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Cablegate: Responding to Arab League Boycott Reporting

VZCZCXRO9011
RR RUEHBC RUEHDE RUEHDH RUEHKUK RUEHROV
DE RUEHGB #3152/01 3410627
ZNR UUUUU ZZH
R 070627Z DEC 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 5646
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 BAGHDAD 003152

SIPDIS
SENSITIVE

DEPT FOR NEA/RA FOR MARK KELLY
DEPT PLEASE PASS TO USTR, TREASURY AND COMMERCE/BIS/OIC

E.O. 12958: N/A
TAGS: KBCT ECON ETRD XF IZ
SUBJECT: RESPONDING TO ARAB LEAGUE BOYCOTT REPORTING
REQUIREMENTS: IRAQ

REF: A. STATE 120272
B. BAGHDAD 2527
C. 08 BAGHDAD 764

SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY.

1. (SBU) Summary and Comment: Post regularly engages GOI
officials at all levels to encourage de facto non-compliance
with the Arab League Boycott of Israel (ALB). Senior GOI
officials repeatedly tell us that Iraq is not pursuing the
boycott, but a tangled web of conflicting laws, regulations
and CPA orders -- applied differently by each Ministry --
has, in the past, resulted in reports of ALB compliance
requests prohibited under U.S. law. While the GOI's slow
review of ALB-specific regulations continues, the changing
business environment and pressure by Post consistent with our
ALB action plan (ref C) have resulted in a significant drop
in prohibited requests. In fact, there have been no reports
of prohibited requests in 2009 in accordance with reporting
regulations under 15 CFR Parts 730-774, though at least one
possible case is under review by the Embassy's Foreign
Commercial Service. End Summary and Comment

2. (SBU) Post's responses are keyed to ref A questions. For
a more detailed review of Arab League Boycott compliance
activities in Iraq, please see ref B, et al.

-- Whether the host government requires participation in or
cooperation with any of the three forms of the ALB or other
international boycotts, for example by requiring that U.S.
firms complete boycott compliance questionnaires or furnish
boycott-clearance certificates as a prerequisite to
licensing, trademark or company registration, bidding on
contracts, or as part of a contract, or refrain from doing
business with companies headquartered in Israel?

U.S. companies have filed no official reports in 2009
regarding Iraqi authorities requesting ALB compliance in
contracts, business registration requests, and/or patent or
trademark applications. U.S. persons reported 33 such
boycott requests to USDOC in 2006, 21 in 2007, and 7 in 2008,
in accordance with reporting regulations under 15 CFR Parts
730-774. Nearly all past cases of prohibited requests in
Iraq (ref C) originated with four GOI entities: the Ministry
of Trade (MOT), the Ministry of Health (MOH), the Patent and
Trademark Office (PTO), and the South Oil Company (SOC).

-- Whether the host government, as a matter of policy,
practice, or contract, requests that U.S. firms comply with
boycott requirements or provides information regarding such
compliance?

Please see above.

-- Whether a host government's formal or informal boycott
practices have had an identifiable impact on U.S. businesses.

We are unaware of any U.S. businesses that have abandoned
operations in Iraq because of ALB compliance requirements in
2009. In the past, following Embassy intervention, GOI
officials have replaced ALB compliance requirements with
alternate language that does not appear to violate U.S. law.

-- Whether the country has legislation or regulations
covering aspects of the ALB? If so, comment on steps the
host government has taken to change domestic legislation or
regulations with respect to either strengthening or
eliminating any form of the boycott.

Conflicting requirements imposed before, during, and after
the Coalition Provisional Authority administration of Iraq
appear to be complicating efforts to harmonize a national
position on the Arab League Boycott. Differing Iraqi legal
opinions about these current requirements have slowed efforts
Qopinions about these current requirements have slowed efforts
by some Ministries (and accelerated efforts by others) to
remove ALB language from registration and licensing
regulations.

For example, Ministerial Instruction No. 196, issued March
15, 2004, by the Ministry of Trade, implemented certain
amendments to Iraq's 1997 Companies Law No. 21. Among other
provisions, the Ministerial Order prohibited discrimination
(based on national origin) against persons who seek to
register a company in Iraq. A separate registration
regulation, promulgated on August 30, 1989 under the
authority of the GOI's 1983 Companies Law No. 36, requires

BAGHDAD 00003152 002 OF 002


certification of compliance with the ALB as a condition of
registration. The Ministry of Trade has taken the position
that Ministerial Order No. 196 remains in effect and
supersedes the 1989 registrations regulation for foreign
companies seeking to register to conduct business in Iraq.
(Comment: Under this interpretation, there does not appear
to be an ALB-compliance requirement. End Comment) The MOH
has taken the position that the ALB non-compliant Ministerial
Order was revoked by subsequent legislation, and the MOH has
reverted to the 1989 boycott-compliant registration
regulation (Comment: Under this interpretation, there
appears to be an ALB-compliance requirement. Ironically, the
Ministry of Health asserts that the National Investment Law
of 2006, the drafting and passage of which the USG supported
with technical assistance, triggered the reversion to the
1989 ALB-compliant law. End Comment)

-- Whether a host government maintains an ALB Office, and if
so, what are its duties. Does the government send
representatives to meetings of the Central Boycott Office in
Damascus?

The Government of Iraq maintains a general Arab League office
located at the Ministry of Foreign Affairs. The office is
headed by relatively low-ranking bureaucrats, who appear to
have informally abdicated their responsibilities for ensuring
that Government Ministries implement policies and measures
consistent with the ALB.

-- Whether a host government, when apprised of instances of
attempted boycott enforcement by government agencies or
compliance requests by private entities, has taken corrective
steps. Please provide details of any positive measures taken
by host governments?

GOI officials have been willing -- once aware of a problem --
to replace ALB provisions with alternate language that does
not violate U.S. law. A Senior Advisor at the Ministry of
Health has reportedly rewritten MOH registration regulations
removing ALB-compliance requirements. Officials at the
Ministries of Health and Trade are reportedly reviewing the
draft registration regulations now. Any progress will be
reported septel.

-- Whether ALB outreach efforts have been undertaken by
Embassy officials during FY09 and whether these efforts have
elicited either positive or negative stances by host
government officials?
The Embassy raises ALB compliance issues in formal and
informal discussions within the context of the U.S.-Iraq
Strategic Framework Agreement working groups with our primary
interlocutors: Senior Advisor to the Minister of Trade Dr.
Abdulhadi al-Hamiri, Senior Advisor to the Minister of Health
Dr. Salah Shubber, and advisor to Deputy Prime Minister Rafi
al-Essawi, Dr. Jaber al Jaberi.
HILL

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