[Senate Prints 112-34]
[From the U.S. Government Publishing Office]


112th Congress  }                                            {  S. Prt.
  2d Session    }         COMMITTEE PRINT                    {   112-34
_______________________________________________________________________
 
                         IRAQ REPORT: POLITICAL 

                      FRAGMENTATION AND CORRUPTION 

                         STYMIE ECONOMIC GROWTH 

                         AND POLITICAL PROGRESS 

                               __________

                      A MINORITY STAFF TRIP REPORT

                                 TO THE

                     COMMITTEE ON FOREIGN RELATIONS

                          UNITED STATES SENATE

                      One Hundred Twelfth Congress

                             Second Session

                             April 30, 2012

                                     
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                     COMMITTEE ON FOREIGN RELATIONS

                 JOHN F. KERRY, Massachusetts, Chairman
BARBARA BOXER, California            RICHARD G. LUGAR, Indiana
ROBERT MENENDEZ, New Jersey          BOB CORKER, Tennessee
BENJAMIN L. CARDIN, Maryland         JAMES E. RISCH, Idaho
ROBERT P. CASEY, Jr., Pennsylvania   MARCO RUBIO, Florida
JIM WEBB, Virginia                   JAMES M. INHOFE, Oklahoma
JEANNE SHAHEEN, New Hampshire        JIM DeMINT, South Carolina
CHRISTOPHER A. COONS, Delaware       JOHNNY ISAKSON, Georgia
RICHARD J. DURBIN, Illinois          JOHN BARRASSO, Wyoming
TOM UDALL, New Mexico                MIKE LEE, Utah
               William C. Danvers, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

                                  (ii)



                            C O N T E N T S

                              ----------                              
                                                                   Page
Letter of Transmittal............................................     v
Introduction.....................................................     1
Economic Opportunity.............................................     5
Visa Processes for American Businessmen..........................     8
Helping U.S. Firms Navigate Iraq.................................    12
The Strategic Framework Agreement................................    13
Oil Production Growing, But . . .................................    14
Corruption Continues.............................................    17
A Rosier View From the Iraqi Kurdistan Region....................    18
OSC-I............................................................
Cost of the Mission May Be Its Death Knell.......................    19
Recommendations..................................................    21

                                 (iii)
?

                         LETTER OF TRANSMITTAL

                              ----------                              

                              United States Senate,
                            Committee on Foreign Relations,
                                   Washingston, DC, April 30, 2012.

    Dear Colleagues: The departure of the U.S military from 
Iraq at the end of 2011 further reduced Iraq's profile for the 
media and the public, but the U.S. Mission in Iraq, comprising 
Embassy Baghdad, two consulates, and 11 other training sites, 
is the largest in the world. It employs almost 2,000 U.S. 
Government personnel and 16,000 contractors. The State 
Department's Iraq mission in 2011 cost the taxpayer about $6.5 
billion.
    Iraq itself is far from the stable, reliable ally the 
administration had envisioned and American influence, according 
to some, is waning swiftly. Iraqi Prime Minister Nouri al-
Maliki projected an air of normalcy claiming at a December 
2011, U.S. Chamber of Commerce luncheon, declaring that Iraq is 
``open for business.'' Several articles written in major 
magazines over the last several months dispute this claim. The 
Atlantic published two such articles, entitled ``Doing Business 
in Iraq'' and ``Freedom is Bad for Business,'' both by Megan 
McArdle. Another entitled ``Under Worse Management'' appeared 
more recently in BusinessWeek. The chronic joblessness and 
poverty seen in Iraq are problems that only a vibrant private 
sector can overcome, and a business friendly Iraq would be a 
substantial improvement.
    Prime Minister Maliki is also accused of being a pawn of 
Iran, a charge U.S. Ambassador to Iraq James Jeffrey disputes. 
He sees Mr. Maliki as a master politician, a man who has 
friends in Tehran, but also one who wants a relationship with 
the U.S. and other Western powers. Such relationships provide 
Prime Minister Maliki with an alternative to Iranian influence, 
the Ambassador argues, and empower him to say no to his Iranian 
friends, particularly when it is not in Iraq's best interests.
    To assess Iraq's openness to business, the status of 
American influence, and the operational makeup and 
effectiveness of the U.S. mission, I requested Senior 
Professional Staff Member Patrick Garvey make another trip to 
Iraq. This was his sixth trip to Iraq on behalf of the 
committee. His first ``visit'' to Iraq was on behalf of the 
U.S. Navy in 2003, when he was recalled to active duty service 
from our staff.
    The following report is derived from a December 2011 
STAFFDEL to Iraq and subsequent research and analysis. I hope 
you find the report and its recommendations useful as the 
Senate works to assess the administration's strategy and U.S. 
involvement in Iraq.

            Sincerely,
                                          Richard G. Lugar,
                                           Ranking Minority Member.

                                  (v)
  IRAQ REPORT: POLITICAL FRAGMENTATION AND CORRUPTION STYMIE ECONOMIC 
                     GROWTH AND POLITICAL PROGRESS

                              ----------                              

    At the direction of Senator Richard G. Lugar, Ranking 
Republican Member of the Senate Foreign Relations Committee, 
SFRC Minority staff has over the past 3 months conducted an 
inquiry into the progress of U.S. efforts in Iraq with 
particular attention to Iraq's economic vitality, commercial 
prospects, and energy development. The proceeding report is 
derived from a December 2011 STAFFDEL to Iraq and subsequent 
research and analysis. At the heart of the inquiry is the 
assertion, which has been repeatedly propounded by the 
Government of Iraq and its Prime Minister, that Iraq is open 
for business. Several articles have appeared in major 
newsmagazines over the last several months disputing this 
claim. The Atlantic published two such articles, entitled 
``Doing Business in Iraq'' and ``Freedom is Bad for Business,'' 
both by Megan McArdle. Another entitled ``Under Worse 
Management'' appeared more recently in BusinessWeek.
    The December 2011 STAFFDEL coincided with the last weeks of 
the nearly 9-year long mission of United States Forces, Iraq 
(USF-I). Over these 9 years, the United States military has 
been the main guarantor of security and stability in Iraq, 
while also serving as the dominant political force in the 
country. The military's withdrawal uncorked a new wave of 
political wrangling and violence, and it has also left the U.S. 
Department of State in charge of a ground structure that more 
resembles a military metroplex than an embassy campus. 
Ambassador Jim Jeffrey, himself once an Army officer, 
understands that the operation is unsustainable and is looking 
for ways to shrink the footprint and the budget, which will 
have an annual cost of about $6.5 billion.
    Staff sought to answer the following questions:
          1. Is Iraq really open for business? Does it matter?
          2. What does the military's departure mean to Iraq 
        and U.S. interests?
          3. How can State downsize the operational size and or 
        cost of its mission without sacrificing U.S. national 
        security objectives?

                              Introduction

    Iraq held a national election in March 2010. While Nouri 
al-Maliki was able to form a government 9 months later, the 
cabinet's security ministry posts have never been filled and 
there has been neither a political ``grand bargain'' between 
competing sectarian interests nor evidence that such an 
agreement is on the horizon. Such an agreement is necessary to 
make up for the lack of institutional underpinnings, checks and 
balances, or traditions of democracy. Without a power-sharing 
grand bargain that provides partners in the governing coalition 
some autonomy within their own ministries, gives some 
legitimacy to the opposition, and guarantees governorates and 
provinces rights, Iraq will remain dysfunctional. Maliki will 
continue to be accused of running roughshod over the rights of 
the people, at best, or at worst, of being another dictator.
    A grand bargain might not be necessary if the constitution 
were not full of gaping loopholes or if the Parliament would 
enact the 54 pieces of legislation that the document requires: 
only about 15 or 20 of which have been completed. \1\ One of 
those requirements is for the creation of a second 
parliamentary body, referred to in the constitution as the 
Council of Union or Federation Council (Majlis al-Ittihad). It 
strains the imagination to believe that any Parliament would 
cede power by creating a competing legislative body, so Iraq 
may remain a unicameral legislature. On the whole, without the 
legislation it requires or a constitutional review and 
amendment effort that seemed to show promise in 2007, the 
constitution remains what one analyst called ``an empty suit.''
    The Erbil Agreements, a collection of power-sharing 
agreements reached in November 2010 that paved the way for 
government formation, contain the elements of such a political 
bargain, but they have been cast aside for a variety of 
reasons. The documents are not public. They are probably not 
even legal or constitutional. Instead, individual aspirations, 
age-old vendettas, longstanding feuds, party politics, and 
legal uncertainties continue to prevail in Iraq.
    Beyond legal uncertainties, distrust and finger-pointing 
are rampant. Minority Sunnis complain that Maliki is Shia 
Iran's puppet, that he and his Iranian masters want absolute 
power in Iraq, and that all Sunnis are to be rendered powerless 
(with the Kurds next). The competing narrative heard in Shia 
circles argues that the Sunnis want to take back control and 
return a dictator to power who will once again marginalize the 
Shia.
    The lack of a grand bargain is borne out in the political 
fragmentation and corruption that block both economic growth 
and political progress. Its absence is seen in even starker 
tones now that the U.S. military has departed. The civil war 
that was feared imminent in 2006 and 2007 is once again being 
talked about. The alliance that elected Maliki Prime Minister 
has weakened. There are rumors that the Islamist movement led 
by Muqtada al-Sadr may have a credible candidate for Prime 
Minister should the votes be assembled for a vote of no-
confidence. Iraqiya, the bloc led by the 2010 popular vote 
winner, Ayad Allawi, however, has not grown stronger. Its 
membership could not hold together on a recent boycott, and 
Allawi has not demonstrated skilled leadership.
    Some individuals interviewed by staff suggest that the 
December, 2011, indictment of Sunni Vice President Tariq al-
Hashemi, could stimulate a Grand Bargain by forcing the 
political parties to take sides and break apart Maliki's 
coalition in Parliament with a no-confidence vote. Whether true 
or not, the type of charges against Hashemi (that he directed 
death squads to carry out political assassinations) could be 
lodged against anyone in the governing coalition. According to 
Hashemi's advisors, the action came after the Vice President 
changed his position on the province of Anbar filing to become 
a ``region,'' but his advisors say the legal action is more 
personal than anything. Status as a region would be 
advantageous for Anbar because under the constitution, regions 
are granted greater economic autonomy, while provinces must 
seek approval from Baghdad for certain initiatives and 
investments.
    One close observer suggested that the threat of external 
pressures (Syria, Iran, etc.) leading to renewed sectarian 
violence in Iraq could also provide impetus for a broad-based 
push for reconciliation. That may mean someone other than al-
Maliki has to be at the helm, since he may not be capable of 
re-earning Sunnis' trust. This is likely to cause great 
consternation among U.S. policymakers and the Embassy, but the 
change from dictatorship to democracy is often turbulent, and 
rarely follows a linear path. A Spanish diplomat who met with 
staff in Jordan offered his country's post-Franco period as an 
overlooked historical example. While that conversation centered 
on the transition in Egypt, there are similarities with Iraq as 
well.
    Without a grand bargain, and without the safety net 
provided by the U.S. military, the best hope for Iraq and its 
citizens may actually be that the economy does not develop too 
quickly. In even the best case, significant oil production 
growth is more than 5 years off and the government of Iraq will 
need outside assistance to develop the sector's full capacity. 
Slow growth will force the government into making careful 
choices in its budget that could lead to a more open economy 
and a more efficient public sector. The government cannot 
afford generous handouts to placate the citizenry. For example, 
the Iraqis are trying to figure out how to wean the country off 
of the legacy monthly food-ration for which all Iraqis are 
eligible and which costs more than $7 billion annually. 
Furthermore, in terms of Iraq's broader (non-oil) economic 
development, it is an underdeveloped resource-rich economy. 
International companies are uniquely positioned to drive change 
and bring transparency into the economic lifeblood of Iraq. But 
many international firms will be skeptical of involving 
themselves in an Iraq venture as long as the Iraqi narrative is 
one of uncertainty, corruption, danger, and legal ambiguity.
    Given that Iraq's fate will be decided in large part by the 
economic growth trajectory it realizes, the top priority for 
the U.S. Embassy should, in the wake of the military's 
departure, shift to helping American companies do business in 
Iraq. Although staff found this to be the case to some extent, 
a great deal of work needs to be done by both the Embassy and 
the companies themselves. The Government of Iraq has an even 
more important role to play in this regard. While PM Maliki and 
other government officials declare that Iraq is open for 
business, staff found the reality to be quite different. 
Outside the oil sector, one finds a business community 
comprised of the lucky, the shady, the very adventurous, and 
companies who have FMF or FMS deals.
    Iraq has many improvements to boast, but it might be 
another 10 years before it is a thriving economy or functioning 
democracy capable of acting as a stable and reliable ally. The 
time has passed when the United States could seek to alter 
Iraq's political realities through military means or propound 
text for legislation. The administration must provide greater 
leadership and a strategic vision that keeps this in mind and 
can adjust to realities. It should expand exchanges under the 
oft-mentioned Strategic Framework Agreement (SFA) that was 
signed alongside the now expired Status of Forces Agreement. 
Vice President Biden highlighted the SFA in his early December 
visit: ``The relationship will be guided by our strategic 
framework agreement which outlines partnerships across a range 
of strategic issues, including energy, trade, the rule of law, 
diplomacy, agriculture, education and many others.'' The 
administration must continue to assign its most skilled and 
experienced Arabist diplomats to ensure Iraq's complex problems 
are considered in the broadest possible regional terms.
    Among Iraqis, there is a great deal of apprehension about 
what will happen next. On one hand the troops have been out of 
the cities and the Iraqis have been providing their own basic 
security since 2009. Overall violence is down markedly. Yet 
there is a growing fear that as Iran becomes further isolated, 
it will use the relationships and terrorist groups (most 
prominently Asaib al-Haq (AAH)) it has cultivated in Iraq to 
drive a wedge deeper into the Sunni-Shia relationship, to 
embarrass Iraq in the eyes of its nascent western allies, and 
to scare off foreign investors. Iran's proxies could also 
attack U.S. activities and further reduce their effectiveness. 
For example, movement for the STAFFDEL was constrained by a 
``credible kidnapping threat'' coming from the ``friends'' of 
Lebanese Hezbollah member, Ali Musa Daqduq, the last prisoner 
held by the U.S. who was released in late December.
    The most apprehensive Iraqis include those who have worked 
for the United States, the hundreds of thousands of refugees in 
the region, and the internally displaced. These Iraqis were 
scared before but feel more vulnerable now. Since the spring of 
2011, there has been a drastic decrease in refugee and SIV 
(special immigrant visa) admissions to the United States. New 
``interagency check'' processes put into place by the 
administration have led to a worldwide drop in refugee 
admissions from a rate of 73-74,000 per year to a total of 
56,424 (9,388 Iraqis) for the current fiscal year. The check 
system is cumbersome, lengthy, and very costly.
    According to the refugee coordinator in Embassy Baghdad, 
the refugee program has a 2-year wait before an initial 
interview can even be conducted. There is currently a 6-month 
(almost 13,000 case) backlog awaiting a Security Advisory 
Opinion.\2\ Even worse, most who have applied and been 
interviewed think they may get approved and thus afforded the 
opportunity to start their lives over the United States. 
Despite this common perception, staff learned that while the 
overall rejection rate of the security check may only be 25 
percent, 99 percent of those cases have not received a 
rejection letter. In other words, applicants that the system 
has rejected are not being told they will not be admitted to 
the United States. In Jordan, staff met with several such 
families who were in various states of limbo and desperation 
awaiting the outcome of these processes.
    In terms of Iraqi politics, staff heard predictable Sunni 
resentment toward Maliki, who they feel has shown a heavy hand 
in dealing with internal security threats but has no political 
backbone when it comes to facing down Iranian malfeasance or 
even dissent among his own parliamentary bloc. Staff also heard 
substantial apprehension on the part of the Kurds, who worried 
that they will be again alone to face a Baghdad strongman (whom 
the United States is arming and training). Tensions along the 
disputed internal boundaries and around Kirkuk continue. This 
state of affairs was made fully apparent when the U.S. turnover 
of Hurriyah airbase near Kirkuk to Iraqi control nearly led to 
armed conflict in November.
    The U.S. military withdrawal gives the Americans little 
ability to protect Maliki against a coup attempt or to continue 
counterterrorism operations in our own interests. However, as 
insurance against more involved plots against the Iraqi 
Government, we retain significant military assets in the 
Arabian Gulf, which include the U.S. Fifth Fleet and a 1.5 
carrier presence,\3\ a heavy brigade and some 13,500 troops in 
Kuwait, and significant air forces in Qatar. This presence will 
continue for the foreseeable future.
    American diplomats judge that Prime Minister Maliki is 
under competing political pressures yet is a master navigator 
of political winds. They feel he is competent in holding his 
own and backing down the Iranians when necessary, and he does 
this particularly by building and maintaining a visible 
strategic relationship with the United States and the West. 
When asked about Maliki's continued support for the Assad 
regime in Syria, for example, Ambassador Jeffrey did not 
condemn the Prime Minister, nor see any great gain in Maliki's 
calling for an end to Assad. It would make no difference to 
Assad's longevity and would only hurt what Maliki views is an 
essential relationship with Iran. Plus, Maliki spent much of 
his exile in Syria.

                          Economic Opportunity

    On December 13, 2011, Prime Minister Maliki spoke at the 
U.S. Chamber of Commerce in Washington, DC. Iraq, he said, 
welcomes American companies, which risk losing out if they fail 
to get more aggressive. But Maliki failed to drive the pitch 
home. He made no promises on the merits about a level playing 
field, accountability or transparency, or reducing bureaucratic 
impediments. Instead he underlined that he and his Iraqi 
Government colleagues will be glad to help American companies. 
Staff heard this in Baghdad from the Chairman of the National 
Investment Council, Dr. Sami Al Araji, a prominent Sadrist 
politician, who said he could sign visas, would take care of 
lodging, cars, and protection for anyone who wanted to come to 
Iraq to ``look around.'' Targeted, logistical assistance of 
this sort is of little utility without concomitant efforts by 
the Government of Iraq to address interrelated economic, 
regulatory, infrastructural, and political difficulties that 
continue to hinder American investment.
    On the positive side, Iraq is exporting about a half 
million more barrels per day than a year ago, and exports are 
expected to increase by that quantity again next year. Positive 
developments have also occurred with regard to Iraq's budget. 
The 2012 budget was approved by the Parliament and received the 
IMF seal of approval. It contains many welcome provisions from 
the economic standpoint. Outside of these two issues, however, 
success is much harder to see.
    Doing business in Iraq remains extremely challenging. 
Capital is hard to acquire. The government is slow in paying 
its bills. The law remains complex and at odds with itself. 
Public utilities and services are not up to standards. 
Investors are scarce and a sense prevails among them that the 
Iraqi Government is not friendly toward business. ``Investors 
come to make money, not to make charity,'' said the Deputy 
Minister of Finance, who had a good grasp on Iraq's faults, but 
like many in government, feels powerless to do anything about 
it.\4\ For example, ExxonMobil, made a deal in the North 
because they got better terms, Dr. Al Jaberi said: ``Who can 
blame them?''
    American firms who were interviewed by staff offered a 
collective shrug, not wanting to lay blame, but they are 
noticeably frustrated with the lack of progress on tenders that 
are never considered, nor offered. For example ITT Exelis, 
which has been working for many years on foreign military 
sales, has for 3 years been involved in a bid to provide a 
military communications system on a direct commercial sales 
basis to the Iraqis, but it ``never comes to fruition despite 
best prices and interoperable equipment--same as delivered 
through FMS.'' \5\
    Dr. Al Jaberi expressed gratitude for what the Americans 
had done for his country and said his government should be 
ashamed for how the Americans are being treated, especially in 
light of what, in his view, is the great gratitude the Kuwaitis 
continue to show the Americans. In this regard he said, you 
have ``the U.S. begging us to [let them] stay.''
    If Iraq is really open for business, the government must 
get out of the way rather than intervene. In an open and 
competitive system, assistance should only be needed rarely. 
``Doing Business 2012,'' an annual World Bank report that 
analyzes quantitative indicators on business regulation and the 
protection of property rights across 183 economies and over 
time, ranked Iraq at No. 164, down five slots from its 2011 
survey. Singapore ranks first, the U.S. fourth, while 
Afghanistan at No. 160 ranks ahead of Iraq. According to the 
report, Iraq has instituted no reforms the World Bank would 
recommend, but it did institute a reform that made it more 
difficult to do business. ``In Iraq starting a business became 
more expensive because of an increase in the cost to obtain a 
name reservation certificate and in the cost for lawyers to 
draft articles of association,'' the World Bank said.\6\
    With the multitude of hurdles detailed by the World Bank 
(and Ms. McCardle in`` The Atlantic''), it is no wonder that 
Iraqis continue to prefer government jobs to opportunities in 
the private sector. This general finding was reaffirmed by the 
International Rescue Committee, which works on behalf of the 
U.S. Government in assisting internally displaced persons 
(IDPs) in Iraq. IRC conducted a ``Livelihoods Survey'' 
reviewing the ``labour market and the relevant openings to 
enhance livelihood opportunities for youth who are currently 
living in IDP camps in Baghdad.'' The study, published in May 
2011, conducted focus-group interviews with about 110 youths 
(15-24 year olds) from urban slums. About 65 percent of the 
males are doing some work, while only 2 percent of females are 
engaged in any income-generating work. Most lack the skills to 
create opportunities or even engage in the economy and 
therefore see few prospects for themselves. Further, ``many 
youth perceive government employment as an ideal work 
environment due to the level of job security and provision of 
benefits.'' \7\ Yet in reality they do not have the education 
or even physical mobility to get to a government job, so their 
best option is self-employment, microenterprise, or day labor 
work. Efforts such as these represent a slow and tedious path 
out of the slums, particularly in the absence of focused 
policies or practices by the Government of Iraq.
    But the lack of jobs is not only a problem for the youth in 
Baghdad's squatter slums. Approximately 2.0 to 2.5 million 
young people in Iraq are unemployed or only work part time and 
want to work more. A study done for USAID in 2011 reports that 
unemployment among the entire population, including what they 
refer to as ``disguised unemployment,'' might be as high as 38 
percent. Additionally, as USAID has documented, ``each year, 
there are 450,000 [more] young people seeking work.'' \8\ But 
with Iraq's public sector more than doubling in size since 2005 
and providing perhaps half of all jobs in Iraq (60 percent of 
all jobs in the Kurdish Region), the call for policies that 
facilitate private sector job creation should be loud and 
clear.
    Staff did encounter individuals and organizations that 
displayed a commitment to changing Iraq's commercial legal 
framework for the better. Among the most pragmatic are the 
entire staff of the Commercial Law Development Program (CLDP), 
who told staff, ``Iraq doesn't know how to transition to a 
market-based system.'' CLDP, a small division of the U.S. 
Department of Commerce, helps developing and post-conflict 
countries implement commercial legal reforms, and is showing 
them how in an understated, measured, and cost-effective 
fashion.\9\ CLDP's current mandate is twofold: ``to build 
capacity conducive to the modernization of Iraq's economic 
infrastructure'' and to ``create a legal environment conducive 
to economic diversification and private sector growth.'' Among 
CLDP's challenges in 2010 was to build capacity for the 
Ministry of Oil's Petroleum Contracting and Licensing 
Directorate (PCLD). The PCLD lacked the knowledge and skills it 
needed to negotiate on an equal footing with the international 
oil companies. CLDP designed workshops to explain the legal, 
economic, and financial intricacies of oil and gas and provided 
3 weeks of consultations in the U.S. that culminated in a 2-day 
simulated negotiation with seven U.S. lawyers. In order to help 
overcome some of the distrust of foreign participation in the 
Iraqi oil market, which has hamstrung the Ministry of Oil, CLDP 
also created some financial models for the Ministry of Oil to 
use in educating members of the Council of Representatives 
about the type of contract being used in the bid rounds.
    CLDP has achieved modest success because of its realistic, 
fact-based appraisal that Iraq's challenging history can be 
overcome neither quickly nor forcefully. There are many 
bureaucratic and human obstacles as well as the legal ones. But 
like the arcane business practices analyzed by the World Bank, 
these broader issues must be tackled because they slow progress 
and discourage honest private companies from pursuing 
opportunities, which is the most sustainable path to job 
creation.
    An additional challenge to economic growth, and a drain on 
the federal budget, which staff discussed with Thamer Ghadban, 
Chairman of the Prime Minister's Advisory Council, are state-
owned enterprises (SOEs). SOE employees are paid out of the 
budget. They receive subsidized means of production (which 
often include free fuel, petroleum byproducts, and 
electricity). Ghadban stated that subsidies and government-paid 
salaries are being phased out. To facilitate this phase-out, 
the budget is going to allow ministries to pay salaries to 
laid-off employees for 1 year. Ghadban said this provision will 
end in a year, after which there will be no more salary 
subsidies or free electricity for SOEs.
    Ghadban's claims were mostly substantiated in analyzing the 
budget itself, but there were inconsistencies, and some of this 
may be a little bit of a shell game. For example Article 31 
states that self-financed public companies should not be funded 
in the federal budget, but that those companies can obtain 
loans from the state-owned banks. Meanwhile, Article 23 has a 
provision that allows the Minister of Finance to settle loans 
given to the SOEs, implicitly supporting the SOEs. So, instead 
of the current practice of subsidies, the state-owned companies 
can get state loans, which can then be written off. As for 
salary phaseouts, Article 21 contains provisions for people who 
have been integrated from the militias, suggesting they should 
not be phased out, and it also states that vacated positions 
should be deleted and not refilled. Finally, Article 11 
provides budget assistance to allow ministries to pay for one-
half of the salaries for 3 years (not one as Ghadban stated) 
for personnel transferred to the private sector.

                Visa Processes for American Businessmen

    Any country that professes to encourage business must start 
by making its processes transparent, predictable, and easy to 
follow. That is far from the case in Iraq. One simple step 
toward opening Iraq for business would be to standardize its 
visa processes. Over the past several months, the procedure for 
getting a visa for Iraq has become increasingly laborious. 
According to one U.S. senior executive, ``Before December 15, 
getting a visa for Iraq took 4-5 days. Now you never know.''
    Iraqi officials say their system is faster than that of the 
United States. Implying that there might be some tit-for-tat 
for poor treatment given to Iraqi travelers, they stated that 
it must be a two-way street. A personal example: unlike prior 
trips, where staff were given a ``multiple entry'' visa good 
for an entire year, for the December 2011 visit, staff were 
given a ``single entry'' visa valid for 3 months. Businessmen 
and journalists state the 3-month single-entry visa has become 
standard for them as well. As a result, many private companies 
who work for the U.S. mission have a difficult time managing 
leave or rotation cycles for their employees because they must 
reapply for visas each time they enter or leave the country.
    Table 1.1 was compiled using publicly available information 
to compare the requirements for Americans seeking to visit 
foreign countries for the preliminary activities necessary to 
determine whether they should expand their business interests 
abroad. Such activities include, but are not limited to, 
participating in fact-finding missions, conducting site visits, 
and attending meetings. Iraq ranks last in this comparison, 
scoring 45 out of a possible 100 points. Countries who scored 
100 required no visa for Americans traveling for basic 
business.
    The United States longstanding European allies are 
prominent among those who have opened their borders to American 
private investment. Other countries with widely divergent 
geographical dispositions, historical relationships with the 
United States, and levels of economic development have welcomed 
American businesspeople with open arms. Included among these 
countries are African partners Botswana, Kenya, Tanzania, and 
South Africa. Botswana, in particular, maintains rules and 
regulations fairly similar to those of our European allies. 
Additionally, several of our partners in East Asia have low 
barriers to business travelers. While the Philippines requires 
Americans traveling for purposes other than tourism to obtain a 
visa prior to departure, processing times are short and visas 
themselves are comparatively inexpensive.
    In South America, longstanding partners Argentina and Chile 
maintain well-reasoned regulations highly conducive to those 
carrying out exploratory processes that are a necessary 
precursor for investment. In spite of the fact that another 
friend in the region, Brazil, expressed concerns about security 
measures taken at American points of entry following 9/11 and 
implemented retaliatory policies, the country has remained open 
to Americans considering the expansion of their business 
interests there.
    Iraq's own policies are far more prohibitive than not only 
those of the countries of all aforementioned regions but also 
many of its neighbors in the gulf. Iraq maintains an 
unpredictable regulations regarding visa processing times, 
costs, and legal duration; burdensome requirements on all 
private American citizens seeking to remain in-country longer 
than 10 days; inconvenient mandated exit processes; and 
unpredictable exit fees. In contrast, the United Arab Emirates' 
regulations are somewhat unpredictable and complex, but the 
government maintains reasonable entrance and exit policies. 
Bahrain and Kuwait continue to leverage their economic 
potential by managing regulations that are among the most 
welcoming to potential American investors.
    Table 1.1 offers insight only on measures governing the 
admission of Americans traveling with the intent of finding 
markets for their products in Iraq. It does not touch on far 
more complex regulations regarding foreign direct investment. 
However, liberalizing such policies is a prerequisite to make 
the country's overall business climate more amenable to foreign 
investment. Iraq has a unique, complicated history with the 
United States that cannot be ignored, but so do many nations 
where Americans conduct business, often despite truly odd--but 
consistent--visa requirements. American businessmen interviewed 
are able to deal with reasonable and well-codified regulations. 
Their frustration stems from the lack of consistency with which 
they are applied and the constant uncertainty.
    Ambassador Jeffrey said that without a status of forces 
agreement, every one of his employees must now have a visa to 
enter and leave Iraq. All contractors, subcontractors, NGO 
employees, and businessmen must get them as well. In Iraq, visa 
issuance falls under the purview of the Ministry of Interior. 
Interior is one of the three security ministry posts that have 
been filled for well more than a year by acting ministers. In 
the case of Interior, the de facto minister is Prime Minister 
Maliki himself. Staff learned on this trip that at MOI Maliki 
has been rewarding Daawa loyalists and made cuts to staff that 
have negatively impacted the effectiveness of the institution.
    Obtaining a visa is not the only slow process. One Western 
journalist whom staff interviewed stated he has been attempting 
to get a residency permit, but it ``has been pending for more 
than a year. It has been sitting on the desk of the Acting 
Minister of Interior (Adnan al-Asadi) awaiting his signature.'' 
Like many, his organization has figured out a workaround for 
the visa process, going through the foreign ministry, or he 
said, ``Bribes will save you some of this hassle.''
    The journalist said that the HIV/AIDS test is a requirement 
for the visa, which is single entry and valid for 3 months. 
Then, he said, ``upon arrival you have 10 days to register with 
the authorities who may or may not demand another HIV test. 
They put a sticker on your passport that takes a whole page. 
Then you need permission to leave Iraq and also maybe another 
HIV test. This exit authorization also earns you a sticker that 
takes up another page of your passport. So for a single visit 
to Iraq expect the visa sticker at the Embassy, the arrival 
sticker and the departure sticker.''

                                                                                 TABLE 1.1 COMPARING VISA PROCESSES FOR AMERICAN BUSINESSMEN ABROAD \10\
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Business visa                                                                                      Exit procedures    Entrance or Exit
             Country                Visa for AMCIT     Visa available at   req'd? (duration    Cost of business     Visa processing    Legal duration of  Other requirements   prior to reaching    fee apart from        Score \11\
                                        entry?               POE?            of validity)            visa?               time?          visa-free stay?        for entry        airport req'd?       ticket cost?
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Argentina.......................  No................  N/A...............  No................  N/A...............  N/A...............  60-180 days.......  None..............  None..............  $140.00 entrance..  95
Bahrain.........................  Yes...............  Yes...............  Yes (14-28 days)..  $20-$228..........  2 weeks...........  N/A...............  No HIV/AIDS test,   None..............  No................  97
                                                                                                                                                           but those found
                                                                                                                                                           to have HIV/AIDS
                                                                                                                                                           refused entry.
Botswana........................  No................  N/A...............  No................  N/A...............  N/A...............  <90 days/yr.......  None..............  None..............  None..............  100
Brazil..........................  Yes...............  No................  Yes (90 days-10     $140-$160.........  10-15 days........  N/A...............  None..............  None..............  None..............  90
                                                                           years depending
                                                                           on work).
Chile...........................  No................  N/A...............  No................  N/A...............  N/A...............  180 days..........  None..............  None..............  $140 entrance fee.  95
France..........................  No................  N/A...............  No................  N/A...............  N/A...............  90 days...........  None..............  None..............  None..............  100
Germany.........................  No................  N/A...............  No................  N/A...............  N/A...............  90 days...........  None..............  None..............  None..............  100
Iraq............................  Yes...............  No................  Travelers for       Determined on base  Determined on case  N/A...............  Must obtain         Must obtain exist   $20-$200            45
                                                                           business apply      by case basis.      by case basis.                          arrival sticker,    stamp at a          (dependent on
                                                                           for standard visa                                                               residency stamp,    designated          length of stay,
                                                                           (validity                                                                       and submit blood    Residency Office    type of visa,
                                                                           determined case                                                                 sample within ten   prior to            other factors.
                                                                           by case).                                                                       days of arrival..   departure.
Kenya...........................  Yes...............  Yes...............  Yes (six months)..  $100.00...........  Two weeks.........  None..............  None..............  None..............  No................  97
Kuwait..........................  Yes...............  Yes...............  Yes (business       $175.00...........  Visas issued at     N/A...............  None..............  None..............  $15.00 entrance...  92
                                                                           travelers use                           all ports of
                                                                           standard entry                          entry.
                                                                           visa).
Philippines.....................  Tourism only......  No................  Yes (3-12 months).  $30.00-$90.00       One week..........  N/A...............  None..............  None..............  Exit fee req'd....  85
                                                                                               (depending on
                                                                                               stay length).
Poland..........................  No................  N/A...............  No................  N/A...............  N/A...............  90 days...........  None..............  None..............  None..............  100
South Africa....................  No................  N/A...............  No................  N/A...............  N/A...............  90 days...........  None..............  None..............  None..............  100
Tanzania........................  Yes...............  Only in case of     Yes (one year)....  Determined on case  Five business days  N/A...............  None..............  None..............  None..............  87
                                                       emergency.                              by case basis.
UAE.............................  Yes...............  Personal travel     Yes (determined on  Determined on case  Determined on case  N/A...............  None..............  None..............  None..............  60
                                                       only.               case by case        by case basis.      by case basis.
                                                                           basis).
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                    Helping U.S. Firms Navigate Iraq

    Given that Iraq's fate will be decided in large part by the 
economic growth trajectory it realizes, the top priority for 
the U.S. Embassy should be helping American companies do 
business in Iraq. Staff found this to be the case to some 
extent, but this is a long way from being a good news story. A 
great deal of work lays ahead for Embassy Baghdad and the 
companies themselves.
    Many U.S. companies are doing big business in Iraq, but 
they all have challenges. Large firms such as Fluor, GE, 
Honeywell, Navistar, Northrop-Grumman, Rapiscan, and AECOM have 
pursued interests in Iraq. Honeywell, for example, has been 
very aggressive and has two offices in country, one in Basra 
and another in Baghdad. They will be opening a training center 
this year in Basra with 13 employees. Orders for their product 
are rising too, reaching about $100 million in orders for all 
their businesses combined, and they are considering expanding 
to work in the Kurdish Region. Smaller U.S. firms such as 
Altergy, Henry F. Teichmann, Inc., and Puralytics have been 
approached by some Iraqi State-owned enterprises that have 
interest in their work. Other U.S. firms have been working for 
the U.S. mission in various forms, including working with the 
Office of Security Cooperation for Iraq (OSC-I), whereas others 
have developed direct commercial sales with the Iraqi 
Government.
    Honeywell gives great credit to both DOD and State. 
Honeywell spent 16 months in a DOD incubator while it tried to 
put together a standalone operation (one of the only positive 
stories staff have heard about the Task Force for Business 
Stability Operations). In particular, they credit Embassy 
Baghdad and commercial officers for their success, naming 
Commercial Attache Dao Le as ``helpful and passionate'' and 
willing to ``go out of his way to help.''
    Similar compliments about the helpful nature of the Embassy 
team have come from the Indiana firm, Ameriqual, which was 
solicited to make an offer on a yet to be seen tender from the 
Ministry of Trade to replace the government distributed monthly 
ration of food commodities with a commercially run operation 
featuring a single prepackaged kit. This would be a huge 
operation and potentially lucrative commercial enterprise, but 
even for huge company like Ameriqual, it would require a great 
deal of capital to produce, ship, and distribute food kits to 
every Iraqi family on a monthly basis. Ameriqual jumped through 
a great many hoops, sending senior officials to Baghdad to meet 
with the Minister, providing figures and estimates, etc. There 
was a great deal of interest on the part of the GOI, which sent 
a commercial officer to Indiana to tour the production 
facility. But in the end, no tender was issued and no bid was 
considered.
    The U.S. and Foreign Commercial Service (FCS) is the trade 
promotion arm of the U.S. Government and part of the Department 
of Commerce. Its main objectives are promoting U.S. exports, 
encouraging foreign investment into the U.S., and protecting 
U.S. business interests. FCS has two staff in Baghdad and 
another in Erbil. They have no locally engaged staff (LES) who 
understand the Iraqi business climate. FCS officers, like most 
Embassy staff, serve on 1-year assignments. U.S. Embassy 
Kuwait, by contrast, has one FCS officer and four LES. American 
companies (and American brands) are all over Kuwait.
    Until 2005, five LES were assigned to work for the FCS in 
Iraq, after which they were left with the one LES staff in 
Erbil. Locally engaged staff underwent quite an ordeal in those 
days. Fearing for their safety, many left the country while 
others simply found traveling into the Embassy too dangerous 
and quit. (And, according to today's staff, `` . . . in a 
couple of cases KIA.'') After that, FCS eliminated the LES 
slots and managed the workload by hiring two bilingual/
bicultural advisors under a DOD contract. That ended in the 
spring of 2011, and another interim solution, a 3161 \12\ 
employee, is onboard, and two Iraq cultural advisors (ICAs) 
were under contract with State through April, 2012. Recently, 
the Department of Commerce and ITA has approved the hiring of 
one LES in Baghdad. To his credit, the Commercial Counselor 
recognizes he is shorthanded and is trying to work around it. 
He said he will `` . . . use fees we charge companies for new 
matchmaking and due diligence services we now offer to pay for 
at least one of the ICAs on contract . . . to ensure that we 
can offer U.S. companies the services they need in order to do 
business here.''
    The Deputy Chief of Mission for Economic Affairs, 
Ambassador Peter Bodde, has also created a task force to help 
work around this handicap, staffing it with additional economic 
officers and 3,161 hires. Nevertheless, staff believes the 
Department of Commerce must put more effort into Iraq, 
particularly by hiring more local staff, especially for the FCS 
mission.

                   The Strategic Framework Agreement

    Although the Status of Forces Agreement (SOFA) negotiated 
by the Bush administration in 2008 has expired, a second 
agreement, called the Strategic Framework Agreement (SFA), 
which was negotiated and signed at the same time, provides a 
framework for activities to ignite Iraq's economic engine.\13\ 
This agreement has been much talked about inside State 
Department and Embassy circles and mentioned in briefings to 
Hill staff, but it can claim few results. Nevertheless, Section 
V of the SFA entitled, ``Economic and Energy Cooperation'' 
should be looked at carefully and some big ideas should be 
generated whose goal would be to get Iraq ``open for 
business.''
    One of the biggest gaps in expertise in Iraq is in project 
development, financing, and management. One idea discussed with 
staff by the Commercial Attache, and proposed last summer by 
the Embassy's Economic Minister with inputs from the Foreign 
Commercial Service, would be modeled on the U.S.-Saudi Joint 
Commission on Economic Cooperation (JECOR) that ran for 26 
years beginning back in the 1970s. As it did for a long time 
with the Saudi state, it would provide tremendous short- and 
long-term benefits to both Iraq and the U.S. In a subdued 
``below-the-radar'' fashion, JECOR provided expertise the 
Saudis needed to develop such things as its civil service, 
national parks, and its emergency response services. The Saudi 
Ministry of Finance paid the U.S. for a wide range of training, 
advisory, and procurement services. JECOR had as many as 300 
advisors in Saudi Arabia at its peak.
    A JECOR model, authority for which is found under Section 
607 of the Foreign Assistance Act of 1961, would provide one-
stop shopping for economic and technical expertise that the 
Iraqis need from many departments of the U.S. Government. 
Setting this up under the Strategic Framework Agreement might 
eliminate controversy. It could feature, for example, the sort 
of procurement processes that come with the FMS program and the 
technical assistance attributes of USAID, but for nondefense 
goods and services. By having the GOI pay for it openly, or 
through a foreign assistance trust fund, one could shield it 
from various criticisms. Additionally, it would create jobs in 
the Iraqi private sector, bring stability benefits by ensuring 
that essential projects such as power stations, generators, 
water treatment plants, and hospitals are built on time and to 
international standards. Finally, a JECOR for Iraq would 
provide a bridge mechanism to the day when Iraq's legal and 
business regulatory framework are up to standards.
    For the United States, a JECOR would, first and foremost, 
fully fund U.S. personnel and support positions, virtually 
eliminating any sort of unwelcome sense that may linger 
following the occupation. It would promote U.S. standards and 
technologies in Iraq--seeding the ground for long-term business 
relationships. It would provide incubator or toehold type 
advantages that defense-oriented companies participating in FMS 
programs enjoy in many countries. In addition it would help 
participating firms with still-problematic issues like 
receiving payments, tender transparency, and procurement 
processes.

                   Oil Production Growing, But . . .

    When one speaks about the dire state of doing business in 
Iraq, oil remains an outlier. While oil has complicated 
realities, it receives great attention from the Maliki 
government and keen interest from international oil companies.
    According to briefings received from the Embassy and the 
Department of State, Iraq's oil production increased by 
approximately 500,000 barrels per day over the course of 2011. 
Net production is up to approximately 2.8 million barrels per 
day, and net exports are about 2.2 million barrels per day. 
Despite improvements to export capacity, particularly the 
recent opening of additional moorings near the port of Basrah, 
production continues to lag. The reasons are detailed in oil 
industry dailies. The infrastructure, including pipelines, 
tanks, and storage capacity, limit export capacity. Iraq has 
for decades used poor technology and techniques for recovering 
oil. But the number one reason Iraq's production lags is 
politics. The lack of a grand bargain that would facilitate a 
political consensus hampers development of a consensus approach 
to Iraq's oil future. Politics hampers the creation of a 
coherent investment strategy--or even the creation of a 
financing mechanism--that will enable the funding of the 
capital to overcome the tremendous infrastructure shortcomings.
    The contracts the Government of Iraq signed so far with 
international oil companies to develop 14 oil fields call for 
Iraq to reach the extremely ambitious target of 12 million 
barrels per day by 2017. An estimated $370 billion must be 
invested to get Iraq to that production target. An authority at 
PFC Energy interviewed by staff in early 2011 stated that this 
would mean Iraq would ``achieve in 7 years what it took Saudi 
Arabia 70 years to do.'' The hurdles Iraq must clear to make 
that happen are tremendous, however, and industry experts think 
that Iraq will be fortunate to reach 5 million barrels per day 
by the end of 2016.
    To reach even the 5 million per day figure, the equivalent 
of adding about a half-million barrels per day per year over 
the next 6 years, would require absolute commitment by the 
government. It would require that a large share of oil revenues 
be reinvested into oil infrastructure. It would require that 
security continue to improve. And it would require that oil 
revenue and investments be handled transparently with a minimum 
loss to corruption. Iraq also will have to overcome the brain 
drain that has occurred in the country over the last 8 years 
and seek an infusion of human capital--much as Saudi Arabia 
did--to help manage this massive effort.
    Iraq's capacity for sustaining democracy will depend 
greatly on the outcome of its oil development efforts. If oil 
revenues are expanded and transparently managed for the good of 
the whole country, there will be less tension between factions 
and regions and more stability grounded in improved services 
and education.
    The lack of security is a handicap as well, but oil 
companies are willing to pay for the security if the Government 
of Iraq will do their share. The uncertain security environment 
made it impossible for the STAFFDEL to visit Basrah or the 
southern oil fields, but staff visited the Kurdish capital of 
Erbil, where a great deal activity can be found. In Erbil, 
staff met with most of the U.S. firms who have operations in 
the Kurdish territories, including executives from Hillwood, 
HKN, Hess, and Marathon. Staff met in Washington with senior 
Kurdish Government officials, including the Minister of Natural 
Resources, Ashti Hawrami, Foreign Minister Falah Mustafa Bakir, 
and Dr. Fuad Hussein, Chief of Staff to the President of the 
Kurdistan Regional Government.
    Experts see real growth capacity in the North, including 
capacity to export in the Ceyhan pipeline. The IKR can be 
exporting 700,000 bpd by 2015 (up from more than 175k today). 
Given that Northern Oil Company production is declining, the 
Kurdish area will be the dominant producer in the north. 
Nevertheless, because no Hydrocarbons or Oil Law has been 
enacted, this potential growth is jeopardized as well.
    In Baghdad, while staff were unable to secure a meeting at 
the Ministry of Oil, staff were briefed by U.S. Embassy 
officials and met with Thamir Ghadban, Chairman of the Prime 
Minister's Advisory Council and former Minister of Oil. Senior 
Petroleum Expert Natik al-Bayati was also in the meeting. Iraqi 
Oil production will reach 3.4 million barrels per day in 2012, 
about 500,000 more per day than in 2011. The 100 billion USD 
(117 trillion ID) draft budget for 2012 includes a $15-20 
billion critical infrastructure fund that will function ``much 
like a sovereign guarantee.'' This is an essential point 
because right now the Government of Iraq must finance every 
single project out of the treasury and needs to establish a 
sovereign guarantee to qualify for assistance from OPIC or the 
Ex-Im Bank. One interlocutor compared Iraq's current financing 
process to buying a house out of your annual salary.
    In the meeting, Chairman Ghadban said that the American 
companies, aside from ExxonMobil and Occidental, are not 
playing the dominant role in the oil sector that Iraqis had 
hoped. He said that Chevron should be encouraged to invest, and 
he noted that investors from France, Turkey, South Korea, and 
Italy are far more active in Iraq than American companies. 
Ghadban made no mention of Halliburton, Baker Hughes, 
Weatherford International, and Slumberger, all of which are 
handling a great deal of the oil services.
    When asked about Hunt and Marathon, who operate in the 
North, Ghadban waived off that fact, as if the work in the 
Kurdish region was child's play. Without emotion, he condemned 
the KRG's awarding ExxonMobil exploratory blocs. He noted that 
under the constitution the contracts would be illegal because 
the KRG lacked the legal right to award such contracts 
independently of the central government. He noted further that 
three of the blocks are in areas outside the borders of the 
Kurdish region, although they are controlled by Kurdish forces, 
and it was clear that he felt that ExxonMobil would have to 
make a choice over which contract it would pursue.
    Ghadban matter-of-factly described the controversial and 
elusive hydrocarbon law, suggesting there was a reasonable 
opportunity, under an agreement reached between Maliki and KRG 
Prime Minister Barham Saleh, for the Oil and Gas Committee to 
review and reconcile differences among the versions of the 
draft law and that it could come up for first reading in 2012. 
The draft in current favor is again the February 2007 version 
of the law.\14\ In 2007, Iraq's political blocs all agreed to 
it publicly, but it did not get through the legislative 
process. Each side points to specific shortcomings in the law. 
The shortcomings have a great deal to do with the different 
approaches to oil development. The Kurds are following a 
privatization policy in managing their resources, while the 
central government has preferred to work under the slogan that 
``Iraq's oil is for all Iraqis,'' which is expressed in general 
terms in the constitution.
    The two approaches are not irreconcilable. Nevertheless, it 
has kept, for example, Baghdad from using production sharing 
agreements (PSAs), which the Kurds have favored. Baghdad has 
favored technical services contracts (TSCs) to develop its 
fields. Because of their incentive structure, PSA's are 
generally favored in the exploration phase, where companies are 
entitled to part of any crude they find in return for assuming 
the risk of finding none. TSCs, on the other hand, pay out a 
set rate on each barrel of oil drawn out of the ground, in 
Iraq's case above a certain threshold. Payments generally are 
occurring ``in kind.''
    Kurdish officials, meeting with staff in Washington, were 
less optimistic about the oil law's chances and suggested 
Baghdad was constantly throwing up obstacles. For example, they 
said that Baghdad's protests against Kurdish contracts for 
exploration rights in disputed territories were ``an excuse . . 
. they are against all contracts.'' The Kurds view the 
hydrocarbon law as good for both investors and Iraqi citizens. 
Staff assess that Parliament could make progress in this 
regard, with the reservation that the Iraqis have not been 
aggressive in brokering solutions across a range of legislative 
issues. The Kurds were also critical of the U.S. Embassy's 
efforts in trying to bring about resolution of the hydrocarbon 
law and related issues, but staff assesses that in this regard 
the time has passed when the U.S. can propound a solution and 
have everyone sign on.
    Transparency may still be the best weapon in working 
through the challenges with oil, contracts, and payments. 
Iraq's State Oil Marketing Organization appears to be 
publishing its production and export records online, but the 
contracts and agreements are not online. And, the Kurdistan 
Regional Government has its PSA's online but not production 
figures.

                          Corruption Continues

    Corruption continues to be a problem in Iraq, stymying 
economic growth and adding to the pervasive distrust and 
political fragmentation. Transparency International's 2011 
``Corruption Perceptions Index'' gives Iraq a 1.8 out of 10, 
which places it in the bottom 10 of the 182 countries ranked 
and (right below Haiti) and qualifying it as ``highly 
corrupt.'' This represents a modest improvement from 2009 and 
2010, when Iraq scored a 1.5 and was in the bottom five of all 
countries rated.
    Staff asked several interlocutors about corruption. There 
is little of note to report. Progress is fleeting and many of 
the same old problems persist. Nevertheless, international 
groups like Transparency International and the World Bank are 
sanguine about Iraq's potential to improve, noting Iraq's not-
so-distant past. The most interesting reply staff received on 
this subject was from Dr. Sami, the Chairman of the Iraqi 
Investment board who stated with emotion, ``Corruption was not 
known in Iraq. Sanctions created it during the 1990s when 
people did it to survive. In 2003, the institutions were 
eradicated. From 2004-2008, corruption continued, as you had 
people struggling for their own existence and hundreds of 
people dying. Stealing is better than killing.'' But he said, 
``Judge me on my efforts to fight it. We are trying to rebuild, 
we have a long way to go, we are optimistic.'' Some corruption 
is to be expected, but according to Embassy officials, it 
remains pervasive and reaches to the highest levels of the 
government. Couple that with what one Iraqi-American 
businessman said was a ``Socialist, anti-Western mentality, and 
a fear and loathing of the private sector,'' and you have the 
recipe for a slower road to recovery than even realists have 
predicted.
    Without stronger laws and institutions, transparency will 
be the Iraqi people's No. 1 weapon, increasing the importance 
of programs like the Extractives Industries Transparency 
Initiative (EITI) so that as oil production increases, the 
Iraqi people can note those figures and judge whether benefits 
are making their way to them.
    Iraq was accepted as a candidate country to (EITI) on 10 
February 2008.\15\ On 23 December 2010, Iraq published its 
first EITI report to which Eddie Rich, Deputy Head and Regional 
Director for the EITI International Secretariat, gave high 
marks, even if some of the figures do not quite match up to 
auditing standards. This is partly because they are provided, 
Rich said, by 34 different companies who provide figures on a 
disaggregated basis. It also does not cover domestic sales, for 
which EITI worries there is ``no accounting or explanation.'' 
The implication is that such sales could be fraught with 
corruption. The report, like most EITI reports, has a 2-year 
lag. It looks at reconciling 2009 figures, not current day 
agreements, contracts, and production figures. 2010, Mr. Rich 
said, will be a different case for Iraq because they entered 
into new agreements and made many payments and signing bonuses 
that were not put on the books.\16\
    By August 9, 2012, Iraq will have undertaken a ``validation 
exercise'' or quality assurance check through its 
multistakeholder process. Stakeholders, including major oil 
companies like ExxonMobil and Shell, civil society 
organizations, and the government, will rate Iraq against the 
20 requirements of the EITI standard. It would not be unusual 
for Iraq to not be found compliant. In fact, Mr. Rich stated, 
``most countries do not become compliant after a single 
report.'' It is not a pass-fail system.\17\

             A Rosier View From the Iraqi Kurdistan Region

    Staff spent 2 days in Erbil, the capital of the Iraqi 
Kurdistan Region (IKR). Arriving via commercial airline from 
Jordan, one is immediately impressed by the glistening, new 
airport that opened in 2010 and receives direct flights from 
Cairo, Dubai, Vienna, and Istanbul in addition to Amman. Cranes 
are moving and new construction is everywhere. Traffic, jammed 
with imported new cars from all over the world, moves with 
purpose and in rhythm with the business day. Visitors can pick 
a visa up at the terminal. The energetic U.S. Consul General is 
a Foreign Service veteran named Alex Laskaris who speaks 
Kurdish and is a font of knowledge about the Kurdish region. He 
sees his No. 1 job as keeping Kurdistan in Iraq.
    The attitude of the Kurdish Regional Government (KRG) 
toward business is to provide security, institute friendly 
policies, and get out of the way. Critics say the security 
forces are heavy-handed, and the government still owns a piece 
of everything (one Barzani brother has a share of the Coke 
franchise, another has Pepsi), but there is no denying 
Kurdistan welcomes private sector investment. It has conquered 
its electricity supply problem by having a company named Mass 
Global Energy build 1750 megawatts of electricity generation. 
Mass Global then sells the power to the government to 
distribute to customers. Ford, GM, Chevrolet, Caterpillar, John 
Deere and many others have opened up distributors. GM reported 
that its fastest growing market in 2010 was Iraq due to 
increased political stability in the country, and it all began 
in the IKR, which licensed the first GM dealership in Iraq in 
2010. GM's sales in 2010 rose 52 percent from the previous year 
and expanded another 68 percent in 2011. It sold 32,000 
vehicles in Iraq, second to Saudi Arabia in the region.
    Staff met with several American entrepreneurs who have made 
the Kurdistan Region their home and are enthusiastic about 
business prospects and are realistic about tax policies and 
corruption. Their only serious complaints were about the lack 
of consular services available at the U.S. consulate. One 
businessman recently had a child and he and his wife have to 
make the dangerous trip to Baghdad to get the child a passport.
    According to international oil executives, their top 
challenges will be exporting product and getting paid. Payments 
are supposed to go from New York to Baghdad, and then to the 
KRG. New production from Kurdistan will come online in 2012.

                                 OSC-I

    The Office of Security Cooperation--Iraq team is comprised 
of 157 uniformed personnel and about 800 contractors and 
civilians who are working on almost 400 FMS cases worth $10.2 
billion ($7.7 billion Iraqi share). OSC-I is led by a U.S. Army 
3-star, LTG Robert Caslen, and a 2-star Navy SEAL deputy. LTG 
Caslen had been dual-hatted as the head of NATO Training 
Mission - Iraq, but that mission folded at the conclusion of 
2011 because the Iraqis would not grant NATO troops immunities 
from Iraqi law.
    OSC-I's mission is training and equipping the Iraqi Army. 
They have a huge, uphill battle ahead of them. The 
relationships they have inherited from the 9-year occupation 
may prove crucial to their success. They are well positioned to 
deliver and are laying the groundwork for the long-term 
``strategic relationship,'' while providing a means for 
American companies to get their foot in the door. Their mission 
statement says they conduct `` . . . Security cooperation 
activities to build partner capacity in support of the 
developing strategic partnership with a sovereign, stable, 
self-reliant, and regionally integrated Iraq.'' It glosses over 
the ``nonpermissive environment'' and ``regional instability'' 
printed boldly on the briefing slides.
    OSC-I's plans are aggressive, designed to build ``enduring 
capacity'' for the Iraqis. It is investing large dollars in the 
mission despite the political fragmentation, corruption, and 
lack of ministers atop the security ministries. Many of the 
major weapons systems will build the Iraqi Air Force and air-
mobility capacities with American-made equipment including C-
130 transports, F-16 fighters, trainers, and various helicopter 
models. The Army will be outfitted with M1A1 tanks, troop 
carriers, and howitzers. There are plans for ground-based air 
defense systems, and for the Navy, off-shore support vehicles, 
UAV's, and patrol boats.
    Some of the plans seem off-base, such as pushing to sell 18 
more F-16s at a time when there is only one pilot in training, 
no officers enrolled at U.S. academies, and as noted above, a 
visa program at a near standstill. But OSC-I is committed.

               Cost of the Mission May Be Its Death Knell

    The State Department is running the Embassy in Baghdad, 
consulates in Basra and Erbil, the equivalent of a small combat 
hospital, several health clinics, an airline, airfields and all 
of the logistical elements involved. There are some dozen sites 
around the country. The price tag for operating all of this 
(including development and assistance programs) will be around 
$6.5 billion for 2012, well above that cost of any other U.S. 
diplomatic mission--but far lower than the more than $40 
billion in U.S. spending budgeted for fiscal 2011 in Iraq.
    The civilian mission numbers about 1,800 USG employees, 
backed by about 14,000 contractors of various stripes (care, 
feeding, maintenance, security, NGOs, and USAID implementing 
partners). The bulk of the $6.5 billion is tied up in 
operations and security. Overhead accounts for upward of 80 
percent of costs according to the Special Inspector for Iraqi 
Reconstruction (SIGIR). Such costs are unsustainable.
    The high cost comes under greater scrutiny when effects are 
measured. Because of pushback from the GOI, and the challenging 
security conditions, many planned programs are not being 
executed. Embassy staff are frustrated by their inability to 
have an impact.
    Ambassador Jeffrey may have been only slightly exaggerating 
when he told staff that trucking food in from Kuwait to provide 
meals for personnel costs 50 times what it would if the Embassy 
were making purchases on the local economy. In Baghdad, core 
Embassy staff are housed in fully furnished apartments--down to 
ironing boards, vacuums, pots, pans, plates and glassware--yet 
the Embassy has maintained the Army way of feeding the troops: 
providing, at no cost to all assigned personnel, three meals a 
day cafeteria style, with four or five different lines of 
cuisine choices. Ambassador Jeffrey inherited a huge military 
operation. He expressed that he had little choice but to 
continue operating in the same fashion, although he was fully 
aware of the need to shed overhead costs or programs, and he 
would rather shed costs.
    Staff was pleased to see that Consulate General Erbil is 
leading in this respect already. Although it, too, provides 
meals free-of-charge for its staff, but via meal vouchers which 
are redeemed at a local establishment that is within the 
security perimeter. There is also a minimart that sells basic 
groceries. This allows many to take meals (particularly 
breakfast) in their own apartments. And because the security 
environment is more benign, staff can even stop for lunch while 
out in town for a meeting. CG Erbil has also begun hiring 
guards from the local population, something State does at posts 
around the world.
    The ratio of contractors to diplomats draws attention. The 
State Department's reliance on contractors itself is 
reasonable. According to the Department of State, ``Although 
not as large as that of DOD or other federal agencies, State's 
contracting activity grew from $1.8 billion in 2001 to $8.8 
billion in 2011. Most of this growth was for programs in Iraq 
and Afghanistan.''
    The U.S. Government does not have in its deployable arsenal 
sufficient security personnel, janitors, cooks, drivers, 
landscapers, etc.; nor should it. However, the Department of 
State must ensure it has ample contract oversight personnel 
deployed to ensure that the taxpayer is getting all that is 
being paid for, and that the mission is not being sacrificed or 
slowed because of shortcomings. Audits and inspections are 
important, and the work of the OIG, GAO, SIGIR, DCAA, DCMA, and 
others are invaluable, but greater emphasis should be placed on 
management. For example, State has put on staff in Iraq a 
retired U.S. Army Medical Service Corps officer who is the COR 
\18\ for its medical contract. The medical contract, with a 
ceiling of nearly $1 billion, covers a hospital and several 
clinics scattered across the country and provides for emergency 
evacuations. It is unreasonable to expect one person to 
adequately manage, much less provide oversight and 
accountability for, a $1 billion contract with facilities and 
personnel working all across Iraq.
    State has hired an additional 103 procurement staff since 
2008, but according to analysis done by the Government 
Accountability Office (GAO), across the board, State does not 
have enough dedicated COR's monitoring contracts and task 
orders in country. The State Department's Acting Inspector 
General, Howard Geisel, stated in a phone interview with staff, 
``The biggest single problem in these situations is the 
Department having enough qualified contracting officer 
representatives (CORs) within the missions and in the 
contingency regions.''
    Staff further note that many of the COR's have other 
primary tasks not related to contract management and that most 
contract oversight personnel are located in the DC metropolitan 
area, not in country. In the case of buying a truckload of 
tomato paste for the cafeteria, you can manage remotely, but 
when it comes to managing 14,000 people who are essential to 
mission execution, staff strongly believes more direct 
oversight is necessary. This might require a change from the 
``centrally managed'' approach the State Department has found 
works elsewhere, but Iraq and Afghanistan are unique in many 
ways.

                            Recommendations

    Concrete policy recommendations are difficult to come by, 
but some pragmatic steps could make a difference in getting 
Iraq open for business and help pave the way for political 
progress.

   The Department of Commerce should fund an increase 
        to its Foreign Commercial Service staffing in Iraq, 
        particularly to hire more locally engaged staff (LES). 
        This would enable them to better navigate the oddities 
        of the Iraq commercial sector, build corporate 
        knowledge, and provide better advice and assistance to 
        American companies.
   A large-scale Joint Economic Cooperation (JECOR) 
        program, modeled on the Saudi Arabia program that 
        existed for three decades, should be initiated with the 
        Government of Iraq under Section V of the Strategic 
        Framework Agreement. Under U.S. law, authority exists 
        under Section 607 of the Foreign Assistance Act of 
        1961. Such a program has great potential benefits for 
        both the United States and Iraq.
   Embassy Baghdad should open a small commissary on 
        the premises as soon as possible. Embassy personnel 
        expressed a willingness and desire to cook their own 
        meals, but they cannot procure groceries on the Embassy 
        campus, nor make trips into town. This would have an 
        immediate impact on dining facility demand and costs, 
        help identify challenges and opportunities, and provide 
        a bridge to the future. Changing the dining facility to 
        a fee-for-service from an all-you-can-eat enterprise 
        might also be worth considering.
   Cuts must be made to Embassy staffing. The 
        Department faces tough decisions in adjusting the size 
        of the Embassy staff, which is larger than it needs to 
        be to accomplish the mission. This has probably been 
        postponed because transition was a higher priority, but 
        cuts can and should be made now before the next 
        assignment and rotation period commences this summer.
   Currently numbering 10 or 11 sites, the United 
        States Government should reduce or consolidate the 
        number of sites from which it is operating in Iraq. 
        Each site requires a cadre of static guards and support 
        personnel that add exponentially to the cost of the 
        Iraq operation.
   In and around Baghdad, no meaningful downsizing can 
        occur if the Embassy has to continue to control the 
        sprawling expanse of real estate for which it is 
        currently responsible, including six separate sites in 
        Baghdad alone. The Department must look for ways to 
        shrink its footprint. One option would be to close FOB 
        Union III, which exclusively houses the OSC-I mission. 
        Those offices should transition to the buildings that 
        were originally constructed for that purpose on the 
        Embassy campus.
   The Secretary of State should commission an 
        independent review of the scope and expectations for 
        the Police Development Program, perhaps resembling the 
        commission that Gen. Jim Jones and former DC Police 
        Chief Charles Ramsey led in 2007 that included current 
        Senate Sergeant-at-Arms Terrance Gainer. From a 
        distance and considering current conditions the current 
        program looks unsustainable. Alternatively, the PDP 
        could become a core element under JECOR and be funded 
        by the GOI.
   According to the contracting officials at DCMA, the 
        LOGCAP contract provides flexibilities to procure 
        locally and even hire local Iraqis. State, through the 
        Defense Contract Management Agency, should push KBR, 
        which carries the LOGCAP responsibilities, to hire and 
        train more Iraqis. The same should be done to increase 
        local food procurement through the contract held by DLA 
        (the Defense Logistics Agency). Start soon. Start 
        small.
   The Department of State should hire, train, and 
        deploy more CORs to actively manage the large contracts 
        and contract-hired personnel it relies upon to operate 
        the Iraq mission. In addition to providing better in-
        country oversight now, as it transitions from some of 
        the DOD/DCMA-procured contracts, the Embassy will 
        benefit from such on-sight expertise.
   The Department of State should enable ConGen Erbil 
        to, at a minimum, provide consular services for 
        American Citizens living in the Kurdistan Region. Staff 
        met with several American businessmen who are living 
        with their families in northern Iraq. One had recently 
        had a baby and was contemplating the requirement to 
        travel to Baghdad to get a passport for the child.
   The Federal Aviation Administration should repeal 
        SFAR 77, which prohibits all U.S. air carriers or 
        commercial operators from conducting flight operations 
        over or within the country of Iraq. Several foreign 
        carriers are operating into Baghdad International, and 
        even more private carriers are flying into Erbil, yet 
        American carriers are prohibited--and that includes 
        jets belonging to American oil and oil services 
        companies like Shell, Hess, Hunt, ExxonMobil, 
        Slumberger, and KBR.
   The multilayered screening procedures for Iraqi 
        Refugees and Special Immigrant Visa (SIV) applicants 
        are costly, cumbersome, and ultimately defeat the goals 
        of these programs by keeping applicants in a state of 
        limbo for extended periods of time. The administration 
        should either terminate the SIV program or add $5 
        million to adequately staff to eliminate backlogs that 
        are more than 2\1/2\ years long.
   The FY 2007 National Defense Authorization Act 
        (NDAA) expanded the Iraqi SIV program to offer 
        protection to more Iraqis who were risking their lives 
        to assist/work for the United States mission in Iraq. 
        The program was further expanded by Section 1244 of the 
        2008 NDAA. Previously limited to interpreters and 
        translators who worked for the military and the 
        Embassy, more employees became eligible. The program is 
        due to expire next year. The program should be allowed 
        to terminate, and seek to accommodate only those who 
        have already applied using quotas that have already 
        been established, but left unfilled. If a new 
        humanitarian crisis opens, new legislation can be 
        considered.

 APPENDIX I--ISSUES TO BE REGULATED BY LAW UNDER THE IRAQ CONSTITUTION19
------------------------------------------------------------------------
               No.                      Article              Issue
------------------------------------------------------------------------
1...............................  9(2)..............  Military service.
2...............................  12(1).............  Flag, national
                                                       anthem and
                                                       emblem.
3...............................  12(2).............  Honors, official
                                                       holidays,
                                                       occasions, and
                                                       calendar.
4...............................  18................  Citizenship
                                                       (entitlement,
                                                       withdrawal,
                                                       reinstatement,
                                                       multiple
                                                       nationalities).
5...............................  22(2).............  Relationship
                                                       between employees
                                                       and employers.
6...............................  22(3).............  Forming and
                                                       joining trade
                                                       unions.
7...............................  23(2).............  Expropriation.
8...............................  24................  Freedom of
                                                       movement of
                                                       manpower, goods
                                                       and capital.
9...............................  26................  Encouraging
                                                       investment in
                                                       various sectors.
10..............................  27(2).............  Preservation,
                                                       management and
                                                       disposal of State
                                                       property.
11..............................  28(1).............  Taxes and fees.
12..............................  28(2).............  Exemption from
                                                       taxes for low
                                                       income earners.
13..............................  30(2).............  Social and health
                                                       security to old,
                                                       sick, disabled,
                                                       unemployed,
                                                       homeless and
                                                       orphaned.
14..............................  31(2).............  State Supervision
                                                       and building of
                                                       hospitals and
                                                       clinics.
15..............................  32................  Care for the
                                                       handicapped.
16..............................  34(4).............  Public and private
                                                       education.
17..............................  38(C).............  Assembly and
                                                       peaceful
                                                       demonstration.
18..............................  39(1).............  Forming and
                                                       joining political
                                                       parties.
19..............................  41................  Personal status.
20..............................  43(1).............  Management of
                                                       religious
                                                       endowments.
21..............................  45(1).............  Strengthening/
                                                       developing civil
                                                       society
                                                       institutions.
22..............................  49(3).............  Election of
                                                       Council of
                                                       Representatives.
23..............................  49(5).............  Replacing members
                                                       of the Council of
                                                       Representatives.
24..............................  63................  Rights and
                                                       privileges of the
                                                       Speaker, two
                                                       deputy speakers,
                                                       and members of
                                                       the Council of
                                                       Representatives.
25..............................  65................  Formation,
                                                       conditions and
                                                       competencies of
                                                       the Federation
                                                       Council.
26..............................  69(1).............  Nomination of
                                                       President of the
                                                       Republic.
27..............................  69(2).............  Nomination of Vice
                                                       Presidents of the
                                                       Republic.
28..............................  74................  Salary of the
                                                       President.
29..............................  82................  Salaries of the
                                                       Prime Minister
                                                       and Ministers.
30..............................  84(1).............  Duties and
                                                       authorities of
                                                       the security
                                                       institutions and
                                                       National
                                                       Intelligence
                                                       Service.
31..............................  86................  Formation and
                                                       authorities of
                                                       the ministries.
32..............................  89................  Regulation of
                                                       federal courts.
33..............................  90................  Establishment,
                                                       authorities and
                                                       rules of the
                                                       Higher Juridical
                                                       Council.
34..............................  92+...............  Number, member of
                                                       selection and
                                                       work of the
                                                       Federal Supreme
                                                       Court.
35..............................  93(6).............  Settling
                                                       accusations
                                                       against the
                                                       President, Prime
                                                       Minister and
                                                       Ministers.
36..............................  96................  Establishment of
                                                       courts,
                                                       appointment of
                                                       judges and
                                                       prosecutors and
                                                       their terms of
                                                       service and
                                                       discipline.
37..............................  97................  Discipline and
                                                       removal of
                                                       judges.
38..............................  99................  Regulating
                                                       military
                                                       judiciary and
                                                       jurisdiction.
39..............................  102...............  Functions of the
                                                       High Commission
                                                       for Human Rights,
                                                       the Independent
                                                       Electoral
                                                       Commission and
                                                       the Commission on
                                                       Public Integrity.
40..............................  103(1)............  Work of the
                                                       Central Bank,
                                                       Board of Supreme
                                                       Audit,
                                                       Communication and
                                                       Media Commission
                                                       and the Endowment
                                                       Commissions.
41..............................  104...............  Functions and
                                                       competencies of
                                                       the Foundation of
                                                       Martyrs.
42..............................  105...............  Establishing a
                                                       commission to
                                                       guarantee the
                                                       rights of regions
                                                       and governorates
                                                       not organized
                                                       into regions.
43..............................  106...............  Establishing a
                                                       commission to
                                                       audit and
                                                       appropriate
                                                       federal revenues.
44..............................  107...............  Establishing the
                                                       Federal Public
                                                       Service Council.
45..............................  112(1)............  Management of oil
                                                       and gas from
                                                       current fields
                                                       and distribution
                                                       of revenue.
46..............................  109...............  Oil and gas
                                                       revenue
                                                       distribution and
                                                       regulation.
47..............................  114(7)............  Water policy.
48..............................  118?..............  Procedures to form
                                                       regions.
49..............................  122(2)............  Authorities of
                                                       governorates not
                                                       organized into a
                                                       region.
50..............................  122(4)............  Election and
                                                       powers of
                                                       Governorate
                                                       Councils and
                                                       Governors.
51..............................  123...............  Regulation of
                                                       power delegated
                                                       to the regions.
52..............................  124(2)............  Status of Baghdad.
53..............................  125...............  Administration,
                                                       political,
                                                       cultural and
                                                       educational
                                                       rights for
                                                       minorities.
54..............................  132(3)............  Care and
                                                       compensation for
                                                       families of
                                                       martyrs,
                                                       political
                                                       prisoners,
                                                       victims of
                                                       previous regime,
                                                       and those injured
                                                       by terrorist
                                                       attacks.
------------------------------------------------------------------------


End Notes
    1. According to a report by the Public International Law & Policy 
Group (PILPG), ``Next Steps for Implementing the Iraq Constitution,'' 
written in 2006, more than \1/3\ of the Constitution will be 
``determined'' or ``regulated by to-be-written laws. The list of 54 
specific mentions is included at Appendix I.
    2. A Security Advisory Opinion (SAO) is a multiagency name check 
required in all cases of possible immigration inadmissibility under INA 
212(a)(3)(C). US. Department of State Office of the Inspector General, 
Report of Inspection Embassy Baghdad Iraq, Report # ISP-I-09-30A dated 
July 2009 provides good overview of this security review process that 
it describes as ``among the most severe in the world.''
    3. The term 1.5 carrier presence in Navy parlance means that they 
will have at least one carrier strike groups patrolling the area, 
sometimes two.
    4. Interview with Dr. Jaber Al Jaberi, 12/7/2011.
    5. From e-mail discussion with John Greenhalgh, Director Middle 
East and Africa Electronic Systems for ITT/Excelis, 6 March 2012.
    6. The International Bank for Reconstruction and Development/The 
World Bank, ``Doing Business 2012, Doing Business in a More Transparent 
World.''
    7. International Rescue Committee, ``Youth and Livelihoods 
Assessment: Baghdad,'' May 2011, p. 16.
    8. ``Unemployment Threatens Democracy in Iraq,'' USAID Agricultural 
Policy Dialog Series #10, January 2011.
    9. CLDP's Iraq program cost $8.65 million from 2006 to mid-2011.
    10. Sources: U.S. Department of State Web site; Web sites of the 
Embassies of Argentina, Bahrain, Kuwait, the Philippines, South Africa, 
Tanzania; phone conversations with Embassies of Argentina, Botswana, 
Brazil, Chile, France, Germany, Iraq, Kenya, Kuwait, the Philippines, 
Poland, South Africa, Tanzania, and United Arab Emirates (Feb. 2012).
    11. Perfect score is 100, five points are deducted as follows: if a 
visa is needed for entry, if visas are not available at points of entry 
(if they are, two points are added), if standard visa processing time 
exceeds 1 month, if additional, nonhealth related bureaucratic demands 
are made after entry, if exit procedures are not conducted at points of 
departure, and if entrance or exit fees are required. Ten points are 
deducted if the validity of business visas, the cost of a business 
visa, or the visa processing time are determined on a case-by-case 
basis instead on a standardized basis.
    12. A 3161 employee, is a temporary direct-hire employee, so named 
because of the section of the law that governs this type of employee: 
USC Title 5 Part III Subpart B Chapter 31 Subchapter IV Sec. 3161.
    13. View the SFA online at this link: http://www.acq.osd.mil/log/
PS/p_vault/SE_SFA.pdf.
    14. The 2007 draft law is available on the web at this address: 
http://web.krg.org/uploads/documents/
Draft%20Iraq%20Oil%20and%20Gas%20Law%20English_2007_03_09_h17m2s47.pdf
    15. SFRC staff reported on Iraq's EITI pursuits in a 2008 report 
entitled ``The Petroleum and Poverty Paradox: Assessing U.S. and 
International Community Efforts to Fight the Resource Curse.''
    16. Video teleconference interview between Mr. Rich and SFRC 
staffmember Patrick Garvey, March 2012.
    17. Ibid.
    18. Contracting Officer's Representative (COR) means an individual 
who is designated and authorized in writing by the contracting officer 
to perform specific technical or administrative functions on contracts 
or orders. The term COR includes any individual (military or civilian) 
performing these types of functions on contracts regardless of the term 
used to describe their position, specialty or assignment (e.g., 
alternate CORs, assistant CORs, Contracting Officers' Technical 
Representatives (COTRs), task order monitors, task order managers, 
performance assessment monitors, etc.). These individuals serve a 
critical and vital role in assuring contractors meet the performance 
requirements of the contract in terms of cost, quality, quantity, 
schedule and cost/price. Only contracting officers have the authority 
to delegate these functions and assign a COR, a COR is not authorized 
to further delegate any responsibility.
    19. Next Steps for Implementing the Iraq Constitution, Public 
International Law & Policy Group (PILPG), 2006, p. 13-15.

                                  
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