The Report
of the Iraq Inquiry
•
the Iraqi
economy after Saddam Hussein (FCO);
•
overview of
post-Saddam Hussein scenarios (Cabinet Office, in preparation
for
inter-agency
talks in Washington).
771.
The FCO’s
second paper on rebuilding Iraq’s economy identified
the
immediate
tasks facing any new administration. Those included investing
in
infrastructure
to build public support and taking control of public
finances.
772.
The paper
stated that detailed analysis and planning needed to
begin
immediately.
773.
A draft of the
FCO paper on economic issues in Iraq, written at some point
before
19 October,381
was
circulated to AHGI members on 4 November.382
The paper
described
Iraq’s
economy as “distorted and very badly damaged”, and consisting of a
number of largely
separate
elements: the oil sector, which was efficiently run; the formal
economy; the food
distribution
system; the informal economy (“an unrecorded, unregulated sprawl of
trading
and
services”); the economy of northern Iraq; and the “partly secret
regime/elite economy”.
The
challenge would be to strip out the undesirable elements, retain
the desirable and
essential
elements (the central bank and economic ministries “probably” still
had competent
staff below
political appointees) and bring those together as a single
economy.
774.
Ensuring that
there was “a smooth economic transition in the early months
after
regime
change” would be the immediate task. Particularly high priority
would have to be
given to
preserving food supplies and effective control of public finances,
both of which
were tied
to the future of OFF.
775.
The FCO paper
stated that, in order to help build popular and regional support
for
the new
administration, it might well be necessary to be able to show early
gains:
“... the
most obvious quick way of doing this would be to provide … a
significantly
improved
food ration, no doubt bolstered with a message about diverting
resources
from
Saddam’s extravagances … Beyond the first 6-12 months the focus
should turn
more to
targeting of reconstruction expenditure to achieve political quick
wins.
“... Even
if a new conflict produces little additional damage, the
combination of
neglect and
war damage means that large investments in many areas and
spread
over many
years, are needed if infrastructure and services are to recover
even
to their
pre-1990 condition. Getting this process under way will be
essential to
economic
revival, to the alleviation of humanitarian problems and to popular
support
for a new
administration.
381
Paper FCO,
[undated], ‘Economic issues in Iraq after post-Saddam regime
change: internal policy and
external
engagement’.
382
Minute Dodd
to Manning, 4 November 2002, ‘Ad Hoc Group on Iraq’.
242