10.2  |  Reconstruction: July 2004 to July 2009

turning around something that had been in place for so long and there was so much

nervousness about it.

“What that did was started a discussion which was the default can’t necessarily

remain …

“So by the time I left in October [2008], decisions on moves to the Palace could be

made by the head of DFID Baghdad. They didn’t have to go back through a lengthy

chain in London. Decisions on some other road moves would still go through my

boss back in London, but gradually that got moved more and more to theatre,

became much more like the Baghdad experience of Red Zone moves.” 562

960.  The 2 June meeting of the ISG focused on economic development.563 Ms Aldred

said that “economic deliverables” would form a core part of the narrative that Mr Browne

had asked for following his visit to Basra, and asked DFID to lead on compiling it.

Mr McDonald said that Mr Brown would want to announce economic progress – or, at

the very least, a Basra economic plan – in his planned Parliamentary statement in July.

961.  Ms Hendrie reported that Dr al-Safi was making little progress in spending the

Iraqi Government’s reconstruction funds for Basra and that, despite UK lobbying, he

remained reluctant to use established structures. The Basra Support Office in Baghdad

would become operational on 7 June. UKTI had expressed interest in appointing a First

Secretary (Commercial) to Baghdad, but was reluctant to fund or staff the post.

962.  A 9 June Current Intelligence Group (CIG) Assessment of Basra’s economy,

commissioned by DFID, judged that the Charge of the Knights had secured “a window

of opportunity to create the conditions for economic growth” but that reconstruction and

development would continue to be constrained by:

• the absence of any systemic approach to project and financial management

within the Iraqi Government;

• competing political agendas, which meant that reconstruction was subject to

“political manoeuvring”;

• corruption, which would remain endemic under the present Government or any

likely successor;

• the uncertain legislative environment, which continued to hold investors back.

International oil companies were in negotiation with the Ministry of Oil but they

were unlikely to make long-term investments until a Hydrocarbons Law had

been adopted;

• security, which remained fragile;

• crime and smuggling; and

562  Public hearing, 24 June 2010, pages 66 and 67.

563  Minute Cabinet Office [junior official] to McDonald, 2 June 2008, ‘Iraq Strategy Group, 2 June’.

351