Iraq: Occupation authorised by UN


“A simple way out would make sure, if there is a conflict, that in any post-conflict Iraq there is a proper UN mandate for Iraq and the oil goes into a trust fund. We don’t touch it and the Americans don’t touch it without UN authority.”


Those were the Tony Blair’s words on MTV on 7 March 2003 prior to the invasion of Iraq (see, for example, here).  They were uttered to scotch what he called the absurd “conspiracy theory” that the US/UK wanted to get their hands on Iraqi oil.


And he repeated this in the Commons debate on 18 March 2003 in proposing the war resolution:


“There should be a new United Nations resolution following any conflict providing not only for humanitarian help, but for the administration and governance of Iraq. That must be done under proper UN authorisation. … And this point is also important: that the oil revenues, which people falsely claim that we want to seize, should be put in a trust fund for the Iraqi people administered through the UN.”


The UN was going to be in charge of Iraq after the invasion: in charge of selling Iraqi oil and of purchasing goods and services with the revenue raised, for the benefit of the Iraqi people; in charge of putting together an interim Iraqi administration and of the subsequent process leading to the creation of a permanent administration.


A very different plan

Six weeks later on 9 May 2003, along with the US and Spain, Tony Blair’s government proposed a very different plan for Iraq in a draft Security Council resolution.  Now, instead of the UN being in charge, the occupying powers proposed that they rule Iraq until a representative government is established and, in the meantime, they be granted UN authority to sell Iraqi oil and spend the proceeds.


True, echoing the words of Blair and Bush at Hillsborough, the draft resolution did “resolve” that:


“the United Nations should play a vital role in providing humanitarian relief, in supporting the reconstruction of Iraq, and in helping in the formation of an Iraqi interim authority”


That was in the preamble, but in the operative paragraphs of the resolution the occupying powers reserved the real, vital, role for themselves. The plan for a UN-led process in Iraq after war, promised by Blair in order to get the Commons to vote for war, was replaced by a US/UK-led process.


Clare resigns

Three days later, Clare Short resigned.  Understandably so, since she had been operating on the assumption that there would be a UN-led process.  She told the Commons so on several occasions in March and April.  For example, in a written answer on 19 March 2003, she said:


“And we are continuing to work towards establishing the right international mandates to enable the UN to take the lead role in relief and reconstruction, and to administer the Oil For Food Programme, in the event of conflict.”


And not long before she resigned, on 28 April 2003, she said:


“As in Afghanistan, we are committed to handing over power to the people of Iraq as soon as possible through a broad-based and representative Iraqi Interim Authority (IIA) selected by a process overseen by the UN.”


Whatever about her bizarre behaviour before the war, she has behaved honourably since.  She resigned when the Government reneged on its stated policy pre-war of putting the UN in charge in Iraq after the war.


Model of clarity

Not only that: during and after the war, in statements to the Commons and elsewhere she was a model of clarity about the responsibilities of the “occupying powers” (a phrase she didn’t flinch from using) and about the limits of their powers.  As she told the Commons on 10 April 2003:


“By the authority under which we are taking military action, our forces are occupying forces in occupied territory, with duties under the Geneva convention and the Hague regulations to supply humanitarian relief to civilians, to keep order and to keep the civil administration running. The forces are empowered to make such changes as are necessary to keep the civilian administration running, but they are not entitled to bring a new Government with sovereign authority into being or to make big structural reforms in the country. That is absolutely clear and is agreed by all international lawyers. There were differences of view about the authority for conflict, but there are no differences whatever on this issue.


“The resolution that will be needed in the Security Council … is not for humanitarian relief or for the troops to do what they have to do under the Geneva Convention, but is to bring into being a Government with legitimate authority. Of course, in the meantime, our troops will consult local people in all the towns where they are operating and will take advice on issues such as whether policing can be up and running again. However, for the restructuring of the political system in Iraq, a Security Council resolution will be needed to give proper authority.”


In that, she was clearly following the advice of the Attorney General (which was published in the New Statesman on 24 May 2003 after her resignation).


Resolution 1483

The Security Council passed a modified version of the draft resolution on 22 May 2003 as resolution 1483.  The voting was 14 votes to nil, with Syria abstaining.  The modifications didn’t significantly enhance the UN role at the expense of the occupying powers.


There is now a Security Council mandate for the occupying powers, now self-styled the “Authority”, to govern Iraq and sell its oil for the foreseeable future.  The resolution was sold as a generous act which after more than 12 years ended economic sanctions: it did, it had to in order that the “Authority” can sell Iraqi oil, and spend the proceeds.


Specifically, resolution 1483:


1.       endorses the occupying powers’ decision to set up a Development Fund for Iraq (paragraph 12);


2.       mandates the occupying powers to sell Iraqi “petroleum, petroleum products and natural gas” and deposit the proceeds in the Fund (paragraph 20) except for 5% which is to go to the UN Compensation Fund (paragraph 21);


3.       endorses the occupying powers’ decision that “the funds in the Development Fund for Iraq shall be disbursed at the direction of the Authority, in consultation with the Iraqi interim administration” (paragraph 13) for the following purposes: “to meet the humanitarian needs of the Iraqi people, for the economic reconstruction and repair of Iraq’s infrastructure, for the continued disarmament of Iraq, and for the costs of Iraqi civilian administration, and for other purposes benefiting the people of Iraq” (paragraph 14);


The only check on the actions of the US/UK in selling Iraqi oil and spending the proceeds is that the Development Fund will have an International Advisory and Monitoring Board with representatives of the UN Secretary General, the IMF, the Arab Fund for Social and Economic Development (an agency of the Arab League) and the World Bank (paragraph 12). Note that this is not a management board, which can tell the US/UK what to do: it is a monitoring board, which at best will look at what they have done.


Ignoring OPEC

The US/UK are now in full control of the sale of Iraqi oil, and as production rises they will be in a position to drive down the world oil price by ignoring OPEC quotas.


The Pentagon has appointed the former head of Shell in the US, Philip J Carroll, as “advisor” to Iraq's Ministry of Oil.  In an article in the Washington Post on 17 May 2003, he was quoted as saying that Iraq “might best be served by exporting as much oil as it can and disregarding quotas set by OPEC”. The article went on:


“Iraq's resumption of oil exports under a new government would expose OPEC to considerable uncertainty. Iraq has the world's second-largest proven oil reserves. Flows of Iraqi oil to the world market unconstrained by OPEC quotas could further erode the cartel’s already limited ability to set prices and might even trigger a price war, eating into the profits of its member countries. Such an outcome would surely delight the Bush administration as well as buyers of gasoline in the United States, the world's largest oil consumer.”


The Post article also reported:


“Among the questions the ministry will confront is whether to break up the state oil empire and put some of its pieces into private hands. … Carroll said his team planned to assist the ministry with a study of potential structures. All options, from maintenance of the old system to complete privatization, will be on the table, he said.”


The Security Council resolution doesn’t specifically authorise restructuring, or selling off, the Iraqi oil industry.  But what is there to stop the “Authority” doing it, for the benefit of the Iraqi people, naturally?


End of Oil-for-Food

Resolution 1483 certainly gives the occupying powers full authority to spend Development Fund money.  In the draft resolution, the Fund was termed the Iraqi Assistance Fund, which is a more accurate description of its purposes, since the first call on it will be to feed the 60% of Iraqis who now rely on the Oil-for-Food programme.  The latter is wound up by the resolution.


Under the Oil-for-Food programme, prior to the invasion, the Iraqi state sold oil and the proceeds were put in a UN bank account, out of which it was allowed to buy food and other goods approved by the Security Council.  (25% of the proceeds were used to pay reparations for the first Gulf War).


The food was distributed by the Iraqi state through a network of 45,000 centres in a manner that the UN regarded as both fair and effective.  Prior to the invasion, Saddam Hussein ordered the distribution of three months supply, which is the main reason why up to now the suffering of the Iraqi people has not included a lack of food.


(A separate procurement and distribution system existed in Kurdish areas, also paid for out of this oil revenue.)


The Security Council modified the Oil-for-Food scheme on 28 March to give the UN Secretary General the power to try to re-establish a distribution system in Iraq and to buy food with money in the account.


Resolution 1483 (paragraph 17) now instructs the UN Secretary-General to immediately transfer $1 billion to the Development Fund for Iraq and, having paid any UN expenses, transfer the rest “at the earliest possible time”.  From then on, the occupying powers will be responsible for feeding the people who used to rely the Oil-for-Food programme.  For the latter’s sake, one hopes that they make a better fist of it than they have done of providing electricity and potable water.


The next call on the Development Fund will have to be “for the costs of Iraqi civilian administration”(paragraph 14), presumably, paying the salaries and other costs of all state employees, including those who provide basic services, such as, electricity, water and sewage disposal.



According to paragraph 14, the Fund also has to pay for “for the continued disarmament of Iraq”.  Not for UNOMOVIC and the IAEA though, because the occupying powers have barred them from Iraq.  However, they are actually mentioned in the final resolution (they weren’t in the draft): paragraph 11 says the Security Council


“Reaffirms that Iraq must meet its disarmament obligations, encourages the UK and the US to keep the Council informed of their activities in this regard, and underlines the intention of the Council to revisit the mandates of UNMOVIC and the IAEA as set forth in resolutions 687 (1991) of 3 April 1991, 1284 (1999) of 17 December 1999, and 1441 (2002) of 8 November 2002”


This begs the question: is the Fund to bear the costs the US/UK have incurred in looking for so-called weapons of mass destruction, and of disposing of them, if by any chance they find any.  Perhaps, it even has to bear the costs of clearing up Iraq’s conventional weapons – a private firm from Zimbabwe has been employed for this purpose already.



If there is any money left in the Development Fund, no doubt it will be used for development, in the words of paragraph 14, “for the economic reconstruction and repair of Iraq’s infrastructure”.  However, there won’t be much until Iraqi oil production rises substantially from its pre-invasion levels (Iraq exported $12.7 billion of oil in 2001), and then only if the price of oil holds up.  There may not be many juicy reconstruction contracts for foreign companies for quite a while.


On 31 May 2003, the Guardian carried a story entitled Future oil sales may be pawned to banks, which began:


“American officials are considering a plan to use Iraq’s future oil and gas revenues as collateral to raise cash to rebuild the country.”


US construction companies, including Halliburton and Bechtel, are apparently pushing this scheme in order to expedite the letting of contracts.  They are obviously aware that, in the short term, revenue from oil sales will not generate enough cash for much reconstruction, after other calls have been made upon it.


Note that there is no suggestion that the US/UK pay for what they destroyed in this war, and allowed to be looted and burned after it, let alone what they destroyed in the first Gulf War, and in the 12 years of bombing in between.  Iraqi oil revenue is going to have to pay for the great bulk of it.


(Here, Geoff Hoon’s approval of looting is worth recording:


“The hon. Gentleman [Bernard Jenkin] referred to looting, and I know that right hon. and hon. Members will be concerned about that issue; indeed, I have sought to identify the extent of it. Fortunately, it appears so far to be confined to Iraqi citizens – shall I use the word – "liberating" those items that are in the charge of the regime by entering its former facilities and the secret organisations, and redistributing that wealth among the Iraqi people. I regard such behaviour as good practice, perhaps, but that is not to say that we should not guard against more widespread civil disturbances.” (House of Commons, 7 April 2003)


Strange how New Labour is in favour of the redistribution of wealth in Iraq, but dare not mention the phrase at home!)


Debt & Compensation

Remember that, theoretically at least, Iraq has enormous debts dating back to its war with Iran and is also liable for enormous amounts of compensation arising out of its invasion of Kuwait.


The debts stand at about $130 billion.  Settled, but unpaid, claims for compensation amount to $27 billion, but there are also unsettled claims for $172 billion. If only 5% of oil revenue is to be set aside for paying these, the 21st century may be out before they are all paid.


Theoretically, anybody who is owed any of this could take legal action to seize Iraqi oil in lieu of payment.  Paragraph 22 of resolution 1483 prevents such action.  This immunity is to last until the end of 2007.


Aid from outside

Some humanitarian aid is coming in from outside.  The UN has launched an appeal to member states for $2.2 billion for its next six months’ humanitarian work.  Whether the total amount will be realised remains to be seen: the willingness of states to subscribe to this and other assistance for Iraq cannot be helped by the constant mantra from Bush and Blair that Iraq is a rich country, whose only problem was Saddam Hussein. 


The UK has contributed $100 million to the UN Fund and is committed to spend as much again in Iraq through other means.  But, in total this is less than 5% of the $5 billion or so spent on the war.


The US is also providing upwards of a billion dollars through USAID, the US Agency for International Development, the US equivalent of the UK’s Department of International Development.  This is the agency which has let the large contracts exclusively to US companies (Bechtel, Halliburton, etc).  It is obliged to do this under US law, because the US taxpayer is paying for the aid – the UK used to “tie” its aid in a similar manner.  The current US aid commitment is less than 1% of the expected cost of the war, which the US Congress Budget Office estimates at $135 billion.


Interim government

The UN has a very minor role with regard to Iraqi oil, far from being in charge, as promised by Blair.  It is not in charge of putting together an interim government either, though if paragraph 9 of resolution 1483 is put into practice, it will share the task with the occupying powers. Paragraph 9 says that the Security Council:


“Supports the formation, by the people of Iraq with the help of the Authority and working with the [UN] Special Representative, of an Iraqi interim administration as a transitional administration run by Iraqis, until an internationally recognized, representative government is established by the people of Iraq and assumes the responsibilities of the Authority;”


Note that this gives Security Council blessing to the occupying powers ruling Iraq until a representative government is established, which could be many years hence, if ever.


On the ground

However, events on the ground may mean that long before that the US will be looking for a way out.  They are obviously having much more trouble than they bargained for.


The restoration of civilian services has not been a conspicuous success.  Before the invasion, despite 12 years of economic sanctions, the urban population of Iraq had electricity and water supplies, though the quality of the water was not universally good, and they had a functioning sewage system – and the invasion forces claim not to have targeted this civilian infrastructure.  Yet six weeks after the end of hostilities, the occupying powers have as yet failed to fulfil their obligations under the Geneva Convention to provide the civilian population with these services.  It is not obvious why.


On the political front, the US seems to have no clear idea about how to proceed.  The initial plan of retired general Jay Garner to appoint an interim government a few weeks after the end of hostilities has been quietly put off indefinitely.  Garner, a Pentagon appointment, has been replaced by Paul Bremer, who is career diplomat.  The policy of working with Baathist civil servants has been modified: senior Baathists are to be sacked, which will make the restoration of a functional civil administration even more difficult.


US forces are still being killed.  If they continue to be killed at the present rate, then by the end of the year they will have lost more after the war than the 160 or so they lost during it – and there is unlikely to be an end in sight even then.  That would be an unhappy state of affairs for a president seeking re-election next year.


Way out ?

By now, his advisers must be thinking about preparing a way out, without loss of face.  During, and immediately after the war, the line coming out of Washington was that, since the UN refused to back the liberation of Iraq, there was no way the US was going to grant it a piece of the action after liberation.  But in recent weeks this anti-UN rhetoric emanating from Washington has subsided.


On BBC2’s Newsnight on the evening resolution 1483 was passed, Sir Jeremy Greenstock, the UK ambassador to the UN, freely admitted that it did not live up to Blair’s promises for a UN role, but said that the resolution was just the beginning as regards UN involvement.  He may be speaking the truth, for once.



Labour & Trade Union Review

June 2003