U.S.
to Propose Broader Control Of
Iraqi Oil, Funds
By Colum
Lynch
10 May, 2003
The Bush administration circulated a draft resolution among key Security
Council members today calling for the elimination of more than a decade
of international sanctions on Iraq and granting the United States broad
control over the country's oil industry and revenue until a permanent,
representative Iraqi government is in place.
The resolution, which is
to be presented to the 15-nation body Friday, would shift control of
Iraq's oil from the United Nations to the United States and its military
allies, with an international advisory board having oversight responsibilities
but little effective power. A transitional Iraqi government, which U.S.
authorities have said they hope to establish within weeks, would be
granted a consultative role.
The proposal would give the
United States far greater authority over Iraq's lucrative oil industry
than administration officials have previously acknowledged. Buffeted
by charges that the United States was launching a war to gain control
over Iraq's oil fields, administration officials have for months sought
to assure governments that Iraq's oil revenue would remain in the hands
of the Iraqi people after the ouster of president Saddam Hussein.
The U.S. text, which was
sponsored by Britain and Spain, could potentially face tough resistance
from France and Russia, who favor continued U.N. control over Iraq's
oil wealth and are on record opposing any Security Council action that
would grant legitimacy to a war that they charge was conducted without
explicit U.N. authority.
But U.S. officials have voiced
confidence in recent days that the bitterness that divided the Security
Council before the war has eased since Hussein's downfall and that the
council would support a new resolution that the administration says
is crucial to jumpstarting the Iraqi economy and its transition to democratic
rule.
The resolution would eliminate
all non-military trade sanctions on Iraq, endorse the administration
of Iraq by the United States, Britain and other countries that took
part in the war, and give its blessing to U.S. efforts to form a transitional
government known as an interim Iraqi authority. It would also order
U.N. members to deny a haven to Hussein and his top officials and to
freeze the assets of members of the former government and their families.
The proceeds would be placed in a trust fund controlled by the United
States and its military allies.
In an effort to address calls
by France, Russia and others for a U.N. role in Iraq's future, the resolution
would direct U.N. Secretary General Kofi Annan to appoint a special
representative to work with the United States on relief and reconstruction
activities, and on the establishment of a representative government.
"The U.N. 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," the resolution says.
But the United States and
its allies would control the political and economic life of Iraq until
an internationally recognized Iraqi government emerges. Under the system
proposed by the administration, the proceeds of Iraq's oil revenue would
be placed in an Iraqi Assistance Fund held by the Central Bank of Iraq,
which is being managed by Peter McPherson, a former deputy Treasury
secretary and Bank of America executive.
The United States and its
allies would have the sole power to spend the money on relief, reconstruction
and disarmament and to pay "for other purposes benefiting the people
of Iraq." The "funds in the Iraqi Assistance Fund shall be
disbursed at the direction of the [U.S.-led coalition], in consultation
with the Iraqi Interim Authority," the resolution states. It adds
that Iraq's oil profits shall remain in the assistance fund "until
such time as a new Iraqi government is properly constituted and capable
of discharging its responsibilities." According to some estimates,
it may take years for such a government to be established.
The fund's expenditures would
be subject to oversight by an international advisory board comprising
representatives of the World Bank, the International Monetary Fund and
the United Nations. The board would choose a team of accountants to
audit the funds.
Although the resolution underscores
the right of the United States to administer Iraq and its resources
for an initial 12 months, it notes that its authority would be automatically
renewed each year until the Security Council decided to end it.
The resolution would leave
open the prospect of the United States tapping into Iraq's oil revenue
to finance its own costly efforts to disarm Iraq. But U.S. officials
indicated that they have no intention of using Iraqi oil money to finance
the broader U.S. military campaign that led to the fall of the Iraqi
government.
The scope and duration of
U.S. control over Iraq's oil outlined in the draft resolution goes well
beyond previous administration statements, which largely have been confined
to affirmations that the oil was the property of the Iraqi people. Testifying
on Capitol Hill in March, Secretary of State Colin L. Powell said, "The
oil of Iraq belongs to the people of Iraq. It's the source of revenue
to run the country."
The resolution attempts to
satisfy Russian concerns that contracts it signed with Iraq through
the U.N. oil-for-food program, under which Iraq was able to sell oil
to pay for food, medicine and other humanitarian goods, be honored.
It would allow the U.N. humanitarian operation to be phased out over
four months, ensuring that about $10 billion in goods and equipment
could be shipped to Iraq before the program closes its doors.
The U.S. effort in the Security
Council is aimed at encouraging foreign countries to help finance the
reconstruction of Iraq. John D. Negroponte, the U.S. ambassador to the
United Nations, urged the international body today to adopt it by June
3, when a U.N. mandate authorizing the export of Iraqi oil expires.
"We're certainly hopeful
that everybody is going to enter into this discussion in a constructive
and forward-looking spirit so that we can get on with the question of
freeing the Iraqi economy, helping them take steps towards the establishment
of a democratic political system, and so that the process of reconstruction
of that country can get launched," Negroponte said.
The resolution makes no reference
to a U.N. role in certifying Iraq's weapons inspections, a proposal
that France and Russia have pressed. "The coalition has taken over
the process of inspecting in Iraq for weapons of mass destruction,"
the text says, adding that it does not envision any role for the U.N.
weapons inspection agency "for the foreseeable future."