US embassy cable - 05BAGHDAD2936

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 002936 
 
SIPDIS 
 
C O R R E C T E D  C O P Y - TEXT ADDED (PARA. 1) 
 
E.O. 12958: DECL: 07/11/2015 
TAGS: ECON, EAID, PGOV, PREL, PINR, EAID, PGOV, PREL, PINR, IZ, IZECON, Parliament, Reconstruction 
SUBJECT: BARONESS NICHOLSON; IRAQI COORDINATION COMMISSION 
KEY TO EU DONOR FUNDING 
 
Classified By: Charge d' Affaires David M. Satterfield for reasons 1.4 
(b) and (d) 
 
1. (C) SUMMARY. European Parliament member Baroness Emma 
Nicholson told Charge on July 9 that the Iraqi Transitional 
Government must establish a 'coordination commission' in 
order to receive European Union funding, as well as to 
provide assurances of accountability.  Nicholson worried that 
the EU 200 million currently in the budget for Iraq 
construction would be used for other programs if the funds 
are not soon obligated, which could also be reflected in the 
2006 budget.  Nicholson envisions a EU delegation working 
with an Iraqi coordination commission to funnel money through 
either the World Bank or UN directly to the 'spending' 
ministries.  Expressing concern about this direct funding 
approach, Charge nonetheless agreed to approach Minister of 
Planning and Development Barham Salih about the need for such 
a commission, as well as to suggest that the Iraqi Government 
develop a prioritized list of feasible projects that the EU 
could fund. Baroness Nicholson seemed uninformed on recent ITG 
Progress, woking with BAghdad-based donors including the European 
Commission/Council rep, developing a new donor coordination mechanism, 
and fuzzy on the details of even EU assistance procedures. In a meeting 
 
with Saleh at the Brussels Conference she gave him the impression that 
the EU was about to pledge 130 million euros in "new" money, which, 
when Saleh's staff pursued it, proved to be inaccurate. We would 
welcome comment/insights from USEU. END SUMMARY. 
 
2. (C) European Parliament member Baroness Emma Nicholson 
told Charge on July 9 that the Iraqi Transitional Government 
(ITG) must establish a 'coordination commission' in order to 
receive European Union (EU) funding.  Nicholson emphasized 
the need to get the Iraqis to a point where they can make 
coherent presentations on their requirements.  Charge agreed, 
noting that the ITG has found it difficult to articulate a 
strategic vision, particularly with respect to taking the 
difficult steps.  The good and bad news, he continued, is the 
fact that it is an election year.  Government leaders will 
need to show progress but, because of potential political 
ramifications, getting them to make those decisions will be 
difficult. 
 
3. (C) Nicholson pointed to the lack of a donor coordination 
mechanism and said Minister of Planning and Development 
Barham Salih is under the mistaken impression that money is 
pouring into the 'spending' ministries.  Charge said that 
Salih had previously not been in a position to coordinate, 
but this has since been resolved to USG satisfaction. 
Nicholson countered that neither the ministries nor ministers 
can effectively coordinate, and hence the need to begin with 
some kind of a commission structure on which the EU can "hang 
its hat."  Without that, insisted Nicholson, money will not 
be forthcoming, even though EU 200 million is currently 
budgeted for Iraqi reconstruction efforts.  There have been 
other pledges of assistance, said Nicholson, but realizing 
those pledges is contingent on spending the money currently 
allocated for reconstruction. 
 
4. (C) Nicholson referred to the EU/Iraqi "Framework for 
Engagement" the European Parliament adopted on July 6, which 
she termed a "warning shot" in the context of the upcoming 
2006 budget.  There is money to be spent on Iraq's 
reconstruction, but she emphasized that the EU will require 
"absolute assurance" of a coordination mechanism at the 
national level.  The spending ministries -- which need to 
convert their wish lists into tangible projects -- should use 
this mechanism and provide the necessary accountability.  If 
the money is not obligated soon, worried Nicholson, it could 
be used for other purposes.  She was supportive of the PRDC 
concept, but claimed it is at far too detailed a level for EU 
consideration at this stage. 
 
5. (C) Nicholson anticipated that the EU would send a 
delegation to Iraq that would want to work with such an Iraqi 
coordination commission.  Funding, she said, would be 
funneled through either the World Bank or UN, but the 
ministries themselves would be able to spend the money. 
Charge expressed surprise and concern that ministries would 
have the flexibility to spend the money, pointing out that 
the U.S. coordinates spending with the ministries, but does 
not provide them with funding to do with as they please. 
Nicholson countered that she had lost much support because of 
"unwelcome" changes in the governments of European states in 
the course of the last year, so it had taken a great deal of 
effort to get even to this point. 
 
6. (C) Charge agreed that the USG could press the ITG to 
engage such a mechanism and would suggest that the Iraqis, 
specifically Salih, develop a well-scrubbed list of projects, 
as well as address the EU's concerns about accountability. 
He noted that Mission personnel are currently in Jordan 
preparing for the July 18-19 Dead Sea Donors meeting and said 
he would direct them to coordinate accordingly with Salih. 
E.O. 12958: DECL: 07/11/2015 
TAGS: ECON, EAID, PGOV, PREL, PINR, IZ 
SUBJECT: BARONESS NICHOLSON; IRAQI COORDINATION COMMISSION 
KEY TO EU DONOR FUNDING 
 
 
7. (C) Nicholson suggested that the most fund-worthy projects 
are those that can deliver tangible results, including those 
dealing with justice issues, capacity building, rule-of-law, 
trade associations and unions, civil society, and police 
training, as well as traditional 'bricks and mortar' projects 
such as road building.  Nicholson said other key areas 
include providing potable water and gender mainstreaming 
projects that focus on employment training.  However, she 
voiced concern about the amount of training taking place 
outside of Iraq, suggesting that future training be conducted 
in-country to the extent practicable. 
 
8. (C) BIODATA:  Baroness Nicholson was first elected to the 
European Parliament in June 1999 and re-elected in June 2004. 
 She is the Vice President of the Committee on Foreign 
Affairs and a member of the Committee for Human Rights.  She 
was a Member of Parliament for Devon and West Torridge from 
1987-1997 and Vice-Chair of the Conservative Party from 
1983-1987.  Nicholson is also the founder and Chair of the 
AMAR International Charitable Foundation, which she founded 
in 1991 to provide emergency aid for refugees in southern 
Iraq and the Iraqi marshlands.  END BIODATA. 
 
9. (U) REO HILLA, REO BASRA, REO MOSUL, and REO KIRKUK, 
 Minimize considered. 
Satterfield