work of both the PRT and those entities 
involved in the province's business environment.  It was the 
largest conference ever held at the PRT and included over 50 
guests, ranging from provincial council members to the heads of 
local business associations to academia.  Participants 
identified the key obstacles to business development as access 
to credit, weak infrastructure, lack of protective tariffs, lack 
of economic data, poor quality control, and corruption.  The PRT 
will help organize a follow-up conference at which key Iraqi 
stakeholders will develop an action program to implement 
solutions to common obstacles.  End Summary. 
 
 
 
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Iraqis Identify Business Obstacles 
 
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¶2.  (U)  Babil PRT held a Business Environment Conference 
February 26 to help Iraqi stakeholders identify obstacles to 
progress in the business environment.  The conference brought 
together over 50 Iraqi business environment stakeholders, 
including ten business associations, economic NGOs, public and 
private sector banks, provincial investment commission members, 
university professors, leading private businessmen, and 
Provincial Council (current and future) members engaged in 
economic issues.  The PRT hosted the conference and facilitated 
discussions (all held in Arabic).   The ultimate goal of the 
conference was to create a process that will lead to a 
public-private partnership identifying and implementing 
solutions to obstacles through an Iraqi-driven action program. 
 
 
 
¶3.  (U)  The morning started with organizations introducing 
themselves and describing the work they did related to the 
business environment.  Two three-person panel discussions 
followed: one on access to various types of credit and one on 
how the government and private sector can collaborate to create 
jobs.  After lunch the participants broke into four pre-selected 
working group -- to ensure good cross-sector representation in 
each group -- to identify and rank the key obstacles facing the 
Babil business community.  Trained LES facilitators lead 
discussions aimed at identifying these key obstacles. 
 
 
 
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Still Looking for Government Solutions 
 
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¶4.  (SBU)  The discussions made it clear that many business 
leaders still look to the state for solutions.  They blamed the 
GOI for failing to enact high tariffs on imported goods, create 
necessary infrastructure, enforce quality control standards, 
support foreign investment and provide adequate data on the 
business environment.  In calling on the government to enact 
higher tariffs on imported goods, one factory owner claimed that 
Iraq was "in an economic war" with foreign imports.  Still, 
Fadil Ubaid Helal, owner of a large shopping center, told the 
PRT that the only Iraqi good he sells is rice because the 
quality of Iraqi goods is simply too low. 
 
 
 
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Financing Woes Top the List 
 
--------------------------- 
 
 
 
¶5.  (U)  All four working groups only agreed on one item as a 
key obstacle to development of the business environment:  lack 
of credit and the inadequacy of the banking system. The other 
key obstacles identified included weak infrastructure (three 
groups), lack of protective tariffs (three groups), lack of 
economic data (two groups), poor quality control (two groups), 
and corruption (two groups). 
 
 
HILLAH 00000022  002.2 OF 002 
 
 
 
 
¶6.  (SBU)  Participants had a lively morning discussion on 
credit.  Numerous business association members and private 
businessmen lamented the challenges of receiving financing from 
Iraqi banks -- but Iraqi bankers were quick to defend themselves 
and place the blame on the unpreparedness of potential 
borrowers.  Waqas Ali, the local head of the USAID private 
sector development program INMA, cited the challenges of opening 
a bank account as one of the greatest obstacles to the 
establishment of more business associations.  Layla Adnan, the 
Bank of Baghdad's regional manager, took to the podium before 
her scheduled panel-discussion to fiercely defend bank 
practices.  Adnan's rebuttal, later echoed by other participants 
in a bankers' roundtable, was that most potential Iraqi 
borrowers were "clueless" about the requirements for securing a 
bank loan.  She argued that businesses were "illiterate about 
credit,"  and lacked basic business plans that demonstrated that 
loans were for profitable business ventures. 
 
 
 
¶7.  (SBU)  Majeed Flaifl, the head of the public Al-Rafidain 
bank and an incoming PC member on the short-list of candidates 
for governor, echoed Adnan's frustration with the quality of 
loan applications, but did not shy from acknowledging weaknesses 
in the public banking system.  Flaifl agreed that "the 
performance and efficiency of government banks has not been 
acceptable. ~Banks should support private investment and we are 
not doing that."  He urged participants at the conference to 
make suggestions to him, either directly or through the Chamber 
of Commerce, about how to improve the process of bank lending. 
 
 
 
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Positive Feedback: an Opportunity for New Conversations 
 
--------------------------------------------- ---------- 
 
 
 
¶8.  (SBU)  Both during and after the event participants 
expressed enthusiasm for having a forum in which to discuss 
private sector development; it was clear that many of the 
participants either had not met or do not meet on a regular 
basis.  Participants consistently told the PRT and each other 
that the conference created an opportunity for "new 
conversations."  The excited buzz during the working group 
sessions was the best proof that the discussion format engaged 
Iraqis.  PIC Deputy Chairperson and Economic Committee 
chairperson Amirah Bakery praised the conference and promised 
that the outcome would help guide her work as chairperson of the 
Economic Committee in the Provincial Council. 
 
 
 
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Next Steps 
 
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9.)  (U)  The conference produced a commitment on the part of 
participants to engage in public-private partnerships to improve 
the business environment.  Babil PRT looks to help facilitate 
this process in a number of ways.  A comprehensive report on the 
conference will be prepared and distributed to participants, 
highlighting significant impediments to doing business.  Based 
on conversations with participants, the next step will be a 
follow-up conference at which Iraqis will collectively identify 
potential solutions to obstacles and develop an Iraqi-driven 
action program for implementing such solutions.  Finally, Babil 
PRT reported on its experience at an MND-C hosted Jobs Creation 
Conference at Camp Victory and we are willing to share our 
experiences with other PRTs interested in undertaking a similar 
effort 
SIAS