UNCLASSIFIED U.S. Department of State Case No. F-2011-04692 Doc No.

C05307639 Date: 07/26/2013

RELEASED IN FULL

REVIEW AUTHORITY: Archie Bolster,

Senior Reviewer

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060934
SOURCE: SMRTGRD.001665
DRAFTED BY: NEA_I:QUINTANILLA, PABLO -- 06/17/11
APPROVED BY: NEA/I:DESROCHER, JOHN P
NEA/I/POL:DAVIS, JASON L NEA/I/ECON-ASSIST.:COOKE, DONALD J
HST, RM 3800:MEIER, EDWARD F HST, RM 7240:SEIDEN, MAYA D
HST, RM 7220:SCHREPEL, DAWN M HST RM, 7256:RATNER, ARIEL M
HST, RM 7246:CATALANO, ELISA HST, RM 7310:ANDREWS, THEODORE H
S\EEE:FREIFELD, DANIEL S HST RM, 1802:PRABHU, RADHIKA G
EXEC:JEFFREY, JAMES F (BAGHDAD)
8CCO4A 172233Z /38
R 172220Z JUN 11
FM SECSTATE WASHDC
TO AMEMBASSY BAGHDAD
INFO IRAQ COLLECTIVE
UNCLAS STATE 060934

SENSITIVE
SIPDIS
E.O. 13526: N/A
TAGS: EINV, ETRD, IZ, ECON
SUBJECT: Deputy Secretary Nides Hosts Investing in Iraq Business
Roundtable
Summary
1. (SBU) On June 3, 2011, Deputy Secretary of State Tom Nides
hosted an engaging roundtable discussion on investing in Iraq with
senior executives from 30 U.S. companies and senior representatives
from the U.S. and Iraqi governments. Secretary Clinton gave
remarks, and noted that "it's time for the United States to start
thinking of Iraq as a business opportunity." The executives
offered a wide range of perspectives on their experiences doing
business in Iraq, the opportunities available there, and the ways
the U.S. and Iraqi governments can help facilitate the entry of
U.S. firms into the Iraqi market. Additionally, U.S. government
participants emphasized that the U.S. seeks to broaden its
relationship with Iraq to include stronger commercial ties as it
transitions from a military-led to a civilian-led presence in Iraq.

UNCLASSIFIED U.S. Department of State Case No. F-2011-04692 Doc No. C05307639 Date: 07/26/2013

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All participants acknowledged that the business environment in Iraq

is difficult, but there was consensus that the opportunities in
Iraq make it worth pushing through some of the difficulties. (See
attachment for full participants list.) End Summary.

"A Market Where Your Companies Can Make Money"

2. (SBU) U.S. and Iraqi government participants, as well as a
number of executives, consistently highlighted the opportunities
available to U.S. firms in Iraq. Secretary Clinton and Deputy
Treasury Secretary Neal Wolin both pointed to projections that Iraq
will see double-digit growth over the next two years, higher even
than China. Deputy Secretary Nides remarked that as a "recovering
businessman," he was impressed by the market opportunities he saw
during his trip to Iraq earlier this year. All three Iraqi
government participants-Dr. Thamir Ghadhban, Chairman of the Prime
Ministers Advisory Council, Dr. Sami al-Araji, Chairman of the
National Investment Commission, and Dr. Munqith al-Baker, Senior
Advisor to the Minister of Industry and Minerals-spoke at length
about billions of dollars worth of investment opportunities across
all sectors of Iraq's economy. Ambassador Melanne Verveer,
Ambassador-at-Large for Global Women's Issues, also highlighted the
role that women will have in Iraq's economic growth, pointing out
that many Iraqi women are very skilled in business development, and
could serve as strong local partners to U.S. business.
Additionally, many of the executive participants (e.g., 360
Architects, ExxonMobil, JPMorgan Chase, Ventech Engineers)
mentioned the commercial opportunities their companies have
leveraged in Iraq, and urged others to consider entering the Iraqi
market.
3. (SBU) The Iraqi government participants discussed the various
steps the Iraqi government has taken in recent years to improve
Iraq's investment climate. Dr. Ghadhban highlighted the
establishment of Iraq's first commercial court in Baghdad for
foreign investors and the Iraqi Cabinet's commitment to provide
better services and develop critical infrastructure. Dr. al-Araji
explained what sectors in the Iraqi economy hold most business
potential and pointed to amendments to the National Investment Law
that have improved access to land for investors. Dr. al-Baker
noted that the Iraqi government has begun a multi-year process to
corporatize Iraq's state-owned enterprises.
"Iraq is Tough; We Understand That"
4. (SBU) At the same time, participants talked about the
substantial difficulties in Iraq. There was virtual consensus on
the top challenges for U.S. companies in Iraq: security, basic
services, infrastructure, corruption, taxation, and Iraq's
bureaucracy. As an example, Energy Deputy Secretary Dan Poneman
explained the inter-related problems of improving the oil and gas
sector and improving power generation, noting that different
ministries need to work together to put necessary improvements in
place. A few participants (e.g., JPMorgan Chase, Goldman Sachs)
also noted that a lack of clarity surrounding sovereign guarantees

UNCLASSIFIED U.S. Department of State Case No. F-2011-04692 Doc No. C05307639 Date: 07/26/2013

UNCLASSIFIED U.S. Department of State Case No. F-2011-04692 Doc No. C05307639 Date: 07/26/2013

and the lack of a sovereign credit rating gives U.S. and other
foreign firms pause when considering investments in Iraq.
5. (SBU) The Iraqi government participants pointed to some specific
steps that they hope will improve the investment climate in Iraq.
Dr. al-Araji spoke about a USD 6.5-7 billion 'deferred payment'
plan that could be used as an alternative to a sovereign guarantee.
Dr. Ghadhban expressed confidence that the Iraqis would pass new
laws governing hydrocarbons resources and revenues this year. Dr.
Ghadhban also said that the Iraqi government intends to join one of
the international arbitration conventions in the near future.
"The United States Stands Ready to Be a Good Partner"
6. (SBU) Throughout the event, U.S. government officials returned
to the theme that the U.S. government stands ready to help U.S.
firms operating in Iraq. As Deputy Secretary Nides said, "we are
committed to helping you, and to making sure the next phase of
Iraq's development is a success." Some companies encouraged the
U.S. government to do more (e.g., Lockheed Martin, NTELX, Oxy,
Ventech) to support U.S. firms, pointing to other foreign
governments and companies that will fill the gap in Iraq. When
pressed for specifics, companies offered a few suggestions: (1)
more support for the U.S. Trade and Development Agency; (2) more
direct support to help U.S. firms find the right Iraqi
counterparts; and (3) a stronger emphasis for USAID on helping U.S.
businesses in the same way that other countries' AID organizations,
such as the Japan International Cooperation Agency, provide focused
support.
7. (SBU) Senior representatives from the Commerce Department, ExIm
Bank, and the Overseas Private Investment Corporation (OPIC) each
spoke about what their agencies can do to support U.S. businesses
in Iraq. Elizabeth Littlefield, President of OPIC, said that OPIC
is exploring oil, housing, and medical equipment as potential areas
for support. Alice Albright, COO of ExIm Bank, noted that, while
they need a clearer sovereign guarantee, ExIm is looking to support
U.S. investment in avionics and transportation, among other
sectors. Michelle O'Neill, Deputy Under Secretary of Commerce for
International Trade, pointed to Commerce's extensive
business-to-business efforts, as well as the Commercial Law
Development Program, which is helping Iraq address some of its most
important legal and regulatory questions. During the lunch
session, Secretary of Transportation Ray LaHood offered his and his
Department's full support to U.S. firms in Iraq, with an emphasis
on roads, rail, ports, and aviation.
Executive Perspectives and Questions: Real Opportunities, Real
Challenges, and a Continued Need for Support
8. (SBU) An important component of this event was the opportunity
for senior U.S. and Iraqi government officials to hear directly
from the executives their perspective and questions about investing
in Iraq. The following is a sampling of some of the issues and
questions raised by the participating executives:

UNCLASSIFIED U.S. Department of State Case No. F-2011-04692 Doc No. C05307639 Date: 07/26/2013

UNCLASSIFIED U.S. Department of State Case No. F-2011-04692 Doc No. C05307639 Date: 07/26/2013

-- One participant noted that the Iraqi government's goal of 2-3

million housing units is ambitious, and asked whether the supply
chain could handle this increase. Dr. al-Araji noted that housing
is one of the most critical areas of need in Iraq, and that the
Iraqi government is already moving forward with its plans to build
the first million new units.
-- One participant argued that there has been little growth in
Iraq's middle class, noting significant restrictions on access to
capital. He asked what the U.S. and Iraqi governments are doing to
support entrepreneurs. Ambassador Jeffrey agreed that the middle
class remains under-developed, but pointed out that USAID has a
number of programs (e.g., micro lending, SME lending, and
agribusiness) to support entrepreneurs in Iraq.
-- One participant mentioned visas and corruption as two key
concerns of all U.S. companies operating in Iraq. Ambassador
Jeffrey said that Embassy Baghdad is working closely with relevant
Iraqi ministries to streamline and standardize the visa process,
and noted that the Embassy can bring specific cases to the Iraqi
government's attention. Dr. Ghadhban noted that the Iraqi
government is very serious about tackling corruption, with
Inspectors General in every ministry and quarterly reports on
corruption.
-- A number of firms already operating in Iraq (e.g., Oxy, NTELX,
ExxonMobil) encouraged other companies to go to Iraq in order to
see firsthand the opportunities available and meet key Iraqi
officials. Dr. Ghadhban and Ambassador Jeffrey echoed this
admonition.
-- One participant mentioned that her firm has actually needed very
little U.S. government support thanks to its local partner, and
that its relationship with the Iraqi government has been excellent.
She made a point to note that her firm has been paid on time by the
Iraqi government.
Comment
9. (SBU) We have received very positive feedback from a number of
participants. Overall, many felt that the Business Roundtable
provided a good opportunity for dialogue between the U.S. private
sector, the U.S. government, and the Iraqi government. A handful
of companies said the event helped inform their strategic planning
for Iraq, and gave them a better sense of U.S. government plans
going forward. We also heard from some participants that this
roundtable should be part of a process, rather than a one-time
activity. Deputy Secretary Nides' staff and NEA/I will work
closely with Embassy Baghdad to develop an action plan that can
capitalize on the momentum created by this event.
Attachment:
CLINTON

Participant List

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UNCLASSIFIED U.S. Department of State Case No. F-2011-04692 Doc No. C05307639 Date: 07/26/2013