The Report of the Iraq Inquiry

Mr Huw Llewellyn, an FCO Legal Counsellor, advised the IPU on 22 October that he did

not consider that there was a basis either under occupation law or resolution 1483 for the

proposed Order.468

On 24 October, the IPU instructed UK officials in Baghdad and Washington to raise

the UK’s concerns on the draft Order with US interlocutors.469 The IPU advised that

privatisation was “the most fundamental economic policy difference we have with the US”.

The UK shared the US interest in building the Iraqi private sector, “but not to the extent of

supporting privatisation of Iraqi state assets by the CPA”. US enthusiasm for privatisation

was not shared in Iraq. The UK believed:

• There were significant risks in privatising SOEs before a functioning private sector

had been established. SOEs were unlikely to flourish, the Iraqi Government was

unlikely to secure a good return, and unemployment could increase.

• Economic reform on the scale proposed had to be led by a representative Iraqi

Government.

The UK also had significant legal concerns about the legitimacy of the draft Order and the

CPA’s authority to transfer ownership of Iraq state assets.

Sir Jeremy Greenstock, the Prime Minister’s Special Representative on Iraq, called on

Mr Tom Foley, CPA Director for Private Sector Development, on 29 October to pass

on the UK’s concerns.470 Sir Jeremy reported to the FCO that Mr Foley had repeated

that all privatisations would take place under a sovereign Iraqi Government. Sir Jeremy

commented that Mr Foley’s assurances contrasted with “other analysis” that UK officials

had seen.

836. On 6 November, Congress approved the CPA’s request for additional funds,

allocating US$18.4bn to the Iraq Relief and Reconstruction Fund (IRRF2).471 The funds

were available for two years. Congress had allocated US$2.4bn to the Iraq Relief and

Reconstruction Fund (IRRF1) in April 2003.

837. Hard Lessons recorded that Congress imposed greater controls on IRRF2 that

it had on IRRF1.472 Those included a requirement to provide, by 5 January 2004,

a complete list of proposed projects. Hard Lessons highlighted the scale of the task

facing the CPA:

“The CPA now had less than two months to compile a list of projects, develop

a spend plan, and build an office [the PMO] to manage … the largest foreign

reconstruction program … in US history.”

468 Minute Llewellyn to Crompton, 22 October 2003, ‘CPA Draft Order on Iraqi Ownership Transformation

(Privatisation)’.

469 Telegram 108 FCO London to IraqRep, 24 October 2003, ‘Iraq: Privatisation Order’.

470 Telegram 239 IraqRep to FCO London, 30 October 2003, ‘FCO Telno 108 to IraqRep’.

471 Emergency Wartime Supplemental Appropriations Act, 2003.

472 Bowen SW Jr. Hard Lessons: The Iraq Reconstruction Experience. U.S. Government Printing

Office, 2009.

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