US embassy cable - 05BAGHDAD3037

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 003037 
 
SIPDIS 
 
E.O. 12958: DECL: 07/20/2015 
TAGS: PREL, ETRD, EPET, RS, IZ 
SUBJECT: FURTHER ON RUSSIAN COMPANIES IN IRAQ 
 
REF: A. MOSCOW 8677 
     B. MOSCOW 8678 
 
Classified By: Charge d' Affaires David M. Satterfield for rreasons 1.4 
 
 (b) and (d) 
 
1.  (C) Embassy Baghdad read with great interest Embassy 
Moscow's two excellent cables on Russian companies in Iraq 
and on how Russia is coming to terms with the new Iraq 
(REFTELS), and wanted to add that at least one Russian 
company is reaching out to the U.S. in Baghdad in an attempt 
to generate business.  On July 10, former Russian Ambassador 
to Syria Alexander I. Zotov (now retired) called on Charge 
ostensibly to discuss political developments in Iraq.  In 
reality, he wanted to discuss business prospects for a 
company he is now representing, Russian Engineering Company. 
 
2.  (C)  Zotov reminisced about how his first overseas 
assignment was as a junior officer in Moscow's Embassy in 
Baghdad.  He feels as if he has come full circle and says he 
is motivated by a strong desire to help the Iraqi people.  He 
said that to do so, he has come to the realization that to 
help Iraqis, one must work with the Americans.  The company 
he represents operates in the south of Iraq but currently has 
very little work to do.  Although Zotov's card indicates he 
works for the "Russian Engineering Company," he passed us 
another with the name of the person in charge in Iraq that 
listed a company name of "Energo Engineering Enterprises." 
(The logo bears a strong resemblance to the now infamous 
Enron E.) 
 
3.  (C)  Zotov explained that in his view, four of Iraq's 
biggest problems are unemployment, lack of adequate energy 
generation, difficulties with transport, and a failure to 
maximize oil exports.  He said his company is well placed to 
help solve all these by employing large numbers of Iraqis, 
constructing power plants, helping to clear Iraq's Persian 
Gulf ports to open the country up to cheaper and more 
efficient ways of moving its products, and by repairing the 
Basra oil terminals.  He estimated that Iraq loses more than 
one million dollars a day by having to utilize roundabout 
shipping routes and lamented the fact that his firm has been 
negotiating for over a year on the port clearing contract. 
This means the Iraqis have lost more revenue by doing nothing 
than they would have by paying the contract price for the 
project. 
 
4.  (C)  Zotov said he understands that because the U.S. is 
funding most of Iraq's major projects there is a preference 
to give the work to American companies.  All he is asking 
for, he said, is a fair chance to compete for some of the 
projects coming on line.  He said that his company has been 
in Iraq for some time, knows the country well, and is ready 
to go to work.  IRMO Senior Transportation Advisor, who along 
with Acting PolMil Counselor was present with the Charge, 
advised Zotov that contracts for salvaging and dredging 
operations at Basra would be coming out soon, and that the 
terminals will be rebuilt, although not for one or two more 
years.  He also advised him that so far $40M has been spent 
or committed on these projects.  He offered to forward 
Zotov's contact information to the Ministry of Oil. 
 
5.  (C)  On the political front, Zotov told Charge that he 
has spoken with the Prime Minister and advised him that 
Russia, too, had recently undergone revolutionary changes. 
He said that under present circumstances extraordinary steps 
are needed by the Iraqi Transitional Government (ITG) and 
that the people need to be convinced their leadership is 
moving forward to solve the country's problems, not merely 
engaging in political infighting designed to protect their 
own positions.  Zotov says he told the PM that the ITG needs 
to be in touch with the people, make decisions, and take 
action.  He warned that the reconstruction process was mired 
in bureaucracy and urged that corners be cut and necessary 
steps be taken to produce discernable results that will give 
hope to the people. 
 
6.  COMMENT:  Zotov seemed somewhat of a forlorn figure, 
diligently making the rounds in search of business 
opportunities that may prove elusive.  It was evident that he 
would prefer to be acting in his old diplomatic capacity, 
rather than as a representative/salesman of a private 
enterprise competing in a tough market that appears at least 
a bit stacked against his client/employer.  END COMMENT. 
 
7. REO HILLAH, REO BASRAH, REO KIRKUK, REO MOSUL minimize 
considered. 
Satterfield