US embassy cable - 02AMMAN4304

C O N F I D E N T I A L AMMAN 004304 
 
SIPDIS 
 
TREASURY FOR OASIA -- MCDONALD, PIPATANGUL 
 
E.O. 12958: DECL: 07/25/2007 
TAGS: ETTC, PREL, IZ, JO 
SUBJECT: JORDAN TRADE MINISTER'S IRAQ TRIP "ONLY FOR 
APPEARANCES" 
 
Classified By: DCM Gregory L. Berry.  Reasons 1.5 (b) and (d) 
 
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SUMMARY 
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1.  (C)  According to the number two Ministry official, Trade 
Minister Salah al-Bashir's July 19-23 visit to Baghdad was 
primarily for show, and added little to the bilateral 
economic relationship.  He noted that some adjustments had 
been proposed to the bilateral oil and trade protocols to 
offset prospective imbalances resulting from the increase in 
global oil prices.  There was discussion of a bilteral FTA, 
but no progress toward that end.  End Summary. 
 
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IT'S ATMOSPHERICS 
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2.  (C)  Trade Ministry Secretary General Samer Tawil told 
Econoff July 25 that the July 19-23 trip to Baghdad on which 
he accompanied Trade Minister Salah al-Bashir was little more 
than damage control following Prince Hassan's recent surprise 
appearance and comments at the meeting of exiled Iraqi 
officers in London.  Tawil said local publicity surrounding 
the trip was a GOJ gesture to a peeved Iraqi leadership. 
Tawil added that the political nature of the trip, and the 
desire of the GOJ to steer clear of substantive negotiations 
with Iraq on trade issues, mean that technical level people 
on the GOJ side were not included on the trip. 
 
3.  (C)  Tawil reported that the Iraqis asked that the 
ceiling on 2002 Jordanian exports to Iraq be raised to 
compensate for the increase in crude prices (now over $25/bbl 
compared to about $19/bbl when the protocols were signed). 
Tawil said he tentatively agreed, but said that Jordanian 
suppliers of extra exports (above the previously agreed 
ceiling) would be paid by the GOJ in 2003 (i.e., some letters 
of credit to Jordanian suppliers approved in the fourth 
quarter of 2002 would only be issued in 2003).  Thus, 
increased outlays to Jordanian suppliers would not impact 
Jordan's 2002 budget. 
 
4.  (C)  Tawil added that other "agreements" announced after 
Bashir's visit, like the removal of 14 Jordanian companies 
from Iraq's "black list" of normalizers, were either 
overblown, were announcements of deals completed far in the 
past, or both.  Finally, he told Econoff that, while the 
issue of a Jordan-Iraq FTA was raised by the Iraqis, no 
progress was made or even seriously attempted. 
 
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Comment 
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5.  (C)  Through this sleight of hand, Tawil hopes that the 
cost of greater Jordanian exports in 2002 will be postponed 
until next year, to be paid for out of Iraqi oil shipped then 
(using cash raised by the oil's sale by the GOJ to the 
refinery company).  Indeed he probably hopes to minimize the 
impact by adjusting the still to be negotiated agreed level 
of 2003 exports.  In a way, however, Tawil's scheme could end 
up backfiring if 2003 subsidized oil imports are interrupted 
for any reason, including a U.S.-Iraq confrontation.  In that 
event, the GOJ would still owe suppliers, but not have the 
income stream to provide the cash.  Indeed, this could come 
at just the time when extra funds are needed to buy oil on 
the market. 
Berry