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Cablegate: Ici Annual Review Conference - Stockholm, May 29,

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PP RUEHDE RUEHROV
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UNCLAS SECTION 01 OF 05 STATE 060123

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID IR IZ PGOV PREF PREL SW EUN
SUBJECT: ICI ANNUAL REVIEW CONFERENCE - STOCKHOLM, MAY 29,
2008

REF: STATE 43799

1. (U) Posts may draw upon this report as needed in their
discussions with host governments about Iraq.

2. (U) Summary: In a meeting that most participants and
commentators agreed helped to improve international
perceptions of Iraq, eighty-four countries and twelve
international organizations met in Stockholm on May 29, 2008
to mark the first anniversary of the International Compact
with Iraq (ICI), complete the first annual Ministerial
Review, and chart the way ahead. Nearly all delegations
acknowledged that Iraq has made real progress over the year
with all three of the ICI "pillars" of security, political
reconciliation / democracy building and economic development.
Yet nearly all noted much work remains to be done. All
agreed that continued success depends on Iraq marshaling its
own substantial financial, human and physical resources.
Participants noted that Iraq's international partners will
need to contribute technical assistance for institutional
capacity building, measures to reduce barriers (e.g.,
avoiding restrictive visa policies), and greater engagement
to promote economic and political re-integration, regional
cooperation and greater trade and investment.

3. (U) Summary continued: Iraq and its major partners
pressed remaining creditors to reduce Saddam-era debts on
Paris Club terms. Iraq also pressed for canceling its
remaining compensation and reparations obligations, and
called for continuing the immunities that protect its
financial assets from legal attachment. The UN, Sweden,
Jordan and France mentioned the need for more humanitarian
assistance for refugees and displaced persons. Iraqi
officials pointed to programs within Iraq for helping
displaced persons and to USD 40 million given for refugees in
neighboring countries. The conference concluded with the
adoption of the "ICI Stockholm Declaration" that elaborates a
set of principles for development cooperation that center on
Iraqi ownership of the process, points to possible future
co-financings, records agreement to hold the ICI ministerial
reviews annually for the remaining life of the Compact
(through 2012), and extends an invitation from the Government
of Iraq to host next year's ICI ministerial in Baghdad. End
summary.

4. (U) With unsurpassed hospitality and efficiency Sweden
hosted the First Annual Review at the ministerial level of
the International Compact with Iraq (ICI) on May 29, 2008.
Welcoming remarks were delivered by Swedish Prime Minister
Fredrik Reinfeldt, Iraqi Prime Minister Maliki and UN
Secretary General Ban Ki-Moon. The results of the First

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Annual ICI Review Report were presented by Deputy Prime
Minister Barham Salih. All pointed to the real progress made
since the launching of the ICI on May 3, 2007, in the three
key areas ("pillars") of security, political reconciliation,
and economic reconstruction and development. DPM Salih said,
"it pains Iraqis" that the progress Iraq has made is not
adequately understood or appreciated abroad, and not
reflected in foreign media reporting on Iraq.

5. (U) All noted the improvements in the capabilities of
Iraq's security forces and the important contributions that
the Iraqi people are making to their own security. They
underlined the progress toward political reconciliation as
reflected in the strong stand the Maliki government has taken
against sectarian extremism and illegal armed groups, and for
key legislation such as the laws for the Independent
Electoral Commission, Justice and Accountability, Amnesty,
Provincial Powers, and Pensions. All favorably noted Iraq's
accession to the UN Convention against Corruption and steps
to establish a National Institute for Human Rights and a
strong and independent judiciary. Both Maliki and Salih
noted the progress being made at the provincial level and
said that the provincial development strategies would be
taken fully into account.

6. (U) In a marked improvement in tone from a year ago, many
delegates remarked on the notable progress that Iraq has made
on both the political and economic fronts and the
significance of re-integrating Iraq within its region and the
rest of the world. UK Foreign Minister Miliband remarked
pointedly on the favorable change in tone, and Finland's
Foreign Minister Stubb noted that Iraq soon will be on the
border of Europe (referring to Turkey's bid to join the EU).

7. (U) Cited often were the indicators that describe the
economic progress that Iraq has made since last year,
including the reductions in inflation and unemployment, and
gains in budget allocations and execution, oil exports and
GDP growth.

8. (U) The European Commission (EC) and the individual
European states were of one voice in expressing their support
for Iraq and their intention to increase engagement. The
European Union has budget Euros 90 million (about USD 135
million at current exchange rates) for technical and
humanitarian assistance in 2008. This is in addition to the
Euros 829 million (about USD 1.1 billion at then prevailing
rates) disbursed from 2003 through 2007. EC representative
Hugues Mingarelli added a strong exhortation to Iraq to
strengthen its structures for implementing ICI measures.
France pledged to uphold this engagement when it takes over
the EU Presidency in June. The UK, Denmark, Spain and
Germany said their bilateral assistance programs would
continue. Greece pledged to "soon" overcome hurdles and
honor its commitment made at the ICI's launch a year ago to
reduce Iraq's debt.

STATE 00060123 003 OF 005

9. (U) Japan reviewed its substantial development assistance
contributions including its grants and soft loans, and noted
that it has hosted two conferences for top Iraqis to promote
the process of political reconciliation. Korea reaffirmed
its ICI launch pledge of USD 200 million in assistance and
soft loans and intentions to remain deeply engaged in Iraq
through its PRT in Erbil.

10. (U) China made a new assistance pledge of about USD 7.2
million on top of the USD 17.3 million it has already
delivered. It said that it has already canceled Iraq's
sovereign debt (about USD 6 million), and will work with Iraq
to settle the amounts owed to China's state-owned enterprises
(perhaps USD 8 billion).

11. (U) Also making new pledges were Hungary (USD 100,000 for
scholarships), and Australia -- which more than doubled its
assistance program with a new pledge of AUSD 150 million,
including funding for 100 scholarships and a program for
Iraqi agricultural development.

12. (U) Russia pointed to its agreement to reduce Iraq's debt
by about USD 12 billion and its new bilateral agreement with
Iraq for trade, investment, education and technical
cooperation.

13. (U) The new Foreign Minister of Georgia, Ms. Eka
Tkeshelashvili, delivered a strong message of political
support and complimented Iraq on the improvements in
security.

14. (U) While railing against "the occupier," Iranian Foreign
Minister Mottaki acknowledged the progress Iraq is making and
described the elements of Iran's bilateral cooperation for
tourism, reconnecting railroads, adding nine electricity
transmission lines and improving health care. Perhaps the
biggest project will be for dual pipelines to take crude oil
from Iraq to the Abadan refinery in Iran, and then to return
refined products (e.g., kerosene). Mottaki reconfirmed
Iran's offer of USD 1 billion in soft loans and intentions to
provide USD 10 million to the International Reconstruction
Fund Facility for Iraq (IRFFI). He said Iran will help
"rebuild" the holy sites in Najaf and Karbala. Border
officials from Iran and Iraq have agreed to meet to discuss
issues of common concern. Mottaki pointed to the good that
is coming from the Iraq Neighbors Process, and wants
particularly for the Neighbors working groups to continue.

15. (SBU) In reference to the pledge Saudi Arabia made when
the ICI was launched a year ago to reduce Iraq's Saddam-era
debt on Paris Club terms, Saudi State Secretary Mr. Madani
bin Obeid said the Saudis had sent an "offer letter" to Iraq.
However, in a meeting on the margins of the conference
Iraq's Finance Minister Bayan Jabr said that no "offer
letter" had been received.

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16. (U) Several international organizations presented their
ongoing and planned assistance efforts for Iraq. The OECD is
actively engaged in helping Iraq to develop its National
Investment Commission. The Islamic Development Bank
reaffirmed its pledge to provide up to USD 500 million in
financing assistance, reported progress working with Iraqis
in the agricultural sector, and appealed to Iraq to establish
more flexible mechanisms for coordinating and approving donor
assistance. The Arab Monetary Fund is making progress to
reschedule Iraq's Saddam-era debt as a final step toward
restoring Iraq to full membership. The AMF will offer its
training programs to Iraq on a priority basis. The IMF
reaffirmed its supportive relationship with Iraq noting that
Iraq is on track to obtain the third segment of Paris Club
debt relief at the end of 2008. On the World Bank was vague
regarding its future plans for working with and supporting
the Iraqi government, perhaps reflecting that decisions are
needed about staffing in Baghdad.

17. (U) There was noteworthy progress for greater diplomatic
engagement. Brazil will open an embassy in Baghdad before
year-end. Turkey is opening a consulate general in Basra and
joining with the UK and Iraq to open a free trade zone on the
Kuwaiti border. Germany announced it will open a consulate
in Erbil.

18. (U) The levels of representation at the event were
generally good. At least thirty delegations were headed by
ministers, heads of organization, or their senior deputies.
Among Iraq's immediate neighbors, Iran, Turkey and Jordan
were represented by their foreign ministers. Iraq's Gulf
neighbors, however, were represented at relatively low
levels. None sent their foreign ministers; only one (Saudi
Arabia) sent a minister of state; the rest were represented
by division chiefs.

19. (U) In the spirit of openness and transparency, the ICI
documents and reports, and information about the Stockholm
ICI event can be found on-line at: www.IraqCompact.org,
www.UNIraq.org/ici.asp, and www.Sweden.gov.se/sb/d/7010.

20. (SBU) Comment: The ICI First Annual Review Report was
aptly subtitled, "A New Beginning." This theme -- that Iraq
is succeeding in achieving a genuine new beginning --
resonated through all of the speeches. Maliki and Salih
emphasized that Iraq needs partnerships -- not financial aid.
But as noted by UK Foreign Minister Miliband and others,
Iraq must keep up its end of the ICI bargain to follow
through with key reforms. For their part, Iraq's ICI
partners must continue their support in the form of technical
assistance for capacity development and, increasingly, for
private sector trade and investment. Success will reflect
that the leading edge for international engagement will have
progressively less to do with a sense of obligation, and more
to do with developing mutual opportunities. As DPM Salih

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noted, "Iraq's resources can help to alleviate needs the
world over." To be credible, between now and the next ICI
ministerial, Iraq must meet the challenges of passing the
Hydrocarbons Laws and other key legislation while improving
the effectiveness of ICI implementation. Iraq needs to do a
better job at inter-ministerial coordination and become more
adept and flexible at coordinating relations with its ICI
partners. End comment.
RICE

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