Cablegate: Southern Provinces Air Concerns with Dpm Al-Issawi

VZCZCXRO6991
PP RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #3185/01 2761316
ZNR UUUUU ZZH
P 021316Z OCT 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC PRIORITY 9749
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 05 BAGHDAD 003185

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD ENRG ELTN EAGR PREF EAIR SCUL IZ
SUBJECT: SOUTHERN PROVINCES AIR CONCERNS WITH DPM AL-ISSAWI
AND MINISTERS

SUMMARY
-------

1. (SBU) On September 17-18, Deputy Prime Minister Rafa
Al-Issawi hosted a conference on "Providing Services to the
Southern and Middle Provinces" in Baghdad. Governors and
Provincial Council members from the nine southern
provinces and Anbar directly presented their concerns about
essential services to key line ministers and deputy
ministers. Ministries, in turn, provided rebuttals and
explained their priorities and strategies to local officials.
Topics addressed included oil, electricity, transportation,
trade, health, municipal works, education, planning, housing
and construction, agriculture, industry, and displacement.
DPM Al-Issawi ordered the ministries to submit written
responses directly to him regarding concerns raised and
unresolved during the conference. The conference gave
provincial officials a chance to give vent to grassroot
frustrations over the sorry state of the delivery of
essential services. It also demonstrates a new willingness
in Baghdad to grapple with these concerns. The real test
will be the results of efforts to follow up. End Summary.

MINISTER OF FINANCE: LEVEL OF SUFFERING IS INTOLERABLE
--------------------------------------------- ---------

2. (SBU) In opening remarks, Minister of Finance Bayan Jabr
noted that, "Suffering has reached an intolerable level. The
level of services is too low and we need the cooperation of
all the ministries and provincial governors to address the
challenges." He also emphasized the need for cooperation and
sharing of experiences to reduce inefficiency. "Mistakes are
unavoidable, but we must keep moving forward. We cannot
raise the level of development until we raise the level of
services."

MINISTRY OF ELECTRICITY: WE ARE TRYING
--------------------------------------

3. (SBU) Governors and Provincial Council (PC) chairs
expressed grave concerns over the shortages of electricity in
their provinces. All participating provinces complained that
the shortages were affecting water resources (as water pumps
are often left without power), agricultural production,
industrial output, and public health. The officials,
especially those from Muthanna, stated the supplemental funds
they received were insufficient to repair the electricity
grids. The Governor of Basra complained that the province
should not be responsible for national industries out of its
provincial electricity allocation. Anbar officials chimed in
with a similar complaint, noting that one
nationally-important factory took 45 MW to run. "The
Ministry of Industry should provide power for them, not the
province." Karbala noted it received thousands of visitors
but had not a single generation plant. Several others agreed
that electricity should not be allocated by population but
take other factors into account.

4. (SBU) The Minister of Electricity acknowledged that the
situation has been very difficult for the past two years. He
noted that lack of funds, staff, fuel, and security, combined
with increased demand, corruption, slow repairs and poor
performance of contractors all contributed to the shortages.
"People who used to have one air conditioner, now have five."
On the positive side, he said that 1,000 MW of electricity
production had been added since last year. Three new
projects will be completed this year, two more by next
summer, and 17 other major electricity projects are pending,
including the renovation of the Al-Hartha generation plant in
Basra. He conceded most of these projects would take at
least one to two years to complete but expressed optimism
that "big power companies are looking at Iraq." The Minister
also highlighted a recent deal with General Electric to
supply generation, but explained marked improvements from
that project would take at least two years to materialize.
He asked the governors to assist by curbing local consumption
and directing more funds towards fuel distribution. The
Minister also said he would increase generation to water
treatment plants, especially in Babil, as well as increase
micro-generation projects as stopgap measures until larger
projects can be completed.

PROVINCES SEEK OIL REFINERIES
-----------------------------

5. (SBU) The provincial officials highlighted oil-related
problems, such as lack of LPG supply and storage, a problem
which would affect their constituents in the winter. All
provinces expressed the desire to construct refineries in
their areas to help address these supply problems, but
complained that the Ministry of Oil's (MoO) ownership of land
for such use complicates such goals. (Note: All refineries

BAGHDAD 00003185 002 OF 005

are government-owned but there are provisions that might
allow for the construction of privately-owned refineries.
Some have been built, but are not operational due to a lack
of crude oil.) Maysan provincial officials were especially
concerned about the availability of kerosene. Anbar's
Governor requested more fuel for gas stations on the border,
and was concerned about insufficient numbers of gas stations
on the main highway. "Tribes are blackmailing travelers due
to shortages," he complained. (Note: MoO owns some gas
stations and licenses others to private operators, but is the
sole provider of fuel to both. Private operators often
divert gasoline supplies, which are needed for both
automobiles and electric operators, to obtain higher prices
on the black market, which leads to fuel shortages at the
official price and reduced hours.) Muthanna officials
complained they were not receiving enough asphalt for crucial
road repair work and Diyala officials expressed concern their
diesel fuel allocation was not enough to run the irrigation
pumps, especially problematic given the severe drought in the
province. Several provinces also requested additional
storage tanks.

6. (SBU) A MoO Deputy Minister highlighted successes, such as
the reopening of the Haditha refinery and its sourcing of
crude oil via rail. He explained that his ministry was not
supplying the border gas stations due to previous tribal
corruption at them. Problems with LPG shortages in the
province are a reflection of transport problems, rather than
the MoO's supplies, specifically singling out the supply line
between Basra and Amarah as problematic. For example, he
said, there is plenty of kerosene available in Basra, but
truckers do not like to haul it to Amarah as the pay is low
for such a short distance. Regarding Muthanna's need for
more asphalt, he explained the MoO was already supplying all
available asphalt to the Ministry of Housing and
Construction. (Note: Asphalt shortages have always existed
and will continue well into the future due to a lack of
refinery capacity.) On land issues, the representative
suggested further discussions as heretofore dialogue on the
topic had been limited.

AN AIRPORT IN EVERY PROVINCE?
-----------------------------

7. (SBU) All provincial officials expressed a desire for an
international airport. (Comment: There is unlikely to be
sufficient passenger and cargo traffic potential to support
more than the few existing international airports in the
near-to-medium term. End Comment.) The Governor from Maysan
asked that the Ministry of Transportation eject Coalition
Forces from Camp Sparrowhawk airfield, in order to transform
it into a commercial airport. On railways, the Anbar
Governor suggested passenger trains, in addition to freight
trains, use the rail line between Baiji and Haditha, and
pressed for extending the line westward to Al-Qaim. Babil
also asked that its train station be reactivated. Regarding
roads, Wasit's representative suggested weigh stations be
placed on trucking routes to prevent damage to roads in the
province, and Diwaniyah officials suggested a limit on
drivers to reduce highway congestion. On maritime issues,
Basrah's Governor complained that Navy War College graduates
were not finding employment with the ports.

8. (SBU) The Ministry of Transportation representative, after
boasting of opening airports in Mosul and Najaf, stated an
airport was not yet a realistic option for each and every
province, but explained the ministry was considering an
airport plan that could service Babil, Najaf, Wasit, and
Diwaniyah. He added that Iraqi Airways had successfully
leased three more aircraft and that a "European airline"
would soon begin a route to Iraq. The representative
emphasized improvements in the Iraqi rail system, but
conceded the process of upgrading rails was proceeding
slowly. He said the ministry is planning a Najaf-Karbala
line. On ground transportation, the ministry has a fleet of
360 18 wheel trucks and is working to "clean up" the trucking
industry, he said. Bus lines are running, he explained, and
would increase in frequency and quality as demand increased.
The representative added that 80 wrecks still need to be
removed from Iraqi channels and that there is large demand
for dredging work.

PUBLIC DISTRIBUTION SYSTEM CONCERNS
-----------------------------------

9. (SBU) The provincial officials all expressed concern over
limited deliveries of the Public Distribution System
(PDS) to their areas. Several provinces mentioned the tea
component of the PDS basket as particularly problematic,
levying specific allegations of corruption against tea
distributors. Provincial officials also complained that
certain provinces, such as Anbar and Najaf, had

BAGHDAD 00003185 003 OF 005

disproportionately large amounts of sugar. Other concerns
included Najaf farmers experiencing payment delays from the
Ministry of Trade for PDS items and Diwaniya's PDS flour mill
facing maintenance problems.

10. (SBU) The Deputy Minister of Trade said his ministry was
exploring ways to reform the PDS system. While he
blamed global inflationary pressures for some of the supply
problems, he stated the ministry was taking concrete steps to
improve the transportation of PDS products. He also
emphasized that the GOI was renegotiating trade agreements
that were halted in 2003, a step that would also help
stabilize food supplies.

TOO FEW HOSPITALS: STAFF, EQUIPMENT SHORTAGES
---------------------------------------------

11. (SBU) On health, the basic issue for the provinces was
the need for new hospitals, equipment, and specialized
medicine. Some officials complained that while they received
initial funding and sites for hospitals, not enough resources
were available to complete the projects. Land use issues
were also creating delays. Basra officials recounted having
purchased medical equipment, but not having enough staff or
subsequent resources to maintain it. Officials from Anbar
asked that the MoH facilitate a medical school in a rural
area, reflecting their concern that doctors trained in the
cities do not leave the cities. Babil Province asked for
more assistance to fight cholera through providing more
nurses. Anbar noted the need for a women's wing for
hospitals with female doctors, midwives and facilities
pre-natal care.

12. (SBU) The Minister of Health (MoH) acknowledged shortages
in medical practitioners and explained that his ministry was
adopting a new strategy to develop human resources and place
them in the "right areas." The Ministry of Education was a
partner on this initiative, he said. He also asked the
provinces to include specialized medical clinics in their
budget requests, as the MoH budget could not support this
area. He also conceded there was a disproportionately low
number of doctors in the provinces. In response to the
complaints about equipment, he acknowledged that there had to
be better provision for spare parts and maintenance
personnel. "Every day a piece of medical equipment is not
working costs $435." He was also trying to get a straight
answer on specialty clinics. "How many specialists does a
cancer clinic need? I don't know," he said. On midwife
training, the Minister was supportive, noting that 23 percent
of births currently occur outside hospitals.

PROVINCES BLAST MINISTRY OF MUNICIPALITIES
------------------------------------------

13. (SBU) During the session related to Ministry of
Municipalities (MoM) issues, the governors and PC chairs
complained about broken sewage systems, lack of solid waste
disposal, and the inability of the MoM to successfully
execute projects. The PC chair from Muthanna cited a 60
percent shortage in drinking water, but said the water
systems could not improve without repairing the sewage system
first. The PC chair from Maysan estimated only 15 percent of
the sewage system was functional in his province, with Babil
officials claiming only 6 percent sewage functionality and
highlighting the problem of cholera in their province.
Muthana, Basra, and Anbar officials all cited lack of
chlorine as a significant problem. The Governor from Basra
specifically complained that heavy pollution in the Tigris
and Euphrates rivers severely affecting his province
downstream. Officials from Dhi Qar, Karbala, and Anbar
discussed problems with solid waste disposal, with Anbar's
Governor stating that poor trash collection constituted a
significant threat to security. They all asked for recycling
or disposal assistance from MoM. Both the Governor and a
Provincial Council member from Basra loudly criticized the
MoM, accusing its managers of treating Basra in a "political"
manner and complaining about the ministry's DG for sewage.
"He is the worst DG in government," the PC member complained.
Anbar's Governor questioned why the MoM has so much
authority for essential services in the provinces. "If we
are trying to decentralize, why not give us more authority
for projects?" he asked. Both Basra and Muthanna officials
complained about the MoM starting projects, but failing to
see them through to completion. The Muthana PC chair also
cited high land prices, determined by the MoM, as impeding
local projects. "If you are going to set the prices," he
said, "at least subsidize them when we implement a
development project."

14. (SBU) The MoM representative claimed the ministry spent
270 billion ID on sewage-related projects in the southern
provinces this year. He listed several projects for each

BAGHDAD 00003185 004 OF 005

province that have been approved or pending funding, but
await subcontracts.

EDUCATION
---------

15. (SBU) The governors and PC chairs argued for more
provincial authority on education issues, given high
student-teacher ratios and large number of dilapidated
schools. The Najaf PC chair cited an average of 90
students per teacher in grades 1-6, calling this problem
"catastrophic." The Diyala Governor said there were 30
schools in his province "falling apart" and requiring
security guards. Basra's PC member claimed scores for
students were much lower than before and called for better
testing standards. Anbar's government emphasized how
security affects education, explaining that many students in
his province missed a nationally-administered English
test due to a security curfew in place.

16. (SBU) The Minister of Education agreed there were
weaknesses in Iraq's educational system, and argued for
more resources to improve it. We need 10,000 more teachers
and 10,000 night guards to protect schools, he said. In
addition 2,500 schools require refurbishment, 150 of which
are constructed of mud. He complained that his ministry
spent a large amount of money refurbishing schools that did
not actually require such work and accused "incompetent"
companies of performing below standards on many contracts.
More coordination was also needed with the provinces, he
explained, also highlighting land ownership issues as an
impediment to building more schools. "We have grants from
Kuwait to build, but we need land," he explained. On student
aptitudes, the Minister said many night school graduates were
unqualified to graduate, stating, "A lot of these guys
cannot even read or write." Explaining the need for
incentives, the Minister also stated colleges and
universities with the highest test scores should receive the
most national scholarship money.

BUDGET EXECUTION DELAYS
------------------------

17. (SBU) Accepting his ministry's blame for some of the
delays in provincial budget execution, the Minister of
Planning, Development, and Cooperation (MoPDC) supported the
provinces' requests to have more authority in contracting.
"If a ministry cannot get a project done quickly, let the
governors take over," he suggested. He said the MoPDC was
creating a blacklist of contractors that have underperformed,
and asked the provincial officials for assistance in
identifying such companies.

HOUSING AND CONSTRUCTION
------------------------

18. (SBU) During the session on Ministry of Housing and
Construction (MoHC) issues, provincial officials listed
many housing, road, and bridge projects in their areas that
were behind schedule. Officials from both Najaf and
Diwaniyah complained about lack of tar and asphalt for road
projects. Maysan and Babil officials complained that heavily
loaded trucks were causing extensive road damage and
suggested implementing scales to regulate such traffic. The
Diwaniyah PC chair recounted how a residential center project
awarded by the MoHC in 2005 had not yet even finished its
foundation stage yet, and asked that the MoHC provide
timelines for its projects. The Anbari Governor asked the
MoHC for more residential projects and the Governor from
Basra complained about disproportionately MoHC funds
benefiting his province.

19. (SBU) Minster for Housing and Construction Bayan Diyazee
explained that the MoHC considers projects by first
weighing them against national strategic goals and then
evaluating feasibility. She explained the MoHC was
implementing 30 road and bridge projects throughout the
country, but conceded her ministry had a shortage of
engineers and equipment, given the large demand. Diyazee
explained that other provinces, such as Wasit and
Diwaniyah, receive more funds than more heavily-populated
Basra due to the highway projects in those provinces. She
claimed, however, that these projects would benefit Basra,
and said the MoHC had a total of 59 projects underway in the
province. (Note: Currently the MoHC is undertaking 24
housing projects in 14 of the southern provinces. One
project in Basra (504 units) is some 34 percent complete; a
new one for Al Anbar was just approved under the supplemental
budget; and the housing project in Diwaniyah has been plagued
by a defaulted Polish contractor that has now been removed.
A new contractor has been awarded the project as well as an
additional $7 million for project completion. The capacity

BAGHDAD 00003185 005 OF 005

of the Ministry is limited and will keep falling short of
Iraq's infrastructure needs for roads, bridges, municipal
buildings and housing. End Note.)

AGRICULTURE REFORMS NEEDED
--------------------------

20. (SBU) Provincial officials lamented the state of
agricultural, requesting more support for animal feed and
equipment from the Ministry of Agriculture. The PC member
from Muthanna requested 25-50 percent subsidies for
purchases of spray aircraft, irrigation equipment, and
greenhouses. Diwaniyah officials requested more chicken
feed and the Anbar Governor asked for more veterinary
services and laboratory testing for meat. Dhi-Qar provincial
officials said the GOI needs to undertake a desalination
initiative.

MORE INDUSTRY NEEDED
--------------------

21. (SBU) The governors from Basra and Anbar asked the
Ministry of Industry and Minerals (MoIM) to focus more on
their provinces, while MoIM Deputy Minister Sami Al-Araji
explained his ministry's initiatives in those areas. The
Governor from Anbar asked Araji for permission to cut off
power to the Al Qaim cement factory, a state-owned
enterprise that came under private management in July. "It's
in the contract that the foreigners will provide
their own electricity, but they are still picking off the
national grid," He explained. He also suggested MoIM
establish a water-bottling facility. Araji said it was too
soon to solve the electricity issue with respect to the
cement factory, as the contract between MoIM and the foreign
operators allowed for a six month grace period on private
electricity generation. Addressing Basra officials directly,
Araji said his ministry had "big plans" for the province, and
shared MoIM's vision to build a "world class" petrochemical
industrial center there.

DISPLACEMENT ISSUES
-------------------

22. (SBU) Dhi-Qar officials expressed concern over the large
number of internally-displaced persons (IDPs) in the
province, and said this was compounding the 64 percent
unemployment rate there. Minister of Displacement and
Migration (MoDM) Sultanov thanked the provinces for their
support in housing IDPs and supporting the GOI's efforts to
establish rule of law throughout the country. He asked for
patience from the provinces as the MoDM finalizes its
national strategy for the return of IDPs.

COMMENT
-------

23. (SBU) The conference, broadcast live, was the first such
forum on essential services for these provinces; it followed
a similar, but less well-organized, session for the northern
provinces in August. While exchanges at times became heated,
the overall tone of the dialogue remained constructive and
cordial. We are encouraged by DPM Al-Issawi's engagement and
outreach to the provinces. The real measure of the
conference's success, however, will be to what extent the DPM
keeps his promise that provincial concerns will not fall on
deaf ears and that ministries will be held accountable for
their shortcomings. End Comment.
CROCKER

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