IIER / FNF Expert Group Meeting Economic Reform and Public Services Potential for local, regional and

d international cooperation 23 August 2013, Erbil, Iraq Recommendations

1 - In order to provide a suitable environment for the success of Private Public Partnerships (PPPs) in Iraq, we suggest a set of elements, the most important of which is to work towards political stability and political party cooperation to enable the enactment of laws in support of PPPs. 2- It is necessary to further facilitate the private sector reform process and to involve the private sector more with the public sector. Therefore, we suggest a comprehensive review and amendment of existing relevant laws as well as drafting new, specific laws in this field where needed. 3-Since the banking sector is a vital and necessary factor for the success of PPPs and due to the underdevelopment of this sector and thus its contribution to the GDP, we suggest to implement the action plan approved by the Upper Supervisory Committee consisting of the Federal Minister of Finance, the Governor of the Central Bank, and the Head of the Federal Office of Financial Supervision as this body is responsible for the process of restructuring state-owned banks. 4- In order to activate Recommendation (3) above, we advise to activate and apply the regulations issued by the Central Bank of Iraq on 3/1/2011, which had the approval of the Council of Ministers. 5- Among the most important prerequisites for a successful PPP is a political, social and cultural environment that paves the way for a pluralistic democratic political system. This is confirmed by the experiences of many countries such as Turkey. The adoption of such an approach will support the development of a socially cohesive society. Required is a roadmap tied into a national strategy for the creation of a genuine partnership between the public and private sectors, with a view to comprehensive economic reform. 6- We recommend the formation of a committee to clarify the mechanisms of paragraph (3), Article (15) of the Companies Act No. 22 of 1997, as well as to reconsider and work on activating the Law No. (20) of 1998 which relates to industrial development. The best way for this is to find ways to connect this law and the foreign investment law No. (13) of 2006, to reach a more clear and mature law serving PPPs. 7-In the framework of supporting PPP, we recommend the activation of the State Employees Discipline Law, and to work toward assessing employees on the basis of achievements.

8- To ensure practical, effective, and financially sound PPPs, we recommend referring the surplus labor in state institutions, especially those that suffer from high disguised unemployment rates, into retirement, through the enactment of the Unified Retirement Law, and disbursing rewarding pensions for these workers. This procedure must be connected to a restructuring process for the state owned institutions to support PPPs. 9- To ensure the success of PPPs, we recommend adopting controls when implementing PPP projects, starting with cost-benefit analyses that will scrutinize the economic feasibility of the partnership. 10- To support PPPs, a partnership between experts and politicians in the decision making processes is needed. Accordingly, we recommend to establish an advisory council independent of politicians and decision-makers. 11- Due to the huge impact which terrorist attacks have on the level of private investment, in addition to the significant financial and administrative corruption rates, and lack of rule of law and good governance in the management of state institutions which affects economic performance of Iraq, we recommend building a national peace strategy involving all parties in order to find a suitable ground to reduce the effects of terrorist attacks and drying up its sources, thus improve the investment climate in order to facilitate PPP. 12- To deliver our messages to the officials and for our meeting to be more effective, we recommend starting media campaigns to educate the public and interested people in this matter. We also recommend holding a national conference to display the most prominent achievements of partnership contracts under the current legislation.