Iraq Inc: A joint venture built on broken promises

By David Usborne in New York, Rupert Cornwell in Washington and Phil Reeves in Baghdad

10 May 2003

The Independent

America and Britain declared themselves yesterday to be the "occupying powers" in Iraq and produced a blueprint for the administration of the country that confined the United Nations to a co-ordinating role.

Although George Bush declared in Belfast last month that the UN would have "a vital role" in Iraq, there was great disappointment yesterday after the organisation was denied an operational role.

Britain acknowledged in a draft UN Security Council resolution that, with the United States, it intended to run Iraq for at least a year as a conquering power. Both countries urged the Council to agree to an instant lifting of economic sanctions against Iraq and accept that, as "occupying powers", they would have near-total control of the country's oil revenues for 12 months and maybe much longer.

Despite earlier promises that the UN should have an important role administering the delivery of humanitarian aid to the country, this task now goes to America and Britain, with the UN reduced to a co-ordinator. John Negroponte, the US ambassador to the UN, said yesterday that there would be no role for the team of UN weapons inspectors led by Hans Blix "for the foreseeable future".

Whatever the fate of the UN resolution, Washington has already started a secretive carve-up of the Iraq reconstruction pie in which all the slices thus far have gone to US companies many of them with close connections to the Bush administration.

The impression that Iraq is becoming a carpetbaggers' free-for-all was reinforced at the Ronald Reagan International Trade Centre in Atlanta this week when lawyers, consultants and business people streamed in, all hoping for a piece of the action. They heard a presentation by the US Agency for International Development (USAid), which is handing out contracts worth $1.5bn (£0.9bn) to rebuild the healthcare system. The USAid contracts total about $70m. If America fulfils its sweeping promise to rebuild Iraq's entire infrastructure, the total may reach several hundred billion dollars. The contracts will be paid for from Iraqi oil revenues, controlled by America and Britain and audited by an international firm of accountants. Yesterday's appeal to the United Nations was contained in a baldly worded draft resolution tabled by Mr Negroponte. It was co-sponsored by Britain and Spain. The text, which makes clear that London and Washington would essentially run Iraq for at least a year, was expected to attract resistance from France and Russia. Controversially, the resolution relegates the UN to an advisory capacity on a board that will monitor the spending of Iraq's oil revenue on reconstruction. A "special co-ordinator", who would be appointed by Kofi Annan, the UN secretary general, would also orchestrate UN humanitarian efforts.

Observers believe America is calculating that the Security Council will be unwilling to allow a resurgence of the bitterness that characterised the weeks before the Allies' invasion of Iraq and will therefore, after wrangling, eventually acquiesce to the resolution. But those behind the resolution recognise it is controversial and are open to discussions on amendments. They expect a tough battle.

Sir Brian Urquhart, a veteran British diplomat and former UN under-secretary general, said: "Surely it would be better for everyone to push this through rather than reopen all the quarrels and instead do something to help the poor people of Iraq. I can't believe that they won't do that."

Yet France and Russia, the most vociferous opponents of the war may even vote for a redrafted resolution. President Jacques Chirac said his government would "undertake discussions on the future of [Iraq] in an open and constructive spirit". But a statement from the French Foreign Ministry said that a "strong involvement of the international community, through a central role of the UN, is indispensable to provide legitimacy" to any post-war Iraqi government.

At the resolution's core are provisions to lift the economic sanctions that were put in place in 1990 after Iraq's invasion of Kuwait. America argues that, without the resumption of full trade, the economic reconstruction of Iraq cannot hope to get off the ground.

France and Russia have insisted, by contrast, that sanctions cannot be lifted until the elimination of weapons of mass destruction in Iraq has been verified by UN weapons inspectors, as stipulated under several existing UN resolutions. The Anglo-American draft omits all mention of UN weapons inspectors.

Separately, the text envisions taking away UN control of Iraq's oil sales. This also runs directly counter to the view of several of the nations opposed to war, who have argued for keeping a UN hand on the Iraqi oil industry. Last night, the Russian envoy to the UN, Sergei Lavrov, said he had "lots of questions" on the text. Washington is asking that the UN oil-for-food programme, which currently takes in all oil revenues and distributes them for the purchase of food, medicine and other humanitarian supplies, be wound up within four months. Control of oil revenues would pass to the "Iraqi Assistance Fund" to be held by the Central Bank of Iraq, managed by US and UK officials. An advisory board with the UN co-ordinator and envoys from other international financial institutions would oversee the disbursement of the revenues, and make recommendations.

The immediate reaction to the plans in Baghdad was negative. "This is very, very bad. We are in the same situation as we were with Saddam," said Bassen al-Khoja, 31. "[They] stole the oil money from the people and we got nothing and now the Americans and British are doing exactly the same. We are not going to see any benefit from it."

Similar disgust was expressed by Fareed Ismail al-Qaisi, 42, who is unemployed. "The United Nations should control the oil money, not the Americans," he said.

This is the first time that Washington and London have formally acknowledged that they consider themselves "occupying powers" in Iraq. It is a status governed by the Geneva Conventions that also lays out strict responsibilities and obligations for those powers under international law.

In Brussels, Poul Nielson, the European Union commissioner for development, voiced dismay at the text. He said Washington was "on its way to becoming a member of Opec", adding: "They appropriate the oil. The unwillingness to give the UN a legal, well-defined role also speaks a language that is quite clear."