VZCZCXRO7940
RR RUEHBC RUEHDA RUEHDH RUEHKUK
DE RUEHGB #0082/01 0130813
ZNR UUUUU ZZH
R 130813Z JAN 10 ZDK
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 6098
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 000082 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EPET PGOV KCOR EFIN ECON IZ NO
SUBJECT:  Iraq Likely to Gain EITI Candidacy 
 
REF:  (A) Baghdad 3135, (B) Baghdad 2214, (C) Baghdad 1134 
 
BAGHDAD 00000082  001.2 OF 002 
 
 
¶1.  (SBU) SUMMARY.  Iraq's political leaders renewed their support 
for improved transparency of oil export revenues and the country is 
now poised for candidacy status in the Extractive Industries 
Transparency Initiative (EITI).  During a conference January 10-11, 
the Ministry of Oil Inspector General (who is leading the Iraqi 
EITI) got agreement on a workplan and organizational structure for 
managing the EITI process among government and civil society 
stakeholders.  Iraq's candidacy will now go to the EITI Board of 
Directors for a vote in February, with Iraq likely to become the 
35th and EITI's largest oil producing candidate.   End Summary. 
 
¶2.  (SBU)  Prime Minister al-Maliki (committed the GOI to oil 
revenue transparency, paving the way for Iraq's formal admission 
into the EITI, as part of a major conference convened in Baghdad by 
the Ministry of Oil (MOO) on January 10-11.  Other key leaders 
including Deputy Council of Representatives Speaker Khalid 
al-Attiya, and Oil Minister Shahristani, and Ministry of Industry 
and Minerals Fawzi Hariri, also attended the conference and pledged 
support. 
 
Civil Society Focus 
-------------------- 
 
¶3.  (SBU)  MOO Inspector General Ala' Mohie al-Din, supported by 
EITI International Secretariat Director Jonas Moberg and officials 
from Revenue Watch Institute and the World Bank (both organizations 
play a supporting role in the process), convened a working session 
with approximately 20 civil society organizations (CSO's) on January 
¶11.  These CSO's elected four representatives from among their ranks 
to serve on the EITI stakeholder council (SC).  The GOI also secured 
the group's buy-in to a proposed workplan and organizational 
structure.  This CSO election and the workplan agreement complete 
Iraq's four-step process to submit an EITI candidacy bid, a process 
the GOI formally launched in February 2008.  (Reftels provide 
additional background).  The CSO monitoring and related public 
awareness efforts - together with oil export audits - constitute the 
main elements of EITI transparency.  Explaining the concept for 
Iraq, Revenue Watch director in New York, Karen Lissakers, noted on 
January 11 that "the EITI standard of government partnership with 
citizens in revenue management will be a powerful tool in Iraq's 
struggle for political stability.  This . . . is a commitment to 
government collaboration with an independent civil society, which in 
turn builds public trust in government." 
 
¶4.  (SBU)  The four CSO representatives who will now serve on the 
EITI stakeholder council are:  Laith Hassan Shamsa, Economic and 
Business Forum (Najaf); Ahmad Abdul Razaq Al-Khafaji, Pro-Integrity 
Organization (Babil); Dr. Bushra Karim Al-Janabi, Sofouh 
Organization for Women and Child Development, (Erbil); and Salah 
Hanun Alawi, Iraqi Bar Association (Baghdad).   Most of the 20 
organizations that participated in the January 11 launch had been 
working with the GOI during previous discussions of the workplan; 
however, it was clear from their own deliberations (which ACCO was 
allowed to observe, after GOI and EITI officials had withdrawn) that 
they had not yet developed deep familiarity with either EITI or one 
another.  Included among the organizations was at least one labor 
union from Basra, which voiced concerns about workers' rights and 
the need for labor to be present in the EITI process.  (Comment: 
the CSO's and the individuals who were nominated are unknown to the 
Embassy.  They are also unknown to the IG of the Oil Ministry 
Inspector General.  End comment.) 
 
Q 
¶5.  (SBU)  According to three of the CSO representatives we spoke 
to, the stakeholder selection process was not open to tribal 
sheikhs, religious figures or media, as these are registered 
separately from CSO's (or NGO's).  This was confirmed by MOO staff 
who helped organize the event.  Comment:  EITI Iraq staff indicated 
that CSO's had been invited through media announcements, but the low 
turnout indicates either some limitations on outreach or, as one CSO 
participant and ACCO contact told us, "a lack of interest in 
initiatives that don't come with immediate financing."  There was no 
CSO representation from Anbar or other largely Sunni provinces.  In 
previous engagements with the Embassy, the GOI had committed to 
including KRG civil society and made an effort to invite one CSO 
from Erbil, but no Kurdish media were invited, and no senior Kurdish 
leaders were there to offer "buy-in" on the first day of the 
conference.  That said, MOO IG Mohie al-Din promoted the KRG 
representative by urging NGO participants to consider including a 
purely humanitarian group, along with those who could offer 
technical and professional expertise for the SC.  When it was 
announced that two of the elected CSO reps were actually serving 
members of the GOI, and thus disqualified from the EITI NGO group, 
the CSO participants then voted in the KRG CSO representative. 
Those who attended the event acknowledged that they expected some 
pushback when other civil society groups came to realize the 
importance of the EITI role in good governance. 
 
¶6.  (SBU)  Revenue Watch indicated it had raised some concerns with 
the GOI, but ultimately noted it was "their" process and that 
external players could only have so much influence.  Revenue Watch 
 
BAGHDAD 00000082  002.2 OF 002 
 
 
also told ACCO staff that the problems with NGO legislation in 
Ethiopia had derailed the EITI process there, as it was judged the 
NGO's could not be sufficiently independent of the government. 
(Comment:  Those concerns bear watching as the process unfolds in 
Iraq, where there is few independent sources of income for civil 
society or media.  MOO IG told us he was not concerned that 
"interested parties" would try to intervene with the CSO 
participants; this will be the key to judging EITI progress here. 
End Comment.) 
 
EITI Purview 
------------ 
 
¶7.  (SBU)  EITI, working with Revenue Watch, told conference 
participants it will recommend that the GOI seek external audits of 
both proceeds of oil export sales to the government and government 
declared receipts for the same transactions.  These audits would be 
compared, and the reports made public.  This cross-check and public 
dissemination would provide transparency in export sales income 
(over 80% of the GOI' revenue in 2009).  Indeed, Iraq's EITI launch 
prompted Revenue Watch to declare on January 11 that "by joining the 
voluntary global initiative it has established itself as the Middle 
East's most important champion of the principles of transparency and 
accountability in the management of oil and gas resources." 
 
¶8.  (SBU)  Nonetheless, Iraqi media and civil society 
representatives posed several questions about the process, showing 
some degree of skepticism and voicing concerns about the GOI 
controlling corruption and managing Iraq's oil wealth more 
efficiently.  One journalist and three CSO representatives pressed 
the MOO IG on better management of contracts, better management of 
oil assets (i.e., oilfield management) smuggling, and monitoring of 
oil products used domestically.  Mohie al-Din indicated that these 
issues fell under his jurisdiction to monitor and audit as the 
Inspector General, and that they were not part of the EITI mandate, 
which would cover only oil export revenues. 
 
Next Steps 
---------- 
 
¶9.  (SBU) Updating us on the SC membership (see also ref A) Mohie 
al-Din indicated the business representatives that have been 
"pre-selected" are Exxon-Mobil and another company whose name the IG 
did not provide but which markets Iraqi oil mainly in Asia, Statoil 
(oilfield developers), and the Northern Oil Company (representing 
Iraqi National Oil Companies).  These members of the Stakeholder 
Council will be formalized now, and Iraq will submit its candidacy 
request to Oslo.  The EITI board will then meet in February to vote 
on Iraq's candidacy.  EITI International Secretariat Director Moberg 
told us that the Board is likely to agree on the candidacy, while 
Revenue Watch indicated there were lingering concerns about 
legislation stalled in the Council of Representatives to formalize 
the operations of Non-Governmental Organizations.  Mohie al-Din 
indicated the CSO groups would next meet with the other members of 
the SC in April, presumably after the candidacy status is formally 
approved and announced. 
 
¶10.  (SBU)  MOO IG told us that he would contact us to request 
financial and other support.  The World Bank is also working with 
the MOO on EITI. 
 
Diplomatic and Commercial Buy-In 
-------------------------------- 
 
¶11.  (SBU)  World Bank Mideast Director told Embassy's Assistant 
Chief of Mission for Assistance Transition on the margins of his 
visit for the conference that he was very pleased with the EITI 
conference.  According to EITI's Moberg, Norway will soon open a 
full-fledged embassy in Baghdad and will provide strong support to 
(Oslo-based) EITI, as will other Scandinavian countries and the UK. 
Q(Oslo-based) EITI, as will other Scandinavian countries and the UK. 
(NOTE:  ACCO will coordinate with UK and Scandinavian reps in 
Baghdad on support for the Iraqi efforts.  END NOTE.)  Revenue Watch 
noted that it had been in touch with companies who are working in 
oilfield development, telling us that all were "fully on board with 
the reporting requirements" that will be incumbent on them as part 
of EITI.