6.5 |
Planning and preparation for a post-Saddam Hussein Iraq, January to
March 2003
838.
The paper set
out strategic and operational objectives against six different
issues:
humanitarian
relief; public finances; oil; Ba’ath Party and former elite
economic issues;
reconstruction
and economic strategy; and effective economic administration.
The
operational
objectives were divided into action needed before the fall of the
existing Iraqi
regime,
“immediate” actions for the first 30 days afterwards and “pressing”
actions for
between 30
and 60 days.
839.
The section on
public finances included as one of its key strategic
objectives:
“Avoiding
disintegration of civil service and public services.” The “specific
operational
objective”
before regime change was to reassure employees that salaries would
be paid.
Objectives
for the 30 days after regime change included ensuring salaries
continued to
be paid and
“decisions about pay policy towards security services and
military”.
840.
The paper was
unchanged from a version shared with the US State Department
on
14
February, when it had been described to US officials as “very much
work in progress,
not
completely co-ordinated here [in London]”.354
841.
The Inquiry
has seen no evidence of further work on the document.
842.
Mr Jon
Cunliffe, Treasury Managing Director for Macroeconomic Policy
and
International
Finance, called on the IMF internal task force on Iraq in
Washington
843.
The UK
Delegation to the IMF reported that the task force had made
“some
significant
progress”, but that staff emphasised the sheer scale of the debt
problem
facing
Iraq, well in excess of the capacity to pay. Without taking account
of the need
to
front-load reconstruction costs, IMF staff estimated it could take
20 years to pay off
less than a
third of Iraq’s potential debt burden of US$300bn (incorporating
external
debt of
US$90bn and compensation payments to Iran and Kuwait). IMF staff
were
pulling
together background information on the economy, the state of
institutions and
priorities
in case the IMF became involved in either policy advice or
technical assistance.
Potential
areas of involvement included currency reform, fiscal policy, the
oil sector and
external
debt. Planning was “highly tentative”. Experience of other
post-conflict situations
had taught
the IMF that “the situation on the ground can turn out to be
extremely
different
from prior expectations and that this then impacts on the policy
advice”.
354
Letter
Economic Policy Department [junior official] to US State Department
official, 14 February 2003,
‘Iraq Day
After: Trilateral Economic Discussions – Follow-up’.
355
Telegram 21
UKDel IBRD Washington to FCO London, 7 March 2003, ‘Iraq and
IMF’.
463