Plan for Iraq handover government scrapped
Peter Beaumont, foreign affairs editor
Sunday May 18, 2003
US and British plans for rebuilding Iraq were descending into chaos this weekend as officials admitted they had indefinitely scrapped plans for a transitional government and Spain revealed a gaping hole in funding for reconstruction.
Allied officials told leaders of the Iraqi exile community, who have flooded back to Baghdad that they had abandoned plans to allow Iraqi opposition forces to form a national assembly and transitional government by the end of the month.
Instead, say opposition sources who attended a Friday meeting with Paul Bremer, the Pentagon-appointed civilian administrator in Iraq, US and British diplomats announced they would remain in charge for an undisclosed period.
Bremer, who was accompanied by John Sawers, a British diplomat representing Prime Minister Tony Blair, told the meeting the Allies now preferred an 'interim authority' in which Iraqis would assist by creating a constitution for Iraq, revamping the educational system and devising a plan for future democratic elections.
'It's clear you cannot transfer all powers to some interim body, because it will not have the strength or resources to carry those responsibilities out,' said Sawers. 'There was agreement that we should aim to have a national conference as soon as we reasonably could do so.'
Huge divisions are now apparent within Iraq's opposition, not least between returning Iraqi exiles, like Ahmed Chalabi, who have been demanding prominent positions in any transitional government, and the grassroots movements, many of them focused on local Shia leaders who are demanding an Islamic state.
Meanwhile there is a crisis over funding for reconstruction following claims that oil revenue will fall far short of the $41 billion (#26bn) re-quired over the next two years to get the shattered nation on its feet. Before the war senior US administration officials, including President George W. Bush, suggested that the sale of Iraqi oil - at present still covered by UN sanctions and administered by the UN's Oil For Food programme - would largely pay for the reconstruction.
But new figures produced by Spain's Ministry of Economic Affairs and sent to the World Bank, UN and International Monetary Fund have led the Spanish government to conclude that oil revenues are likely to fall far short of the contribution originally envisaged. According to the Spanish figures, the $41bn total is likely almost to double over 10 years, and even that calculation has been challenged by international aid agencies working in Iraq who fear the figure could rise to as much as $250bn over the same period.
Although Iraq has more than 112 billion barrels of proven oil reserves, the second largest in the world, its oil infrastructure is under-developed and deteriorating and - experts say - would require considerable investment to realise its potential as the economic engine of a postwar economy. In 2002 Iraq pumped $13bn worth of oil, a figure it is unlikely to come anywhere close to this year after deliberate firing of wells by Saddam's regime and the near-complete disintegration of Iraq's civic society.
According to the Spanish figures, renovating and modernising Iraq's oil industry will cost $3.5bn alone.
The scale of the expected shortfall in funding has been underlined by the US commitment to reconstruction, a slim $2.5bn approved by Congress. US Treasury Secretary John Snow insisted last week that countries like France and Germany, who opposed the war, would have to make substantial contributions.
The US, UK and Spain are now sponsoring a UN resolution to end sanctions against Iraq and the oil for food programme, instead placing Iraqi oil revenues first under the Pentagon's control, then under a transitional Iraqi authority through which the money could be channelled for reconstruction.
The resolution, which would give the occupying powers authority in Iraq for at least a year, would also call for an international fund to rebuild Iraq. The resolution, which is expected to be tabled this week, is being opposed by France, Germany, Russia and China over the lack of a clearly defined central role for the UN and concern that placing Iraq's oil revenues in the hands of an occupying power would breach the UN convention.