VZCZCXYZ0005
OO RUEHWEB

DE RUEHGB #1441 1530306
ZNR UUUUU ZZH
O 020306Z JUN 09 ZDK
FM AMEMBASSY BAGHDAD
TO SECSTATE WASHDC IMMEDIATE 3298

UNCLAS BAGHDAD 001441 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV EFIN PREL IZ
 
SUBJECT:  IRAQ: ASSET TRANSFER PROCESS WELL UNDER WAY 
 
¶1.  SUMMARY:  The United States and Iraq have agreed upon, and are 
implementing, a comprehensive asset transfer process.  The process 
includes commitments by the Government of Iraq to maintain 
U.S.-funded infrastructure in Iraq.  End Summary. 
 
¶2.  Since 2008, Embassy representatives have been working with the 
Government of Iraq (GOI) to develop an asset transfer process.  This 
process is designed to provide a single, comprehensive method for 
transferring assistance project assets to the GOI, regardless of the 
USG agency involved.  The USG and Iraq reached agreement on this 
process in recent months, and are now in the process of implementing 
that agreement. 
 
 
¶3.  The first step in the asset transfer process was for the GOI to 
accept USG-funded assets.  On December 16, 2008, Iraq's Council of 
Ministers issued Decision Number 444.  In a May 18, 2009 note, the 
GOI formally informed the USG of Decision 444, specifically 
emphasizing that no financial obligations could arise from these 
assets and that Iraqi ministries are responsible for their operation 
and maintenance.  The GOI requested the Embassy to "confirm that 
this decision, if acceptable, delineates the principles accepted by 
our two governments for working together in order to complete 
handing over the projects donated by the people of the United States 
to the people of Iraq."  The Embassy confirmed this understanding in 
a June 1, 2009 diplomatic note.  With this exchange of notes, the 
USG and GOI finalized agreement on the asset transfer process. 
 
¶4.  Decision 444 and the exchange of notes between our countries 
call for a Memorandum of Understanding (MOU) to set out how the 
asset-transfer process will operate at the working level.  EmbOffs 
are in final discussions with Iraq's Ministry of Planning and 
Development regarding this MOU. 
 
Comment: 
 
¶5.  Many USG funded assets have already been transferred and are 
being operated by Iraqi authorities.  For example, all power 
stations built with USG funding, as well as other projects in the 
electricity sector, have been transferred and are owned, operated 
and fully maintained by the GOI.  The GOI has assumed the 
Operations-Maintenance-Sustainment (OMS) contract initially funded 
by the USG.  Additionally, large-scale projects in the water sector 
have been transferred and are maintained by the GOI.  The situation 
for the Nasiriyah water project is improving.  The GOI has recently 
purchased $2 million in spare parts for this project, showing some 
commitment to sustainment of these assets.  There is no lack of will 
to move forward; however, there is still a long way to go before the 
skill level and culture of maintenance approaches the level of our 
own. 
 
HILL