Cablegate: Chalabi's Provision of Services Committee - April 22 and 29

DE RUEHGB #1396/01 1261100
P 051100Z MAY 08




E.O. 12958: N/A

Ref: A. 08 Baghdad 1245
B. 08 Baghdad 1150
C. 08 Baghdad 1091

1. (SBU) SUMMARY: At the April 22 meeting and for a third straight
week the Ministry of Trade complained that some of their trucks
carrying needed food rations for Sadr City were turned away at
checkpoints by the Baghdad Operations Command (BOC). The Amanat also
blamed the BOC's strict checkpoint policy, which they claim
prohibits laborers from exiting Sadr City, for significantly limited
trash collection services across all Baghdad. The BOC had strong
words for both the Ministry of Trade and Amanat's accusations -
reporting that food rations were possibly poisoned and claiming that
Amanat employees do not show up for work because of threats, not
checkpoint delays. Dr. Chalabi was visibly annoyed by both reports
given his committee's previous recommendations to alleviate the
checkpoint "choke points". (Ref A and B)

2. (SBU) Also at the April 22 meeting, the Ministry of Industry and
Minerals (MIM) and brick factory owners from Nahrawan accused one
another of corruption and fraud. The brick factories are suspected
of selling Heavy Fuel Oil (HFO) - the fuel used to operate the brick
factories, on the black market, rather than using it to operate the
factories. The factory owners claimed that HFO distribution charts
were being falsified by government employees, making it appear as
though factory owners were receiving larger quantities of HFO.
Chalabi refereed the dispute and later determined that he would send
a memo to the National Security Advisor (NSA), strongly suggesting
that Nahrawan brick factories be supplied with HFO from the Bayji

3. (SBU) Attending the meeting for the first time, the General
Director (GD) of Rail Services for the Iraq Ministry of
Transportation hailed rail capabilities in Iraq. He pled for
increased utilization from other Iraqi ministries, particularly
Trade and Oil. Initially expressing reluctance to increase reliance
upon rail due to external threats, the Deputy Minister of Trade
softened her tone and agreed to meet privately with the GD. The
Ministry of Oil (MoO) was not in attendance; therefore their opinion
regarding greater rail utilization remains unknown.

4. (SBU) The Baghdad Water Authority (BWA) reviewed short and long
term solutions to expected summer water shortages, including water
distribution via tankers and dredging the Tigris near the Karkh
Water Treatment Plant. (Ref C) At the conclusion of the April 22
meeting, the Ministry of Electricity (MoE) reported that summer
electricity production levels (5400 MW) were only attainable if the
security situation improved.

5. (SBU) Water scarcity, the impact on Sadr City services due to
ongoing kinetic activities and transportation needs were on the
April 29 agenda, with little new news to report and fewer new
resolutions or recommendations offered. Interestingly, after the
Amanat proudly reported its activities to address water scarcity,
including tanking water, Deputy Mayor Naem crumbled under
questioning from Dr. Chalabi. He threw up his hands in disgust and
said that the tankers wouldn't even temporarily solve expected water
shortages. The Deputy Minister of Trade told of the same problems
discussed at the April 22 meeting with little progress to report on
previous recommendations. FAQ spokesperson, Mr. Tahseen al Shekhli
painted a grim picture of education in Sadr City, although Dr.
Chalabi chastised him for spreading propaganda. The Deputy Minister
of Health was in attendance for the first time in over 3 weeks. He
provided a brief, but upbeat report on health services in Sadr City.
The meeting ended with a report on likely repercussions of an
ongoing dispute between Zain, the largest cell phone provider in
Iraq, and a security firm providing security for cell phone towers
throughout the country. According to the briefer, if the dispute is
not resolved immediately, cell phone service will be disrupted,
dealing a significant blow to intelligence and infrastructure
programs. End Summary

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Sadr City Services Show No Apparent Improvement: 4/22-4/29
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6. (SBU) At the April 22 meeting, the Deputy Minister of Trade
reported that some staple ration items, including sugar, cooking oil
and detergents have been provided to the residents of Sadr City for
the month of May despite checkpoint delays and overall ration
shortages. Six other items though, including milk, flour, wheat,
soap and tea, still need to be provided. Reported first on April 8,
milk has not yet reached the requisite testing centers due to
violence. (Ref B) There are overall shortages of wheat and soap and
some of the other supplies are late because they cannot be delivered
to Sadr City, again because of checkpoint procedures. Chalabi was
not able to mask his discontent - and in fact reminded the committee
that they have done their part to alleviate checkpoint delays,
sending three memos to the BOC towards that end. (Ref A and B) A
representative from the National Security Advisor's (NSA) office and

BAGHDAD 00001396 002 OF 005

Iraq-Executive Steering Committee (I-ESC) Secretariat, Mr. Sayid,
suggested that this issue be elevated to the I-ESC, a weekly meeting
hosted by Prime Minister Maliki and attended by Iraqi Ministers and
Baghdad local government officials, including the Mayor, Governor
and Provincial Council Chairman. The committee did not object so the
Ministry of Trade is expected to provide a detailed report for an
upcoming I-ESC.

7. At the April 29 meeting, the Ministry of Trade reported that 78
tons of children's milk was finally distributed, but another 23 tons
is needed. Deputy Minister Soiba announced that 19 containers, or
350,000 tons of wheat were at Umm Qasr port in Basrah, waiting to be
unloaded. This sparked a larger conversation about the current
supply chain management system for Iraq's Trade Ministry. Dr.
Chalabi was outraged to learn that the current supply chain system
takes on average 3 months to unload 1 month's worth of supplies.
Chalabi demanded a 6 month forecast of wheat purchase, delivery and

8. (SBU) Trash continues to pile up not only in Sadr City, but
throughout all of Bagdhad, reported Baghdad Deputy Mayor Naem, a
Sadrist, at the April 22 meeting. Because the vast majority of the
Amanat's laborers are from Sadr City and cannot get through the
checkpoints, the Deputy Mayor estimated that less than 50% of trash
produced daily is removed daily. The BOC, in an agitated voice
countered, saying that they "...are not preventing people from
getting to work". In fact, the General in attendance said that many
of his soldiers are from Sadr City themselves. He pointedly blamed
militias for intimidating Amanat employees. He claimed that the
Iraqi Army faces similar threats.

9. (SBU) (The Deputy Minister of Defense said that the Iraqi Army
and police are being treated as criminals and narrated an attack on
an Iraqi soldier and his family in the Ghazaliya area simply because
of his affiliation with the Iraqi Army. Dr. Chalabi expressed
sympathy, but stuck to his task, improving services in Bagdhad. This
issue was not one the committee neither could nor would address.)

- - - - - - - - - -
Sadr City Check-Up
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10. (SBU) At the April 29 meeting, the Deputy Minister of Health
said that since April 28, 2,605 people have been wounded in action
during the ongoing conflict in Sadr City. Another 925 people have
been killed in action. Approximately 80% of medication needs are
currently met and ambulance movement in and out of Sadr City has
improved since last report, over three weeks ago. The Deputy
Minister said that one hospital, Martyr Sadr Hospital, has been
without power for over 10 days, but its current status is good due
to generators. Dr. Chalabi complemented the Ministry's efforts and
said he intends to provide incentive awards to the doctors working
over time for Sadr City.

- - - - - - - - -
Fueling Sadr City
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11. (SBU) Fuel delivery for Sadr City was briefly discussed at the
April 29 meeting. According to Dr. Chalabi the Prime Minister (PM)
stopped most fuel delivery into Sadr City, with the exception of
kerosene. However, 400 containers of LPG, 8 oil trucks and 6 trucks
carrying diesel have supposedly been delivered. Another 55 trucks,
containing various fuel products await entry via the checkpoints to
Sadr City, according to the NSA. Dr. Chalabi will send a committee
representative to Modafar Square to assist Coalition and Iraqi Army
with fuel movement into Sadr City.

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Learning in Sadr City
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12. (SBU) Mr. Tahseen al Shekhli, the FAQ spokesperson, claimed
that ongoing kinetic activity and insurgent activity in Sadr City
has prevented many children from attending classes. The rapidly
approaching June high school diploma tests will be devastating for
many students because many are ill prepared due to their inability
to attend class. Chalabi suggested that the test be postponed, but
Tahseen pushed further, arguing that the students did not receive
enough education throughout the year and there simply wasn't enough
catch up time before Chalabi's proposed testing date. Tahseen
suggested that seats be set aside for former Sadr City students to
attend universities. After a brief discussion, Dr. Chalabi asked his
staff to invite the Ministry of Education to attend the May 6th
meeting for further discussion on this issue.

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Heavy Fuel Oil (HFO): Black Market vs Brick Factories - an April 22
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BAGHDAD 00001396 003 OF 005

13. (SBU) Acting as mediator between a representative from the
Ministry of Industry and Minerals (MIM) and several Nahrawan brick
factory owners over HFO distribution, Dr. Chalabi will send a letter
to the NSA recommending that the Nahrawan brick factories be
supplied with HFO from Bayji.

14. (SBU) According to the Deputy General (DG) of Industry and
Development from MIM, of 410 brick factories, 133 are operational
and all 133 have consistently received HFO under MIM's authority.
When asked about capacity, the DG said that if all 410 factories
were operational, then 8 billion bricks could be produced in a year,
employing a significant amount of laborers. Nahrawan alone can
produce 30 million bricks at full capacity. When probed about fuel
shortage, the DG conceded that at least 50,000 jobs are lost because
of it.

15. (SBU) The brick factory owners defended themselves against
accusations of selling HFO to the black market instead of using it
to operate their facilities. (Note: The sale of HFO is more
profitable than the sale of bricks. End Note) They countercharged
the Ministry of Oil (MoO) with falsifying records, claiming that the
owners picked up larger quantities of HFO than actual reality. In
one example, the brick factory owner said that his factory was
legally authorized 16 tankers of HFO from Bayji, but after picking
up that allotment, he was issued a receipt totaling 24 tankers, an
additional 8 tankers he claimed never to have received. The owners
asked Dr. Chalabi to sequester HFO distribution charts from June
2007 to March 2008 from the MoO to prove this point.

16. (SBU) According to the brick factory owners, SOMO sent a memo
stating that they would supply only registered facilities with HFO.
They strongly criticized MIM for not doing their due diligence to
adhere to that request and to provide the factories with adequate
fuel. The NSA representative suggested that MIM conduct a needs
assessment or allow the factories to get their own supplies at
Bayji. There were security concerns regarding the latter suggestion,
but Dr. Chalabi decided to pursue that option primarily because it
will be the quickest solution. Quick fixes are not unusual for Dr.
Chalabi in his ombudsman role.

17. (SBU) Frustrated by the politics, the brick factory owners
asked the committee to remove political parties from their
Industries Union. Adhering to his committee's mandate, Chalabi ever
so politely told them that was not within his jurisdiction.

- - - - - - - - - - - - - - -
The Little Engine that Could?
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18. (SBU) The rail from Basrah to Baghdad is and has been working
for some time reported the General Director of Rail Service from the
Ministry of Transportation at the April 22 meeting. While
acknowledging that security is currently more problematic, he pled
for greater utilization, particularly for commodities and oil
movement. Primarily lobbying the Ministry of Trade, likely because
the Deputy Minister complained earlier of transportation problems,
he offered rail as a viable alternative to move food ration supplies
from Um Qasr port in Basrah to Baghdad. Dr. Chalabi noted that Trade
has been threatened by some criminal elements against using rail.
(Note: Rumors have circulated that there is a "mafia-like"
organization controlling the trucking industry. End Note) Dr.
Chalabi questioned Transportation's loading and offloading
capabilities, which the GD admitted was limited. Nonetheless, the
Deputy Minister of Trade invited the GD to visit with she and the
Director General of Ration Cards to discuss greater use of rail
within her ministry.

19. (SBU) Dr. Chalabi commended the Ministry of Transportation for
their continued commitment to move 1 million liters of kerosene per
day. The GD seized that opportunity to lobby for an additional 1
million liters of kerosene per day, which he claims the rails can
handle, including on and offloading. Unfortunately, the Ministry of
Oil was not represented at the meeting to respond.

- - - - - - - - - - - -
Water Water Everywhere
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20. (SBU) At the April 22 meeting, the BWA expressed serious
concerns of a drought this summer, which will lower the Tigris River
water levels and possibly halt the use of the Karkh Water Treatment
Plant, a major supplier of potable water to Baghdad. If Turkey
builds new dams, which is rumored, the BWA warned of grave
consequences to water levels throughout all of Iraq, not just

21. After several meetings, the committee has attempted to plan and
prepare for water shortages during Iraq's hottest months. (Ref A, B
and C) In the short term, the Amanat plans to distribute water to
areas expected to face shortages over the summer months
(July-September). The Deputy Mayor asked for a representative from

BAGHDAD 00001396 004 OF 005

the Provision of Services Committee to participate in future
planning sessions to ensure coordination. The committee also
reviewed some of the previously suggested longer-term solutions,
including dredging the river near the Karkh Water Treatment Plant,
and building a temporary dam. (Ref B and C) The BWA announced the
formation of a committee/department to address the Tigris River
dredging issues. Prepping for the planned dredging site around the
plant is underway. One of the dredgers previously mentioned for use
on this project could not be repaired, but a new dredger has been

22. (SBU) The BWA also discussed on April 22 their trip with Multi
National Division-Baghdad (MND-B) to several proposed Reverse
Osmosis (RO) sites. MND-B plans to lend several of these water
purifying devices to the Amanat to help curb expected potable water
shortages. Most importantly, the Mayor of Baghdad, recently assured
BWA of their commitment to provide necessary resources to ensure
adequate, clean water production and delivery. No details were
offered so it's difficult to ascertain the level of commitment at
this time.

23. (SBU) Violations, mainly theft, against water pipelines
continues to burden the potable water system. Violations must be
stopped the BWA argued, but they also contended that part of the
solution involved alternative resources for both drinking and
irrigation water. The Ministry of Interior (MoI) is supposedly
creating a "violations department" to address these issues. Dr.
Chalabi suggested that the Amanat hire guards to be available 24/7
to protect the major water lines running from the east to the west.
He intends to send a memo to the Mayor of Baghdad to that end. The
BWA seemed somewhat frustrated by Chalabi's proposal and reiterated
that security alone will not resolve the issue. He pushed for
alternatives and outright improvements to the irrigation water
system. However, at that time no such solutions were offered.

24. (SBU) At the following meeting, April 29, Baghdad Deputy Mayor
Naem proudly delivered a report on water conditions in Baghdad.
Municipal offices are currently looking into their needs and
available resources, specifically available tankers for the summer
months. He said the Rashid area is expected to face shortages and
will need at least 349 tankers to compensate for those shortages.
Nine sectors in Sadr City will require two shifts of potable water
tankers per day. Each tanker will cost approximately 100,000 dinar,
costing more than the Amanat claims to have. They are seeking
assistance from the Mayor.

25. After throwing darts at the wall to determine the number of
tankers needed and the people served, Chalabi declared that the
Amanat's plan would not meet estimated need. (Note: Need has never
really been determined. End Note) Naem said the ministries were
supposed to lend trucks to the Amanat. He asked the Ministry of
Trade for the 150 tankers previously promised, but the Deputy
Minister corrected his figures with a mere 30 tankers. Naem then
said that the municipal offices could not be forced to lease
vehicles. Chalabi scolded him for going into unnecessary details and
reminded him of his task to provide potable water to the people.
Feeling cornered, Naem then said that there were not enough sources
of potable water to meet this demand - the tankers were not going to
work. Clearly frustrated with Naem's tap dance, Chalabi took the
lead, stating that he will send a memo to the Prime Minister and
Council of Ministers asking for funding to supply 120 days worth of
potable water. Chalabi ordered his staff to pull together the
municipal offices to develop a coordinating distribution plan.

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Will Electricity Meet its Production Goals this Summer?
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26. (SBU) On April 22, the Deputy Minister of Electricity said that
previous electricity production projections, 5,400MW, 1,400MW of
which are for Baghdad, are attainable only if the security situation
improves. The Deputy Minister submitted a report of damages from
kinetic activity in Sadr City. Several transformers are leaking oil
and several low pressure cables have been damaged. The Ministry is
sending repair crews to accessible areas, but some areas are still
not safe enough to enter. It's not clear, if and when those areas
will in fact become accessible.

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Zain Gone Zany?
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27. (SBU) Concluding the April 29 meeting, a cellular phone
consultant provided a doomsday report on an ongoing rift between
Zain cellular phone provider and its former/current security
provider. Over $15 million is owed to the more than 7,000 security
forces protecting Zain's cellular network throughout the country.
According to the briefer, if the money is not paid by May 13, the
security forces are threatening to walk which will make the network
vulnerable to looting and insurgent attacks. This will disturb not
only the primary communications network, but also intelligence

BAGHDAD 00001396 005 OF 005

operations, essential service delivery and repair, etc. The briefer
urged the Government of Iraq, Multi National Force-Iraq and the U.S.
Embassy to intervene on the matter. The U.S. Embassy maintains that
this is a matter between two private sector entities - no place for
the U.S. Embassy. Dr. Chalabi intends to send a memo to the Prime
Minister on the matter. (Note: Dr. Chalabi owns some portion, if not
all, of the security firm. End Note)


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