I DECLASSIRED I fl Future of the Development Fund for Iraq Issue: The Development Fund for Iraq (DFI) as currently structured offers several important benefits, including immunity for Iraqi oil revenues and other assets deposited in the DFI and oversight by an international board, as mandated by UNSCR 1483. It is expected that the Transitional Administration scheduled to assume authority on July 1 will be considered an "internationally recognized, representative government" for purposes of UNSCR 1483. Absent other arrangements, the new Iraqi Transitional Administration would assume exclusive control over oil revenues and the Iraqi budget, while control over disbursements of funds that remain in the DFI should be addressed, since such control is currently assigned to CPA, which is scheduled to dissolve. The USG must determine whether to seek to terminate. preserve. enhance or otherwise modify the current DFI structure post-July 1. and develop a strategy to implement its decision. Below are three major options for Principals to consider. Assumptions: All the options discussed below assume the following: • that a mechanism will be in place to ensure that S percent of oil revenues continue to be deposited into the UN fund to compensate those who suffered damages in the invasion of Kuwait; • that there is some preservation of transparency/independent oversight of Iraqi finances, at least with respect to export oil sales; • any option should be approved both by the Governing Council and subsequently accepted by the Transitional Administration; • that Security Council members will recognize the need to revise UNSCR 1483 fmancial arrangements. Option 1: Close DFI on July 1 without successor arrangement Key elements: • DFI account at the NY Fed held by Central Bank of Iraq is closed in last days of CPA authority and balance transferred directly to Iraqi government account; • oil revenues deposited directly to account identified by Finance Minister or other appropriate authority; 991JJllllUJiiI' h IR9k lt'f/11 DATE 09/// L 20(J7 FOIACASE# ,., •• ,, 031'3 ; ~ . llllHIZPT?s 2 • IAMB, per UNSCR 1483, continues to supervise audits of oil export sales to ensure consistency with international best practices, but does not review expenditures of oil export revenues. (In the alternative, Iraqi authorities might agree to another independent oversight mechanism for oil export sales.) PROs: • Relatively easy to sell to Iraqis; • Consistent with UNSCR 1483, in that international recognition of Iraqi government ends requirement to deposit oil revenues into DFI; • Continued audit of oil export sales by an auditor reporting to the IAMB (or alternative independent oversight mechanism for oil export sales). CONs: • Weak oversight over use of oil revenues, misappropriation/corruption are risks; • Immunity would apply only to oil revenues, but not other sources of funds previously deposited into DFI (e.g., frozen assets); • May increase risk of attachment for off ashore Iraqi government accounts; since immunity would remain only for oil revenues, per UNSCR 1483; creditors might argue that commingling with other government funds means loss of immunity; • Would require new structure via UNSC resolution to meet international obligations regarding transfer of assets, as well as to deal with remaining OFF surplus; • Does not bolster credit rating of Iraq so as to facilitate access to credit (primarily because expenditure decisions are not audited by outside entity and all oil revenues - which remain the primary revenue source for Iraq - retain immunity from attachment from all creditors through 2007). Option 2: Retain current DFI structure with some outside oversight and influence on Iraqi expenditures Key elements: • DFI is preserved by new UNSCR, but signatory changed to lraqi(s); • Other arrangements remain as is, with 95 percent of oil revenues flowing into DFI (however, Iraqis could decide to move DFI from NY Fed to another bank); limited to transition period until an elected government rules under new constitution. iif llifilliiJJ'ti/zh RT JPT?EPT75 3 • IAMB would continue to review audits of DFI and monitor oil export sales; • General guidelines on purposes of DFI expenditures maintained (e.g. expenditures only for "operations of government ministries, promoting economic development and other activities benefiting the Iraqi people"); • Modify scope of immunity for DFI successor to preserve until end of 2007 only against all claims arising before July 1. PR Os: • Greater transparency would encourage prudent use of public resources and sound debt management, thereby enhancing political stability; • Could help reassure Iraqi factions on equitable sharing of oil revenues; • Reduces risk of misappropriation/corruption; • Compatible with some continued inununity (see next bullet) for Iraqi financial resources, including seized and frozen Iraqi assets; • Facilitates access to credit by partial lifting of immunity for new creditors, while international oversight over oil revenues would mitigate some risk inherent in more limited immunity, by ensuring transparency of post-July 1 transactions; • DFI could act as off-shore reserve fund, avoiding impact on exchange rate of unrestrained hard currency inflows; • Could later provide the basis for an oil trust fund. CONs: • Iraqis may object to any continuation of outside monitoring of Iraq's oil sales or restrictions on the purposes for which proceeds may be spent; anti-Western parties could target international monitoring in 2005 elections; • Reaching agreement on new UNSCR may be difficult; • Risk of over-borrowing with lifting of immunity for post-July 1 claims (but risk would be mitigated, as ability of creditors to take legal action against revenues would impose some discipline on Transitional Administration ); • Lifting of immunity for post-July 1 claims effectively subordinates Paris Club and other pre-July 1 claims. iit fWi'Jit JTI:'* I IJF IP l 4 Option 3: and control over expenditures Retain DFI structure with greater international oversight Key elements: • Similar to Option 2, except that the international influence would extend from monitoring to control; • Continued deposit of 95 percent of oil revenue in the DFI subject to a dual-key structure, whereby transfers from the DFI/off-shore reserve could take place only with the consent of the international authority; limited to transition period until an elected government rules under new constitution. PROs: • Greater transparency would encourage prudent use of public resources, tlhereby enhancing political stability; • Reduces further risk of misappropriation/corruption; • Facilitates access to credit with lower risk of over-borrowing; • Compatible with continued immunity for Iraqi government resources; • DFI could act as reserve fund, avoiding impact on exchange rate of unrestrained hard currency inflows; • Such an institutional structure could evolve into an oil trust fund. CONs: • UN or other international institutions may be reluctant to accept an active role in managing Iraqi financial resources; • Reaching agreement on new UNSCR may be difficult; • haqis will object to limited control over the bulk of their financial revenues. Note: A related variant would utilize, in place of international control over an off-shore reserve, a separate Iraqi-controlled mechanism, similar in concept to Chad's revenue college. NGO representatives, civil servants, Parliament members, and others in Chad monitor financial flows, participate in budget formulation and monitor budget execution. Another possibility would be a mechanism including the central bank governor and finance minister on a financial control board. The greater the proportion of Iraqi revenues that are held in such a manner off-shore, however, the more difficult it would be to persuade Iraqis to give up control. 8 er lJillHU fiMt'lls ???EP?ETT I 5 Future of the DFI Draft: Clear: EB/IFD/OMA - T Engle/M Bocchetti 647-9792 215104 EB -E. Anthony Wayne - ok EB/IFD - L Greenwood - EBIIFD/OMA - T Engle - ok NEA - A. Farsakh - ok IO/PHO - G Southern - ok I.JEB - K Loken - ok E-D Cade - ok Treasury - A Shah - ok tiiil JJilQft Iii ' L ?2?257 Surranary of Conclusions for Meeting of the Iraq Stabilization Group Economic Cell Feibruary 12, 2003,, 3:00 - 4:30 P.M. Room 208, Eisenhower Building PARTICIPANTS: Chair Gary Edson State Al Larson Tony Wayne Robin Raphel Dayna Cade Treasury Randy Quarles Larry McDonald Juan Zarate Defense David Norquist Cameron Leuthy Cassie Strom Benj ami n Runkle Commerce Ted Kassinger Susan Hamrock OMB Jackee Strasser Vice President Steve Claeys CIA David Gordon CEA Brent Neiman OPIC Ross Connelly Robert Drumheller US AID Gordon West CPA Joseph Benkert Dayna Hutchings Chris Spears Olin Wethington M ichael Flei scher (via phone) NSC John Simon Ad.nan Kifayat Rick Karp Gary Peters Cathy Taylor Summary of Conclusions Frozen Assets • Syria: Syria is seeking to by-pass U.N. sanctioned approach and broker a deal directly with Iraqi interlocutors. State has drafted a cable in response. Olin Wethington will ensure the Finance Committee of the Iraq Governing Council names the appropriate delegation to visit Syri a and deliver a clear SS?PPT 2 message per the State cable . (Action: CPA (B) . Timing: February 18 ) • State will revise its cable to reflect the role of the Iraq Governing Council in appointing a delegation to Damascus. (Acti on: State. Timing: February . 13) • Jordan: Jordan intends to pay out an additional $15 million in claims. Treasury will obtain a rationale from GOJ for this payout, an apparent violation of their earlier commitment to postpone further payouts until an Iraqi review of the claims. (Action : Trea•ury. Timing: February 17) • Kuwait: Kuwait has yet to transfer $85 million in frozen assets. Dov Zakheim will intervene to ensure this transfer occurs. (Action: Defen•e. Timings February 17 ) • Treasury will meet with the Communications cell to discuss ways to make public the successes of the frozen asset recovery effort. (Acti on: Treasury. Timing : February 18 ) Future of the DFI • NSC will circulate the U.K . paper on the topic. (Actions NSC. Timing: February 13) • NSC will forward the State / Treasury paper - with amendments to highlight the case for preserving the DFI to the Iraqis and the notion of its transitional nature - to its Principal for further discussions with State, Treasury, and CPA at the Principal level. (Action: NSC. Timing: February 17) Central Bank Reserves • Treasury, Olin Wethington, and Rodney Bent will develop a paper expressing a consolidated view of the appropriate reserve level for the Central Bank and recommendations for achieving that level. (Actions Treasury, CPA (B). Timing: February 18 ) Private Sector Development • OPIC will update its table of credit facilities, including a column for expected start date, funding source, and status of discussions with OMB. (Action: OPZC. Timings February 17. ) • OPIC will discuss with Rodney Bent how to access the $10 million CPA contribution to the I FC SME Facility. (Ac tions OP.IC with CPA (B) . Timing: February 17.) ??? 77 3 Data Issues • CPA (W) will work to get Booz-Allen to assist with National Account data by March 1. (Actions CPA (W). Timings Immediately) Oil-for- Food Transition • Ambassador Raphel will produce a paper with reconunendations for the OFF program issues, to be discussed with CPA (W) and DoD. (Actions State. Timing: February 17) • CPA (W) will investigate the strike at Um Qasr and inform the Econ Cell of progress in resolving it. (Action: CPA (W). Timings February 17) • State and CPA (B) will identify the impact of the Strike on the Food Pipeline. (Actions State, CPA (B). Timings February 17) FINAL DRIU'l" !RAO STRATEGIC lRANSITION ~ ' • '"'8• T~i-. ~ ~ : ~~A> ~~ ',j~' E.1. 1bi< Obledlw: C,..le Sound RKl!I. Monel8rY & Ex""-..,. Polldw CSTATE'xCornn*1t from DODI E.1.1 CUrrencyexehangecoq>lei.c1 TREAS TREAS ECON CPA 15-Jan Done Point person (Wastiington): Tom Si"1)SOn E.1.1.2 Complete exchange ol 25 Swiss dinar notes TREAS 17-Apr OMB TREAS/000 ECON CPA NSCECON E.1.3 Obtain IGC ejlpfOV8I ol Centtal Bank Lew; Build c-.tial e.r1k l'9MMIS; Cann! Bank and Finance Ministry performing eo trair>ed on international best nnw-Jioes JO.Jun truJZ /W 211Dl20CM ~tOl10- FINAi. DRAFT IRAO STAATmlC TRANSITION 1'1.-'N 20 JAN D4 Willi 000 COMMENTS Govemor and appointed serior supeiv1 sory ollioal have been Jntegraled lllto the BIS and Middle East Cenlral Bank suoervisorv mee1;nns 30-Jun Finance Minislry: establish sound and transparenl budget framework and processes critical 1 0 the functioning of the govemmenl and 10 econcmc stability 30-Jun E.1.4 Select foniign banks lo operate In lrac;t"' TREAS TREAS ECON CRA 23-Jan Point persoo (Washington): Fred Buhler Central Bani< of Iraq appoints selection cormV!lee End December Done Cenlral Bank ol Iraq selecls loreign banks. subjecl to due diligence review 28.Jan y Central Bank CClr11'feleS due diligence review End February Approved foreign ba<*s up and running By30-Jun E.1.5 Strengthen tax ad!Tini&lration/relorm tax polieies TREAS USAIO ECON CPA E.2. Ablar ~: DIOt Rellef/-n.tlon oe "--£TREAS'> (Comment from oom Maxirrum redudion in value of Iraq's extemal delll. TREAS E.2.1 STATE ECON CRA 1.Jul POiol person (WaShin,.ton): Clay l..owefy, John Ratyea, Cllfls Walker CPA to a. ssist Iraqis in procuring Independent aocountarta 10 assist with dab! recoocilialion 12-Feb (proposals we> CR A to asslsl Iraqis in procuring independenl legal and financial advisors on debt resi ructunno by end March Undertake anatysla of debt burden, debt suslainabilily, and fulure debl mana""""'nl s1ra1onu by end March Assist Iraqi governmenr in o~n!Zing staff inlemaby to '"'""'""" in debt s Condud c:orrptehensive mapping of ex1emal debt claims, indertaken jointly by Central Bank and MoF by end March 3Chlun (substantial progress) Reach informal .._reement among sovereign credilors 30-Jun E.2.2 fdWNa subslantial rewm ol aueta .. ' TREAS STATE ECON CPA Point person (Washington): Anne Wallwork E.2.2.1 Ensure ptOCedureslsystems in piece for Iraq to eddress oonwnerical ctan again&l the former gov'! o1 Iraq TREAS STATE ECON CPA U .a.lor OblM:ttw.. : Mobilia Fis end Ott. Eld9mel ~ ~nte raie traa tmo Iha Wor1d &.on< mv (S'fATEj !Comment trom 000) E.3.1 Ensure lnternationel FNndal in.tilutions convnence lunded programs and p8 & mechanism for US E.3.3 bilateral llS8istance post-June 'J{J»- STATE USA!O ECON CPA E.3.4 Secure WTO Observer Status USTA STATE ECON CPA 12-Feb E.3.4. 1 '"""""""~of Fo,..;,,,, Trade forWTO USTR STATE ECON CPA 1.Jul E.4. Major Oi.i..:thle; ltlablllb 1-wort< to fecllltllle J oi> CrUlllon and Grvwth ol FrM M•!Mt Eeonomv CTAEAS') (ComrnM\t from DOD) Revise the~ Law and ensure adequacy ol COMMERCE/ commeR:ial code to faciitate foreign •nd dome91ic TREAS 000/USAIO inYestment E.4.1 ECON CPA 1-Jul E.4.2 E.4.3 Leverage public ependirlg to encoorage job creation through mechenisms such as the MoPW Putilic Worl1ete initial assessmen1s ol lhe slale·ownod banks €nd January G Acqvire and dOPk>y Bearing Point resources to provide training and technical soppon as ~ on an interim basis End February G Begin worlwned banks End February G Pqee on and beg.n to ~ !he anacnment risk 11e-a•-. as recommeuded bv lhe feoAI team End June E.4.4 EslabfiVI procedure to tum over coOOot ol Ofl to fnlqs NM9811s ,,..._..,., UNSCR 1.a3 STATE TREAS ECON CPA E.4.5 Ensure 89labhhnen1 ol corporate Nlorm and tr~ p<00ra,,. for lreq Stale~ enterpri- rd develop1• t ol ..., ... llQ8 policies for~ COMMERCE USAIO ECON CPA E-4.6 Estabish, fund, operele Property Oelms Comniuion STATE USAID ECON CPA E.5. .. - Ive: Enable ....... to --their own oU _,_to the I rut88t b8lwflt Oii m i dtiz.ne (STATE°) (Comment from DOD) E.5.1 Develop framework and Institutions to manaoe the lreqi oi - operly and efflcienlly, In eccontance wi1h inernational best pr ac:licea, including the Mlabl~ ol a Nationlll Oil CorTOAllY STATE TREAS/CPA /DOE ECON CPA E.5.2 IWview options by new Iraqi l10lf&rnmenl lor u .. of oil, including trust fund, ii ~ ~ STATE TREAS ECON CPA l'aoe'ol10- STATE, NSC ECON STATE, TREAS,NSC ECON STATE. TREAS. DOD. NSCECON STATE, TREAS, NSC ECON STATE, TREAS,NSC ECON FINAi. DRAFT IRAO STRA TEGIC nv.NSITION PLAN 20 J~ Ool Wl'IB 000 00-ENTS ~~'.l~· ~:·4~: ~~~,~~~~ -·t •~{ :~- -~~: ~ ff:it.!t · :~? , ~)~ 4 J~ ~t· ~~-/ ~. : . ; .:. ~ : · ES.1.1 ES.LU ESSEN AL SE"v" Es - DEFENSE- (Co mment from NSC Def Poll s1'ATEI ES. 1. Ma cw Obi...:tive: Aestare & ..._..... ES lnfrutruct.- and • """IOV ,,_I s whlle lmnrovl1111 their n- from DODI ESG ESG ESG ESG fl iTA TE°l IComment lrom DOOi CPA 1.feb CPA CPA CPA ES.1.1.2 ES.1.1.3 Establi9h balle!ine for rehabilillllion and ~emenl ot key elements of all essential services infrastructures CPA to oversM ma~ of projecl8 before June 30 eports 1o 2.5 MBPD and 1.6 MBPO, respectively by Aplll 1 ~ by Oecelrbet 3161, lllCua a rouD1 (ST ATE"> I Comment from ooc 1 G.2.1 F'INlllze and in1Jlement reasonable e~on policy !or dlt-Ba'athifocation STATE Coordinale outreach by SaUriale ancillary egrvements negotialed STATE DOD GOV CPA G.6.12 Seek Iraqi cormiilmllnt to abide by tl8Bly ll11d ofher ln!emational obligallonll STATE STATE GOV CPA G.8. Malor Obleclive: E.naaM the Unn.d IUl!ona. metor. 8nd .-lone! .-. Hl:T ATE') (eomm.nt horn DOOi G.6.1 UN fully ac:Qve in ltaq: SRSG ~ STATE STATE GOV CPA G.6.1.1 PTCpOM UNSCR ~the inlerim goverrrnm. adjulting the MNF (aa ,_,.,.), alabhhing a reletionlhip ~ lhe UN ll11d lral1silional oc-mmert, and~ up loole 80ds lrom previous rewlutione ... STATE STATE GOV CPA 0 .6.12 Iraq's right to - In lMGA len1JOle "Fr1endl or 1,.q· G'°'-C> STATE STATE 11. 1. 0 .7.1 ; r~•- > ft·-~ ~ Seek ,_IY legi.i.lion 111>11 inlliUiotW -ioen-• 11 thel guarMlM be9ic c:M. polilieal, end human rlahla .. STATE STATE GOV 1or~ GOV CPA ~~9"' •• "'' ·''°"' LA..JILl'I CPA G.7.2 Seek Iraqi ootmilmenl to llgn lnl-lionll human right• and lnlemmioNll ,_.,.ariln law OOft'll'i!menll STATE STATE GOV CPA G.7.3 ~plan IOf holOrG elecl.iont -..111an1 ..-i lrUmelion.i •landarda lot dMnoc::nllic elec:Siorw ... STATE STATE GOV CPA G.7.4 EalabliSh laWI end inafilutiOnl lo 9'*'18 ~ oppo!IUnllies. Pftllection, and rut l)Ollllcal pattioipallon of women STATE STATE GOV CPA G.7.S Establish prograrne lot iotlg-tann polilic:al party buldinO and c:Ml society activism STATE STATE GOV CPA "-7cll0- 000 000 STATE. NSC SPSWA 000,NSC SPSWA STATE, DOD. NSCSPSWA STATE, DOD. NSCSPSWA STATE. DOD, NSC SPSWA NSCSPSWA NSCSPSWA NSCSPSWA STATE STATE STATE STATE STATE. MSC SPSWA 20JANOO WITHOOOCOMMENTS "'"'- ~:,..;.,... . . ....... ~~ .... - ;.,- SECURITY- (Comment ftOm 000) CPA S 1 1 , Recruit. train, equip, lllNC!Ure Iraqi Armed~ DOD STATE ESG .. . ' ,......., 1'Jr Fon» and Neval (Coulal Palmll Fon:in CJTF-7 S.1.1.2 S.1.1.3 S.1. 1.4 S.1.1.6 AllcnJh, train, equip, stn.icture Iha ICDC Aac:n.11, train. equip , structure Iha FP Recnril, lnlin, equip, alrUCWAI Iha BP Reaul~ t..r., equlp, llltuCIU19 lhe po1a•• S.1.1.5.1 $.1.2 Hire a. no~ CIVPOL and po11ee traineta to halp trm and menl04' Iraqi polloa~ Delermine dilpaeillon ol EPWs & Olher~ DOD STATE ESG DOD STATE ESG STATE(OOO) OOO(STATE) ESG STATE(OOOJ DOD(STATE) ESG /JUSTICE STATE{DOO) DOD(STATE) ESG /JUSTICE DOD STATE ESG CJTF-7 CJTF-7 CJTF.7 CJTF-7 CJTF.7 CJTF-7 5.2.1 C>elelTrine ~ '°' Coelllio<1 am kllqis tor inlemel and .-nai 89CIU,..,. DOD STATE ESG --L (Comment''°'" 0001 CPA/CJrF-7 5.2. l . l Estabr;lh a ndlinallonal pa~ C21trucw,.10 ..u,. lrUmll encl llldemal _,,_ OOD STATE oov CP AIC.JTF-7 S.2.2 ~a Sea#ilv AQJNmen~ SOFA. and 191altd ~(ind. Mid eei"""' u.s.•• STATE(OOO ) OOO(STATE) oov CPNCJTF-7 S.S. -~= S.-T..-ist Una In 1.-Row o1 FoNlan-. -cooo"> le-it from DOOi S.S.1 Anat.ia lor cooperation'*-~nce '4lfllicH ol CIA CIA CT US & li.q~~ s .. 3.1.1 1'9Ql Intel Sal\lloe Opetationaf'' CIA QA CT S.3.1.2 ~ck Cllllcal node9 of !ha lnugenc:y DOD CIA CT 5.3.1.3 Target T errorill Wiltrllllan W.O and ec:tMty Ride ltaq 000 CIA CT S.3.1.3. 1 MEK & PIO( praance ended In Iraq 000 CIA/STATE CT Dela.,,.. Iris~ ol Iraq's CIO!lfllef· $,3.2 lem>rism lora. & their proper location within Iraq's 000 CIA/ST ATE CT security atruclutO. CIA CJTF·7/CIA CJTF-7/CIA CPAICJTF-7 CJTF-7 $ .4.1 Ji.Ness previous ltaql treety obligalions and d91ermina pdantial lor ,_ otJligllliona. S.... Iraqi ~ IO ralily irternationlll no~V-.on ~..cl IO abida~ !ha ~irws and Mes ol ~ ncq>dteration expori f'flfin'ecw STATE STATE(OOO) ESG CPA S .4 .12 Oeclda whelh&r to Iller ecope ol Iraq WMO & misde -triclions. rearic:tlcrs on s-oo!IA nuclear llClivitias, & anne ent>argo (wll require rwislon ol applicable UNSCR.l. STATE 000 ESG CPAICJTF-7 l'lga. al 10 S-0- 000 000 DOD 000 DOO 000, NSC Del Pol STATE. 000 DOD 000,NSC Doi Pal DOO OVP,STATE, 000, NSC SPSWA,NSC Daf f>o( 000.NSC SPSWA 000 000 NSCOCT NSCOCT STATE, 000 STATE.DOD STATE, 000 STATE, DOO FINAL DRAFT IRAO STRATEGIC TRANSITION l'U\N 20 JAH OC WITH DOD ~S S.4.1.3 legal & logistical lra. mework tor WMD personrel recirection enort in place & rwady lo continue opelemen1 atrateglc comm plan for lraQi Govemanoe Transition .. , NSC 000/STATE COMM CPA SC.1.1.1 Intensify outrNch to eong,. • ., Atrencan pub!ic, lnll Aur!iienoes "" NSC DOD/STATE COMM CPA SC. 1. 1.2 Eslabtish raallslic e>cpee1atlona for media and dornesticWltl on T rensffion abiedives NSC 000/STATE COMM CPA SC. I. l .3 Eslablish effedive convnunlcations with the Iraqi people -"""""the Ttansltion Dian and actions NSC 000/STATE COMM CPA Develop, Cooroinate. I~ PA rollOUI plans to SC. l . l . 4 suppo11 policy lnitiativH'dedeions and task execution NSC OOQISTATE COMM CPA SC.2. llbl " otmc11w: Penuldl ir.n1 a to nmrttctnata In oovemment 1'11onn nmt!HS • In ntabll1hlna civil ., dat¥ lNSC'> fCOmmenl from DODI Develop Iraq Meda NeCWOfl< (IMN) and al-lraqiyah SC.2.1 direc:tion. mana09rnen1, production, and opetations plan' 000 STATE COMM CPA 000 000 COMM CPAICJTF-7 NOTES: 1. L.-d AQercy - /lqency wilh prinwy 1'9sponsibilily for providing policy guidance, task assignments. and -.ring adequate resourcee are 19qUetlad/'provided. NSC as lead agency indicates PC dlnoclion, not NSC ataft 2. Supponjng Agencies - Sucipott1 ttie Lead l'(Jency by providing one or more of the folo"'1ng: Policy, lurdng, ~. oonllaeling. or procurement support 3. IA cell monitoring execution and anltting Lead agency wi1tl lnleragency coordination and tasking. 4, />qn;y 9JC8CUlif'4j laska in I ra~ S. Cabinet AQency with ov•aU rnponslbility lor Mldor l major objectilles (Comment Imm 000) 8. CPA Priorities within Sec:tora and Major Objec;tlves FINll DOD recommendmiona a of 15 JarnlMy M 10:00 AM STATE, 000, NSC NSC NSCPRESS NSC PRESS NSCPRESS STATE, NSC 1~ Nl 211- FINA!. DRAFT IRAO STJIATEGIC TllANSITION PlAN 27 JAN 04 AWAITING OOIYSTATE APPROVAl - ~~ ~~;:~t~; t; ~{:#' ·~~· ~: ~·t.::t E.1. Mmor Ob-: Cr'Mle Sound Fi- Monet.v & Exchanae Policies CTAEAS"l Cummcyexchangecon1Jle!ed. E.1.1 TREAS TREAS ECON CPA 1!hlan E.1.2 E.1.3 E.1.4 E.1 .5 E.2.1 Produce balanced hl.tn..to. for~ OMB Obtain IGC approval of Central Bank Law: Boilcl Central Bank ..erves; Cenlral Bank and Fll\llllOO Ministry performng core functions./Regulatory structl.A'e in place TREAS Select foreign banks to operate In lrao .. 1 TREAS Strengthen tax administrationlrefonn ta. policies TREAS E.2. Miii°' Oblactiwl: Debt R911el/ -trlatlon of Auets (TREAS') Maxim.im reduction r. value of Iraq's external debt TREAS TREASIDOO TREAS TREAS USAIO STATE ECON ECON ECON ECON ECON CPA CPA CPA CPA CPA 28.Jan hJul NSC ECON TREAS,NSC ECON NSCECON TREAS, NSC ECON 000,NSC ECON E.2.2 Achieve slbstanlial return ol aaseta•• E.2.2.1 Ensure procedureslsyslems in place lor Iraq to addr986 comrnerical dU?ls agalnat the lormer OOV' ol Iraq TREAS TREAS STATE STATE ECON ECON CPA CPA NSCECON TREAS,NSC ECON EJI. Mei°' Oblecl"'9: Mobilize !Fis 8ncl Other External Flnanc:lna and ~me H'8la 1taa Into the Wortd Economv (STATE; E.3.1 Ensure International Flnanclal Institutions commence funded progran-$ and projec:ls by July 1st .. ' E3.2 E.3.3 TREAS TREAS ECON CPA Assure ooon:irelion ol al intemelional donor aS9islenoe and encourage addilional donations. STATE TREAS ECON CPA Reech agreement COYering 8CO!l8 & mechanism for US bilateral assistance po&t.June 3'1 ... STATE USAID ECON CPA Secure WTO Observer Status USTR STATE ECON CPA con.MIA Memorandum o1 Foreian Trade 1or wro USTR STATE ECON CPA E.4. Mllior Obiectlve: e.tablleh fremewortc &o facllltate Job Cr91111on and Growth ol Free Market Econamv (TREAS') ReYise the Con'1>any Law and~ adequacy or commeldal code 10 facilitate foreign and domestic STATE USAJD ECON CPA inveslmenl l.Mverage public spending to encourage job crealion through mecharisms such as the MoPW Public Works 000 USAJD ECON CPA omorams and the Sucolernen\al._. E.3.4 E.3.4.1 E .... 1 hJut hlul hluf 12-Feb 1.JU 1-Apr E.4.2 TREASINSC ECON STATE, TREAS.DOD. NSCECON STATE, TREAS, 000, NSCECON TREAS,NSC ECON NSCECON STATE, TREAS,NSC EOON NSCECON E.4.3 E.4.3.1 E.4.3.2 E.4.4 Rapidly facilitate credit to private sectorl'' TREAS USAIO ECON CPA Stand up the IFC SME FinanOnQ Facility TREAS OPIC ECON CPA Rehabilitate State-owned banks TREAS TREAS ECON CPA Eslablish procedure 10 tum over conlrol or OFI to Iraqis STATE TREAS ECON CPA revise as neceuarv UNSCR 1483 Ensure establishment ol OOfPOrale reform and training programs for Iraq Slate owned enterprises and COMMERCE USAJD ECON CPA development ot severa.noo poic:ies for ~av- 1!H"eb TB tr TREAS,NSC ECON TREAS,NSC ECON TREAS STATE,NSC ECON STATE, TREAS,NSC ECON EA.5 Ptgo1a18- FINAi. ORAfT lfW) STRATEGIC TRN E.5,1 OeYelop lrllm8wOlt< and~ lo manll09 the 1'*11 Oil seclOr operily end~. in ea:onlence ,.;in necnaDonar- ptlldices, ind'°1Q the-~ al a N8tiorW Oil Cormanv STATE TREAS'Cf'A /OOE ECON CPA 3().fbl STATE. TAEAS. NSC ECON E.S.2 A.view options by,._ Iraqi~ lor UM ol oi, inclucing llUSI fund, ii II~ STATE TREAS ECON CPA , ..... STATE, TREAS, NSC ECON "-2oll- 10:01 Ml 211r.!OCM FINAL DRAFT IRAO STRATEGIC TRANSITION Pl.NI ES.1. Iola.,,.~: RHtot9 & - ES ln1rnlNCCunt, end emnlnv I.., la while ES.1.1 Eatalllisll bUeline f0< !9habiilation and ~ ol NSC key eleme.U ol all -ntial Mrlion lnfrnlNCUlres 000 their II- (STATE°> ESG CPA ES.1.1.1 CPA to OV8'Me INll~ of projec:tt belor9 June 30 arx1 devise approp.-11ruc1u G.1.1 Transitional MniniBltetive l..aw (TAI..) prepared and 1anree G.1.2.3 Develop Blrategic plan lot RelugeeJIDP 181Vm and reinteoretioo STATE DOD GOV CPA 20-Feb STATE.DOD G.2.1 Q.:Z. M1kir OblN!Hva: Aobu.t en-ment """"""ICtlona with SUnnla end other ethnic end rellalous n.....,... CSTATE'l F'inalize and ~ INIOtl8ble e ... "1)tlon policy lor STATE d&-Ba"athlicetion 000 GOV CPA 3ChJen DOD G.2.2 Coonlina1e outl98dl by Saudi Anlbia. Kuwait. and Joldanlo~ STATE DOD GOV CPA 30-Jan NSCSPSWA G.2.3 ldenlify promnent Sumis 10 help llri1h drafting or Transitional AdminlalnlUve Law and i~ ol caucuses STATE DOD GOV CPA 30-Jan NSCSPSWA G.3. M•k OblRdlve: &tebll8h Laal11111w c-lltv ISTATE'l G.3.1 Convene T ranaitional Natlorlm Auerl"blv STATE DOD GOV CPA 31-Mav DOD G.3.1.1 Ealablish rula9. f)IOOllduteS. end mecharisms to Nlec:t lhe Transilionel National Aaembly and related perty AdNilv STATE STATE GOV CPA 28-F•b STATE, NSC SPSWA G.3.2 Census und6rway. STATE STATE /COMMERCE GOV CPA 30-Sep COWIERCE Q,4. M8lor ~: ~the Judlc&lll 8'andt end deWio> edher9~ IO Rule ol Law (JUSTICE') G.4.1 ESU!blish a "'1ctlonlrletod belore lnln&ition JUSTICE JUSTICE ESG CPA G.4.1.4 Investigation and DispositlontT rial ol NQIHM) DetaJ.-•• DOD JUSTICE GOV CPA kH.2 War Crin.a and Acclountal:Jlli Assist Iraqi Govemment and Iraqi Special Tribunal with w-igalion and Drmecution of Seddam and HV0s JUSTICE 000 GOV CPA 000 000, NSC Legal G.4.3 Ea!abish lews & lnst~utlon• 10 root out oortuptlon I Plan lor lransition ot OOlce ol Public lnteomyW STATE JUSTICE GOV CPA TBO" STATE, DOD G.4.3.1 Develop Iraqi lews capable ol add.-ing letrolism. narootics.money•undering, pnwenting pro!ileralion, etc. STATE JUSTICEAXlD CT CPA »Sep STATE, DOD "-'°''- FWAL DRAFT !RAO STRATEGIC TRANSITION Pl.AN G.5. M .. ~ l".llhl.M!tl119; Tran•ltlon to Emba&&'8Fncut1119 Functl ·--A - ., .... Aellllions ISTAT~ G.5.1 Prepare '°' tne Mteblilhment of a u.s. Entiass/"' STATE 000 oov CPA Orqoing 000 G.5.1.1 US Gov & Iraqi Gov prepared to ectablish lonnal Nlatlon&; ~le ancillary~ negoba:ted STATE DOD GOV CPA »Jun DOD G.5.t.2 Seel< Iraqi oollYrilmanl 10 atlkM by ltUly and other lnlemalioNI obllgialions STATE STATE GOV CPA 30-JIXI STATE. NSC SPSWA G.8. MmM ()bl9cthM: IE.-!he Unlleel Ndona, m.ior. and .-tonal ~(STATE") G.8.1 UN fully active "1 Iraq; SASG appoiMed"'2 STATE STATE GOV CPA 1-Mar OOD. NSC SPSWA G.6.1.1 f'roi-e UNSCA enClolsing the hterim gove0rarily restofed, OUlline plan to address inic1 ar1Nrs to UN. STATE STATE GOV CPA »Aug STATE. 000, NSCSPSWA G.6.2 Engage the Major Powen actively In Iraq STATE STATE OOV CPA Ongoing STATE.DOD, NSCSPSWA G.6.3 in.itement regional .irategy 10 secure neighbors active eunoon for DOlitlcal traneltlon .,,,,.,.. .. STATE STATE GOV CPA 0'1going NSCSPSWA G.6.3.1 SeaJre lull diplolnltic nK:Ognition ol Transitional Government from all countries In lhe rnalon STATE STATE GOV CPA 31'1111 NSCSPSWA G.6.3.2 Explote poaible •Friends of Iraq" Group STATE IG.7. _.,. uomcuw: ~~·•n uamewon< to ensure luture QOnW>Ha,_ wnn STATE GOV CPA 11ta11D11rat 10r nunmn nanm ano 1-Mar NSCSPSWA I C I G.7.1 Seek neonaary legltlalion and lnatautional af1'1111gementa ltlat guarantee basic clvll, poilical, end human n.Ynt1"" STATE STATE GOV CPA 3ChllXI STATE G.72 Seek Iraqi oonvrilment to sign inlemalional human rights and lnternatlonel humanitarian law commitments STATE STATE GOV CPA 3Chlun STATE G.7.3 A«lv•noe plan lat holding .iections oon&i$1ant with intemadonal atandardc for democratic elections•• STATE STATE GOV CPA SC>Jun STATE G.7.4 e.tablllh lawa and institutions to ensure equal oppoilunitiea, protection. and full polrtical participation of women STATE STATE GOV CPA 30-$ep STATE G.7.5 E81ablith prograrna for long-term political party building STATE and civil ...a.tv activism STATE GOV CPA 1-'Ma . r STATE. NSC SPSWA Pegescte- f1NAL DRAFT IRAO STRATEGIC TRANSITION PlAN S.1. Malat ~: --.1.-1 s.curttv ~ 8ftd Milibntand -the..._, . to-lllelr own ..curttv tooo' S.1.1 AsNa lholl and iotv term eeourily forces (NIA. ICOC, FP l!otd9r Police) ,,_ 000 STATE ESG CPA Rectuil. tnlln. ecMJ, 91ruclul9 keqi Armed Fons leo.lltlon end lreall to ensure lntamal 8nd ext9mel -irttv moo'> S.2.1 Oe4efrrina relJ)Ondlilhlea lor Coalition and lra

111rt1 loroe• & their proper loc:alion wilt'in Iraq'• security structura. CIA CIA CIA CIA 000 CIA 000 CIA 000 CIA/STATE DOD CIAISTATE CT CIA CT CIA CT CJTF·71CIA CT C.JTF-7/CIA CT CPAICJTF-7 CT CJTF-7 SA. lblcw OblM:tlw: Eliminate ~.4. 1 "-9 previous lracj traety obligations and detemine polential lor new obligations. Seel< Iraqi aoraamam to ratlly lnlemational 00t1>rolife STA TE STATE(DOO) ESG CPA S.4.1.2 Decide wh8th8' lo allar sccpa of Iraq WMD & missie ratric:liona, 1Mtt1clione on paaceM nucle8f llCIMtiea, & arma errbargo (will require ravillion of applicable lJNSCRs). STATE OOD ESG CPAICJTF·7 l7 JAN OI AWNTWG DOD/STATE APPROVM._ OOD 000 reo·· TBD .. 000 OOD OOD OOD, NSC Dal Pol STATE,000 000 000, NSC Dei Pol 000 I.Jul OVP, STATE, DOO, NSC SPSWA, NSC Dal Pol 31-May DOO, NSC SPSWA DOD OOD NSCOCT NSCOCT STATE, 000 STATE. 000 l·Apr STATE, 000 STATE.DOD 10;01 Ml 2f18'20CM FINAL DRN'T 1RAO STRATEGIC TIW'ISITIClN PLAN S.U .3 l.egaJ & logislical lratn8'#0!k for WMD petSOnn8I 1*1r6Clion ellon in pl6o6 & IUdy 1o continue 0pe