US embassy cable - 05BAGHDAD4107

C O N F I D E N T I A L BAGHDAD 004107 
 
SIPDIS 
 
NSC FOR ABRAMS/DORAN/POUNDS TREASURY FOR GLASER/LEBENSON; 
EB/ESC/TFS FOR SALOOM; NEA/I/ECON 
 
E.O. 12958: DECL: 10/04/2015 
TAGS: EFIN, PREL, SY, IZ 
SUBJECT: UPDATE ON SYRIAN RETURN OF IRAQI ASSETS 
 
REF: DAMASCUS 4765 (NOTAL) 
 
Classified By: DCM David M. Satterfield for reasons 1.4 (b) and (d). 
 
1. (C) Emboff met Dr. Saladin H. Al-Hadithi, Director 
General, Iraqi Fund for External Development (DFI), Ministry 
of Finance, October 4 for his take on his recent trip to 
Damascus to discuss the current status of Iraqi funds in 
Syrian banks (reftel; Saladin headed the GOI team). The main 
purpose of his trip had been to better understand why and to 
whom the Commercial Bank of Syria (CBS) had decided to pay 
out $463.2 million of Iraqi assets without GOI consultation. 
$266 million was given to Syrian public sector claimants and 
$237.7 million to Syrian private sector claimants (total of 
$503.8 million). Syria, for reasons still unclear, pulled 
back $39.9 million from the initial payout and transferred it 
to the Iraq DFI ($503.8-39.9=$463.1 million).  The Syrians 
also flagged another $800 million claims by Syrians on Iraq. 
Saladin was skeptical on this number. He asked what Syria 
would have, that Iraq would pay $800 million for. 
 
2. (C) Saladin noted that while the GOI was pleased with the 
August 5 transfer of $261 million, he was concerned with the 
missing/unaccounted $463.1 million that the CBS had already 
given away. Saladin sent a note to the Syrians expressing 
concern over the $463.1 million and requested a follow-up 
meeting so that the two sides could review all these 
payments. Saladin said that if this cannot be settled at his 
level, then it would go to the respective countries Ministers 
of Finance. If this doesn't work, Iraq is prepared to have 
third party mediation or arbitration.  He said that this 
procedure had been agreed upon by both sides in a July 21 
memorandum of understanding signed by the Iraqi Minister of 
Oil and the Syrian Minister of Finance (Saladin declined to 
provide a copy).  He noted that the MOU did not contain any 
deadlines, so he expected that it would take some time to 
resolve. Nonetheless, he expected that there would be another 
round of bilateral talks soon, probably in Damascus. 
 
3. (C) Comment: Saladin was quite adamant about the $503.8 
million cited above and not the $580 million pay out figure 
cited in reftel. While not directly related to his meetings 
last month in Damascus, he told us that Syrian-Lebanon Bank 
in Beirut transferred this summer $71 million to the DFI (in 
three tranches: $45 million, $15 million and $11 million). 
 
Khalilzad