The Report
of the Iraq Inquiry
417.
The assessment
was copied widely within the FCO, including to Mr Chaplin, and
to
Trade
Partners UK (TPUK). The Inquiry has seen no evidence that it was
copied to other
departments.
418.
Mr Creon
Butler, the FCO Chief Economist, endorsed the economic
adviser’s
analysis
and the importance of thinking about economic issues “at the same
time” as
military
options.234
He advised
that:
“… a few
$bn spent on a Jordan safety net [to cushion the economic shock
of
conflict]
and more rapid intervention in Iraq post-conflict is likely to be
small beer vis-
a-vis the
total costs of military intervention and could do a great deal to
ensure the
ultimate
success of the exercise.”
419.
Mr Butler
added that:
•
The
Government would need to make special provision for the
costs.
•
It was
important to learn the lessons of post-Milošević Yugoslavia, where
a
“first
rate” economic team, largely from the Yugoslav diaspora, had made
“a
tremendously
positive impact” on economic management. Did such people
exist
in Iraq’s
case?
•
International
financial institutions (IFIs) were unlikely to sanction any
significant
work on
Iraq until there was a clear international mandate. If they did
not, it could
still make
sense for the UK to do work in-house and start a dialogue with the
US.
420.
Mr Butler did
not copy his email to Mr Chaplin, Mr Ricketts, or outside the
FCO.
421.
On 6
September, Treasury officials sent Mr Brown a paper on the economic
impact
of military
action on the global, regional and Iraqi economies.235
The paper
addressed
three
scenarios: a large-scale invasion leading to relatively quick
regime change
(identified
as the most likely scenario); regime change through an internal
uprising; and
regime
change after a prolonged campaign during which WMD had been
used.
422.
The paper
assessed that oil prices could rise by $US10 per barrel. Over a
year,
that could
reduce global growth by 0.5 percent and raise inflation by 0.4-0.8
percent.
Investor
and consumer confidence could fall and there was limited room for
easing
monetary
and fiscal policy across the G7.236
423.
In the region,
“a small group of countries could lose out quite heavily” as a
result of
a range of
factors from reduced tourism to disruption of trade with
Iraq.
234
Email
Butler to Gray, 30 August 2002, ‘Iraq: Economic Issues Raised by
Military Action and
Regime Change’.
235
Email Crook
to Bowman, 6 September 2002, ‘What would be the economic impact of
a war in Iraq?’
attaching
Paper, September 2002, ‘What would be the economic impact of war in
Iraq?’.
236
The G7
group of industrialised countries: Canada, France, Germany, Italy,
Japan, United Kingdom,
United
States.
182