US embassy cable - 05BAGHDAD2822

UNCLAS SECTION 01 OF 02 BAGHDAD 002822 
 
SIPDIS 
 
SENSITIVE 
 
NEA/I PASS GRAMAGLIA, SILVERMAN, EB/TRA 
 
TAGS: EAIR, PREL, PGOV, ECON, IZ, BAGHDAD 
SUBJECT: BAGHDAD INTERNATIONAL AIRPORT GETS A 24-HOUR 
REPRIEVE, BUT OUTLOOK STILL NEGATIVE 
 
SENSITIVE BUT UNCLASSIFIED  USG DIST ONLY  NOT FOR 
INTERNET DISTRIBUTION 
 
REF: BAGHDAD 2804 AND PREVIOUS 
 
1. (SBU) SUMMARY: The July 3 anticipated closure of Baghdad 
International Airport (BIAP) was delayed for one day as 
representatives from the Prime Minister's office, Ministry 
of Transportation (MOT) and security contractor Global Risk 
Strategies ("Global") agreed to meet on July 4 to attempt 
to negotiate an alternative that would prevent BIAP's 
s 
closure.  In a meeting of all sides today, the PM pledged 
to support any agreement between the MOT and Global.  The 
ITG and Global moved further apart in their negotiating 
positions, however, and agreement tomorrow is very 
unlikely.  END SUMMARY 
 
2. (SBU) On the morning of July 3, Transitional Prime 
Minister al-Ja'afari hosted a meeting to discuss Global's 
security contract at BIAP (REFTELS)  Global country 
directors Messrs. O'Brien and Mann, the Ministers of the 
Interior (MOI) and Transportation, the PM's Legal Counsel 
(Dr. Fadel), the PM's Chief of Staff, and Embassy/IRMO 
Transportation representatives were present.  The PM 
pledged that all of Global's "rights" would be respected, 
however, the Iraqi Transitional Government (ITG) 
representatives also made clear that they did not recognize 
the 12-month contract award Global claims it received in 
April.  This position represents a complete policy reversal 
from last week's meeting held with the PM's representatives 
(REFTELS)  Rather than acknowledge the disputed contract 
and renegotiate its terms, as agreed to last week, the ITG 
now seeks to negotiate a 3-month phase-out contract 
instead. 
 
3. (SBU) The ITG also claims that Global did not have a 
valid contract from January through March 2005.  In a 
change from its position on June 25 and June 27, the ITG 
now says that it will not honor Global's unpaid invoices 
for March, April and May.  Instead, the MOT wants to 
negotiate a substantially reduced rate ($1-2 million per 
month) rather than the $3.7-4.8 million Global invoiced. 
 
4. (SBU) As the discussion became increasingly hostile, the 
parties moved away from agreement.  PM Ja'afari urged 
Global to meet directly with the Minister of Transportation 
and promised to honor any agreement they would make. 
Apparently, because the MOT is pushing the hardest line, he 
declared that his Deputy Minister and staff had exceeded 
their authority when they agreed to pay Global's invoices 
on June 27.  It is very unlikely that discussions to be 
held today, July 4, will lead to a negotiated solution. 
 
5. (SBU) The MOI claims their forces could be trained to 
take over airport security in one month.  The PM's position 
however is that a three-month transition would be better. 
The MOI and MOT said they had received other bids to take 
over airport security (NOTE: We understand that these were 
solicited rather than merely "received".  END NOTE)  They 
specifically cited a bid from the firm protecting the 
Palestine Hotel, for less than $2 million per month. 
 
6. (SBU) After the meeting, Dr. Fadel, the PM's Legal 
Counsel, admitted that he had deliberately avoided 
returning Global's calls to set up contract negotiations 
last week (REFTEL), after it became clear that the ITG 
would not support the approach agreed upon between Global 
and the Deputy Minister of Transportation, with the 
concurrence of PM representatives Said Hakki and Dr. Fadel, 
on June 27. 
 
7. (SBU) Global plans to meet with the MOT and Dr. Fadel 
tomorrow, but sees no chance for resolution.  Embassy 
representatives will also attend.  Global representative 
Tim O'Brien believes that on July 3 the PM repudiated 
commitments that his own staff made on his behalf in the 
June 25 and June 27 meetings and expressed his "contempt" 
for the resolution process and the people involved. 
 
8. (SBU) After today's meeting, the MOT floated the idea of 
the USG paying half of Global's arrears.  Per previous COM 
direction, Embassy representatives replied that the USG 
would not do so, and that the ITG should not consider it a 
possible option under any circumstances. 
 
9. (SBU) COMMENT: The Embassy continues to monitor the 
situation and encourage both sides to come to an agreement 
that will avoid airport closure.  Global representatives 
appear to firmly believe that the "good faith" offered last 
week by the ITG was actually done in "bad faith" as 
reflected in today's policy reversals.  As such, we remain 
doubtful that a mutually agreeable solution can be found. 
Since any new security arrangements put in place in the 
event of Global's departure would need to be thoroughly 
vetted before the civilian side of the airport can reopen, 
we are engaged to ensure that if the airport closes it 
would not impact our and ITG participation in the July 10- 
11 Joint Economic Reconstruction and Economic Development 
(JCRED) meeting or the July 18-19 IRFFI Meeting in Amman. 
END COMMENT 
 
10. (SBU) REO Hillah, REO Mosul, REO Kirkuk, REO Basrah, 
minimize considered. 
 
SATTERFIELD