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Cablegate: Security Council Renews Mnf-I, Dfi and Iamb

VZCZCXRO6124
OO RUEHBC RUEHBZ RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUCNDT #1187/01 3532152
ZNR UUUUU ZZH
O 192152Z DEC 07
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3371
INFO RUCNRAQ/IRAQ COLLECTIVE PRIORITY
RUEHGG/UN SECURITY COUNCIL COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 USUN NEW YORK 001187

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PREL PGOV UNSC IZ
SUBJECT: SECURITY COUNCIL RENEWS MNF-I, DFI AND IAMB

1. (SBU) Summary: On December 18, the UN Security Council
unanimously approved the extension of the mandate for 2008 of
the Multinational Force in Iraq (MNF-I) and the arrangements
for the Development Fund for Iraq (DFI) and the International
Advisory and Monitoring Board (IAMB). The U.S., UK and
Slovakia cosponsored the resolution, which is numbered
Resolution 1790. Prior to adoption, at Russia's request, the
Security Council received a briefing by Warren Sach, UN
Controller, on behalf of the IAMB. Sach identified five
major issues of concern in the handling of DFI monies (which
are primarily revenues earned from petroleum exports).
Following adoption of the resolution, the U.S, UK and Iraq
Permanent Representatives spoke, emphasizing the steady
transition of Iraq to full integration within the
international community. The Iraqi Perm Rep, Hamid
al-Bayati, emphasized that the government of Iraq considers
this extension of MNF authority to be its "final" extension.
End summary.

IRAQ RESOLUTION ADOPTED

2. (U) Following final approval by Prime Minister Maliki of
the MNF-I resolution text, the U.S. requested during the
morning of December 18 that the resolution be put "in blue,"
with a vote in the afternoon. Despite the fact that the
"blue" period normally lasts 24 hours, Council members agreed
to this expedited process given the consenus on the text and
the crowded Council calendar. In an intervention after the
vote, Ambassador Khalilzad noted that the decision to extend
the mandate, coupled with recent decisions to extend the
mandate of the UN Assistance Mission to Iraq (UNAMI) and to
launch the Iraq Compact in May, "signal that the
international community recognizes that what happens in Iraq
has profound consequences for us all, and that the Iraqis
striving to establish a stable, peaceful and prosperous
democracy merit our support." UK PermRep Sawers echoed this
sentiment, and noted that the UK is determined to "fulfill
its responsibilities and obligations to the Iraqi government
and people." Sawers said the UK's withdrawal from Basrah
should not be considered the end of the UK's involvement in
Iraq.

3. (U) Iraqi PermRep Bayati said the Council,s adoption of
the resolution was a "historic day" because it marked his
government's request "for the last time" for MNF support. He
While describing MNF's assistance as "essential to accomplish
the mission started with Iraq's liberation," he underscored
several times the Iraqi government,s desire that this
resolution be the last extension of the MNF-I mandate, noting
that no country desires foreign troops on its soil and that
MNF should not stay "one day longer than they are needed."
Bayati delivered an update on the situation in Iraq, and said
the government is focused on its efforts "to achieve national
reconciliation, to ensure expanded political participation of
all national political forces, guarantee respect for human
rights and the supremacy of law, achieve economic growth, and
to provide basic services for the Iraqi people." He claimed
Iraq had averted civil war and succeeded in rebuilding the
ISF. Bayati said the challenges ahead include defeating
terrorism and al-Qaeda and its allies. He said Iraq desires
to play a role in advancing stability in the Middle East. He
ended his intervention by calling again on the Security
Council to reduce or abolish the transfer of five percent of
Iraq,s proceeds from oil export sales to the UN Compensation
Commission set up to assist victims of Saddam Hussein,s
invasion of Kuwait. The official text of UNSCR 1790 is at
http://www.un.org/Docs/sc/unsc resolutions07.htm

IAMB BRIEFING

4. (U) UN controller Warren Sach, the UN,s representative to
the IAMB (comprised of the Arab Fund for Economic and Social
Development, the IMF, the World Bank, the UN and the GOI),
provided an update on IAMB activities before the vote at
Russia's request. Sach recalled that the IAMB had been set
up as an audit oversight body for the DFI, which to date has
held deposits of USD $70 billion in oil export sales, 10.2
billion in transfers of Oil-for-Food monies, and $1.5 billion
in transfers of frozen Iraqi assets. He reported that the
IAMB has met 21 times since October 2003. In the judgment of
the IAMB, "major issues" of concern related to the handling
of DFI resources are the following: 1) the absence of a
comprehensive oil metering system; 2) the use of barter
transactions (especially those not reported to the DFI);, 3)
inadequate controls over expenditures; 4) oil smuggling; and
5) "certain" contractual practices. He said these concerns
had been corroborated by other independent audits, including
those undertaken by the USG.

5. (U) Turning to the future, Sach reported that the IAMB
was working closely with the board's Iraqi successor, the

USUN NEW Y 00001187 002 OF 002


Committee of Financial Experts (COFE), to prepare for the
upcoming GOI takevoer of the IAMB function. Russian DPR
Shcherbak noted that the Security Council had not established
the DFI or IAMB but had merely "noted" their establishment in
Council resolutions. He said Sach's briefing underscored the
need for the Council to exercise its oversight over the IAMB
and DFI. To this end, he called for the IMF (as incoming
chair of the IAMB) to brief Council members in Washington in
January, in order that the Security Council might gain a
better understanding of the state of play within the
DFI/IAMB. Shcherbak asked Sach to organize this briefing.
Khalilzad

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