VZCZCXRO6904
PP RUEHBC RUEHDA RUEHDH RUEHKUK
DE RUEHGB #0186/01 0251329
ZNR UUUUU ZZH
P 251329Z JAN 10
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 6276
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 BAGHDAD 000186 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAID EFIN ECON IZ
SUBJECT: BAGHDAD: WORLD BANK MAY SCALE UP IRAQ PRESENCE 
 
REF: REF: 2009 BAGHDAD 3112 
 
¶1. (SBU) SUMMARY: World Bank Vice President for the Middle 
East and North Africa Shamshad Akhtar told GOI officials and 
international donors January 16-19 that the World Bank would 
seriously consider increasing its presence in Iraq.  Specific 
programmatic and staff increases would depend on the security 
situation and the availability of funds, said Akhtar, adding 
that World Bank President Robert Zoellick would be 
approaching Bank board members for support soon.  Akhtar also 
said the Bank's board would be ready to vote on a possible 
$500 million Development Policy Loan (DPL) for Iraq as soon 
as February 9, if the GOI passes its 2010 budget by the end 
of January.  Akhtar agreed that the World Bank and the United 
Nations were uniquely placed to offer Iraq technical 
assistance.  She promised that high-level World Bank 
officials would conduct more frequent temporary missions to 
Iraq until the permanent staffing pattern is worked out.  END 
SUMMARY. 
 
FIRST FACT-FINDING TOUR TO IRAQ 
------------------------------- 
¶2. (SBU) World Bank Vice President Shamshad Akhtar postponed 
her first trip to Iraq scheduled for December 9-10 due to 
security concerns after the December 8 bombings.  After 
pressure from several donors, she rescheduled her trip for 
January 16-19, in order to assess the need to augment the 
World Bank's presence in Iraq and underscore the World Bank's 
commitment to the country.  Her trip included meetings with 
Deputy Prime Minister Rafe Al-Eissawi; Speaker of the Council 
of Representatives Ayad 
Al-Samarraie; the Ministers of Finance, Trade, Education, 
Municipalities and Public Works, and Electricity; Deputy 
Governor of the Central Bank; Chairman of the National 
Investment Commission; donors, bankers, and private 
entrepreneurs.  Akhtar was accompanied by Hedi Larbi, 
Director of the Middle East Department (based in Beirut), 
Jean-Michel Happi, Country Manager for Iraq, Jorge Thompson 
Araujo, Economist, and Christian Shorter of Global Security, 
who was assessing the security implications of an increase in 
World Bank personnel. 
 
SECURITY AND FUNDING KEY VARIABLES FOR STAFF INCREASES 
--------------------------------------------- --------- 
¶3. (SBU) Several donors -- including the British, Danes, 
Italians, UNAMI and the European Union -- repeated 
coordinated, specific requests to the World Bank to augment 
its presence in Iraq.  Those requests included: assigning a 
World Bank Country Director and Deputy to Baghdad, hiring 
local staff for administrative support, and ensuring that all 
employees working on Iraq are willing to travel to Iraq as 
needed (reftel).  Akhtar reacted positively but said 
decisions on new staff or programs would have to wait until 
the Bank conducts a security assessment after the March 
elections.  She also cautioned that the global economic 
crisis and the Haiti earthquake had put large demands on 
limited Bank resources, especially for a "middle-income" 
country like Iraq.  Bank President Robert Zoellick would ask 
board members in March for an increase in overall capital for 
the Bank, which if granted, may improve Iraq's chances of 
tapping into funding for middle-income countries.  Zoellick 
may also ask donors to sponsor specific international-staff 
positions at the Bank in Baghdad.  (NOTE: The UK through DFID 
is already sponsoring one such position related to private 
sector development.  END NOTE.)  Akhtar promised high-level 
World Bank officials would be visiting Iraq more frequently 
until the permanent staffing pattern is worked out.  She 
Quntil the permanent staffing pattern is worked out.  She 
noted Zoellick may be considering a trip to Baghdad as well. 
 
WORLD BANK HAS ROLE TO PLAY IN DONOR COORDINATION 
--------------------------------------------- ---- 
¶4. (SBU) Akhtar agreed with Ambassador Hill that the World 
Bank and the United Nations were uniquely placed to offer 
unbiased technical assistance on a wide range of issues and 
that both had an important role to play in multi-lateral 
donor coordination.  With no GOI-sanctioned 
donor-coordination mechanism on the horizon following the 
International Compact for Iraq, Akhtar said that the donors 
should at least start coordinating amongst themselves by 
sector.  She said the World Bank would be willing to lead 
in coordinating assistance on: 
 
- public financial management (they have already assumed the 
lead of the follow-on to the formerly U.S.-led Public 
Financial Management Action Group); 
- the Public Distribution System and the social safety net; 
- private sector development, including help to small and 
medium enterprises and microfinance; and 
- some infrastructure projects including water and 
electricity (they have just called a technical-level donor 
coordination meeting on energy issues for January 30). 
 
BAGHDAD 00000186  002 OF 002 
 
 
 
Akhtar agreed that donors have a five to ten year window -- 
before Iraq is likely to realize increased oil revenue -- in 
which the GOI would be more willing to make reforms, 
especially if they were tied to specific budgetary 
assistance.  Akhtar said that the World Bank could be 
particularly helpful by providing training through the World 
Bank Institute for career-level staff in a variety of 
ministries. 
 
DEVELOPMENT POLICY LOAN 
----------------------- 
¶5. (SBU) Akhtar said the Bank's Board would be ready to vote 
on a possible $500 million Development Policy Loan (DPL) for 
Iraq as soon as February 9 if the GOI passes its 2010 budget 
by the end of January.  She said the DPL was drawn up in 
conjunction with the International Monetary Fund's possible 
$3.8 billion Stand-by Arrangement for Iraq.  She said that 
although the IMF has liquid resources to offer Iraq and could 
have provided the additional funds rather than the Bank, it 
is counting on the World Bank's DPL with Iraq to help realize 
necessary economic reforms. 
 
COMMENT 
------- 
¶6. (SBU) Close coordination between this mission and other 
important donors ensured the World Bank received a loud and 
clear message about the need to increase Iraq programs and 
the size and level of its Iraq mission.  Akhtar's visit, 
while a fact-finding tour in her first six months in the 
posting, was also designed to respond, "We have heard you." 
Akhtar admitted that while she personally supported increased 
engagement it was going to take some work on her part to 
bring other parts of the Bank around to this point of view. 
She also hedged vows of a more robust Bank role by noting 
constraints posed by security and Bank resources.  The GOI is 
likely to benefit most from the Bank's capacity-building 
programs in the five years or so before substantial increases 
in oil revenue come on line.  The USG should continue to 
press the Bank to substantially expand its programs and staff 
in Iraq in the window of opportunity.  Absent a GOI-led donor 
coordination mechanism, donor partners will continue to 
coordinate among themselves and the World Bank should have an 
active voice in that process. 
 
HILL 
HILL