US embassy cable - 04AMMAN1918

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 001918 
 
SIPDIS 
 
E.O. 12958: DECL: 03/11/2014 
TAGS: ECON, PREL, SOCI, JO 
SUBJECT: IRAQI BUSINESSMAN "CAUTIOUSLY" OPTIMISTIC ABOUT 
IRAQ 
 
REF: AMMAN 1722 
 
Classified By: CDA David Hale for reasons 1.5 (b) and (d). 
 
1. (C) Summary.  An Iraqi businessman who operates a small 
office supply factory in Baghdad told us that he is 
cautiously optimistic about social and economic developments 
in Iraq, and that he has increased production and is 
operating two shifts at his Baghdad factory.  He hopes for 
better banking and credit services in Iraq and shared his 
concerns about the July 1 transfer of power.  He warned about 
continuing strains in the Iraq-Jordan relationship and hoped 
that time will heal deep wounds.  End Summary. 
 
IRAQI BUSINESSMAN OPTIMISTIC 
---------------------------- 
 
2.(C) In a March 3 meeting with PolOff, Raid Rahmani, an 
Iraqi businessman with factories in Amman and Baghdad, told 
us that he is cautiously optimistic about business prospects 
and life in general in Iraq.  He cited a reduction in the 
number of kidnappings, increased traffic around Baghdad until 
midnight, the revaluation of the Iraqi dinar against the 
dollar (although too volatile at times), higher salaries for 
average Iraqi workers, improved and informative programming 
on the Al-Iraqiyya television station and better access to 
gasoline (at cheap prices) as delible signs of improvement. 
 
3. (C) Rahmani owns a factory that produces markers, 
ballpoint pens, rulers and crayons in Baghdad.  He said he 
currently employs around 50 Iraqis on two shifts and is 
looking to hire more.  He added that unskilled labor costs 
have steadily risen from USD $12/month to an average of USD 
$50-60.  He has advertised in a local newspaper looking to 
hire more workers and was disappointed with the lackluster 
response.  He blamed the level of insecurity in and around 
Baghdad for the lack of interest and stressed an improvement 
in security will be directly linked to an improvement in the 
unemployment situation.  He proudly declared that business 
was great and that he is making money exporting primarily to 
Jordan, and is interested in expanding. 
 
BANKING SERVICES: IMPROVEMENT EXPECTED 
-------------------------------------- 
 
4. (C) Rahmani complained about the poor quality and 
availability of banking services in Iraq.  He said there was 
no "functioning" banking or insurance system and bemoaned the 
lack of "letters of credit" and other credit programs to 
assist Iraqi businessmen.  The lack of such services, he 
added, was a deterrent to those in Iraq with little or no 
capital who may be interested in starting businesses of their 
own.  He disliked having to deal with cash in many of his own 
business transactions.  (Comment: According to our other 
informed sources, this is not an entirely accurate picture of 
banking services in Iraq.  While letters of credit are 
expensive and difficult for Iraqi firms with no outside 
assets or partner to obtain, they are available.  We know 
that Jordan's Export and Finance Bank is offering letters of 
credit to private Iraqi businessmen through its working 
relationship with the National Bank of Iraq.  This 
arrangement, however, may have been placed in jeopardy by 
recent Iraqi government activity - Reftel A).  Further, 
Embassy sources told us there are at least seven private 
Iraqi banks offering letters of credit and doing electronic 
transfers in Iraq. 
 
JULY 1: POLITICAL UNCERTAINTY 
----------------------------- 
 
5. (C) On the political front, Rahmani opined that the 
uncertainty over the July 1 handover is creating anxiety for 
average Iraqis.  Many Iraqis are worried about what the 
transfer of power will mean, how it will affect them and how 
the country will develop once Iraqis are left to govern 
themselves. 
 
IRAQ-JORDAN RELATIONS: STRAINED 
------------------------------- 
 
6. (C) On Jordan-Iraq relations, Rahmani was frank about the 
level of resentment felt by many Iraqis against Jordan and 
its citizens.  He said Iraqis see Saddam-era Iraqis living it 
up in Jordan, being well-received, buying up expensive villas 
and driving fancy cars.  He said Iraqis recognize that these 
people owe their wealth to the Saddam regime and that their 
"ill-gotten" wealth was made at their expense.  That Jordan 
grants Jordanian citizenship to Iraqis who invest JD 750,000 
(USD $1,059,300) in Jordan, he added, touches on a raw nerve 
for many Iraqis who feel that money spent by former regime 
officials belongs to Iraq and Iraqis. 
 
IRAQIS NEED TO SEE MORE POSITIVE CHANGE 
--------------------------------------- 
7. (C) Rahmani said that while he remains optimistic, the 
U.S. must make every effort to let average Iraqis "feel" that 
change is progressing (electricity blackouts every 3 hours 
must improve), engage Iraqi businessmen and provide them with 
business opportunities.  As an Iraqi, he said, "if I make a 
profit I reinvest it in Iraq, while a Lebanese, Egyptian or 
Kuwaiti repatriates such profit to his respective country." 
 
COMMENT 
------- 
 
8. (C) Rahmani's comments mirror those who have heard from 
other Iraqi businessmen that the situation is improving -- 
but not quickly enough. End Comment. 
9. (U) Baghdad minimize considered. 
 
Please visit Embassy Amman's classified website at 
http://www.state.sgov.gov/p/nea/amman or through the 
Department of State's SIPRNET site. 
HALE