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Cablegate: Rehabilitating Industry in Diyala Province - Progress At

VZCZCXRO0997
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #4055/01 3471503
ZNR UUUUU ZZH
R 131503Z DEC 07
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 4829
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 004055

SIPDIS

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ECON ETRD EAID EFIN IZ
SUBJECT: REHABILITATING INDUSTRY IN DIYALA PROVINCE - PROGRESS AT
DIYALA ELECTRIC INDUSTRIES

1. (U) This is a PRT Diyala reporting cable.

SUMMARY
--------

2. (U) In the wake of recent clearing operations by Coalition Forces
in Baqubah, rehabilitation of the primary State-Owned industrial
facility in Diyala province made good progress in September and
October. The Director General returned to the facility after
several months' absence, the Department of Defense's Task Force for
Business Stability Operations (aka "Brinkley Group") performed a
thorough assessment of several manufacturing lines, and the
Government of Iraq (GOI) has renewed commitments to support the
facility.

Progress at Diyala Electric
---------------------------

3. (U) The months of September and October were busy for the PRT's
primary industrial focus at the moment, Diyala Electric Industries
(DEI). First, engineers and production experts from the Department
of Defense's Task Force for Business Stability Operations (aka
Brinkley Group) performed a four-day site assessment which was very
successful. They were able to evaluate the distribution transformer
plant, power transformer plant, oxygen/argon plant, and the
fiber-optic plant. The Brinkley Group security consultant also
completed a security survey of the facilities and will provide the
PRT with his recommendations.

4. (SBU) DEI provided greater access to personnel and equipment than
ever before. The provincial government, Brinkley Group, PRT, and
3-1 Cavalry (CAV) Brigade (BDE) have developed a division of effort
plan to bring four of DEI's production lines (x2 transformers,
oxygen, and fiber-optic) back up to full production capacity. The
provincial government has budgeted approximately $7M USD from the
2007 Budget to be used primarily for purchase of raw materials. The
Brinkley Group will provide a grant of at least $500k USD to be used
primarily for purchase of repair parts. They will also contact the
World Bank regarding low-interest loans that could be used to
replace worn out machinery. Finally, the PRT and 3-1 CAV BDE are
exploring options to provide sufficient power to the plant for full
operation, which will probably involve purchasing generators.

5. (SBU) Second, the Director General of DEI, Abdul Wadood, returned
from his self-imposed exile after three months. Under Abdul Wadood's
previous tenure, DEI was moribund. He provided a long list of
excuses why he could not get the plant running again, and showed no
initiative to overcome them. Since he fled the province in June DEI
had made steady progress towards partial operation with the Acting
DG, Mahmoud Abdul-Razaq, in charge. Fortunately, Mr. Wadood appears
to be more cooperative now than before he left in May. For example,
he reports that DEI has increased the number of commuter buses
moving personnel in the greater Baqubah area from seven, at the
beginning of the month, to thirty-three by the end. Mr. Wadood also
claimed that that the working hours have increased by one hour since
his return and are now from 0800 to 1200. He committed to
increasing them by two more hours from 0800 to 1400 after Ramadan is
over in mid-October. He's also committed to attending the weekly
Governor's cabinet meeting at the Governance Center (GC) on Monday
mornings.

6. (SBU) Third, the Deputy Commanding General of Multinational
Force-Iraq (MNF-I), Lieutenant General Rollo, visited DEI along with
the Deputy Governor. During the visit it was clarified that the
Ministry of Industry and Minerals (MIM) had received approximately
$500k USD recently allocated by the Deputy Prime Minister's office
for back pay and victim compensation, but it has not provided the
funds to DEI. When pressed, Mr. Wadood also admitted that the
presence of the Iraqi Army is needed at DEI in order to protect the
workers, and they should not be removed. To illustrate the fragile
security situation in Diyala, twelve DEI employees were abducted
this month when their bus was intercepted by Anti-Iraq Forces (AIF)
on the road just west of DEI. Fortunately, they were quickly
released unharmed once they identified themselves as Sunni.

7. (SBU) Finally, according to Mr. Wadood, the Ministry of Industry
and Minerals (MIM) has recently made several encouraging moves
toward helping DEI become functional again. First, MIM has
allocated $4 billion ID for DEI to purchase a critical piece of
machinery for the Transformer plant. The MIM has made the
stipulation that the equipment must be purchased by the end of the
calendar year or DEI will lose the money, and Mr. Wadood is now in
negotiations with a German company to supply it. Second, the MIM
asked the DG whether DEI needed two heavy fuel oil generators (5 MW
and 7 MW), which it would import from Korea, to help insure
sufficient electrical power to the production lines. DEI replied in
the affirmative via official letter in October.

COMMENT
-------


BAGHDAD 00004055 002 OF 002


8. (SBU) All agencies of the US Government need to continue
providing their full support to DEI to further encourage the
positive steps being made at DEI. Increasing production will
provide desperately needed employment opportunities, inject needed
currency into the local economy, provide equipment critical to
repairing Iraq's damaged electrical infrastructure, and directly
support Coalition Forces counter-insurgency strategy in the recently
liberated city of Baqubah. End.

BUTENIS

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